Equity holders question Equinor's adherence to Paris Agreement policies before Annual General Meeting
In the lead-up to Equinor's annual general meeting on May 14, 2023, investors Sampension and Folksam, along with the ACCR, have filed a resolution challenging the Norwegian oil and gas supermajor's planned expansion of oil and gas exploration and production.
The resolution, which is set to be voted on by shareholders, including Equinor's 71% majority owner, the Norwegian Ministry of Trade, Industry and Fisheries, calls on Equinor's board to explain how it reconciles the company's planned increase in fossil fuel output with the expectations of its majority shareholder, which has committed to operating Equinor in line with the goals of the Paris Agreement.
This pressure comes in response to Equinor's decision to increase oil and gas output by 10% between 2025 and 2027. The company's plans to expand its production have raised concerns among investors, who argue that it contradicts the Paris Agreement's aim to limit global warming to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase even further to 1.5°C.
Sarasin & Partners, a firm managing around £18.5bn, has divested from Equinor following the company's decision to increase fossil fuel output. The firm's head of stewardship, Natasha Landell-Mills, stated that Equinor's refusal to reduce emissions puts long-term shareholder capital at risk.
Equinor, despite earlier being viewed as a "leader in the green transition", has weakened its energy transition plan. The company's approach is to invest in lower carbon intensity operations while continuing to develop fossil fuel assets, reflecting a transition model rather than an immediate decarbonization commitment.
However, Equinor states it is making progress towards its 2030 strategy focused on "high value and low carbon," aiming for upstream CO2 intensity around 5 kg CO2/boe. The company highlights a transition strategy that includes substantial renewable projects, such as offshore wind farms, alongside continued oil and gas development.
Jacob Ehlerth Jørgensen, head of ESG at Sampension, has stated that the increase in Equinor's fossil fuel ambitions is problematic. The investors have raised concerns over Equinor's strategy and its alignment with the Paris climate goals.
Equinor is currently proceeding with significant oil and gas development projects, including final investment decisions on Johan Sverdrup Phase 3, Fram South development, and advancing the Johan Castberg field in the Barents Sea. They expect production growth of over 10% from 2024 to 2027, maintaining high production levels on the Norwegian Continental Shelf (NCS) and new international projects such as the Bacalhau field in Brazil.
In summary, Equinor’s current oil and gas expansion continues actively with strong production growth targets, complemented by incremental renewable investments and emissions intensity improvements, but the company has not radically altered its expansion plans in response to shareholder pressures from entities like Sampension and Folksam. The alignment with the Paris climate goals appears to be framed as a gradual transition with decarbonization efforts alongside sustained fossil fuel development, rather than full alignment with the 1.5°C target by halting new oil and gas projects.
- The resolution filed by Sampension, Folksam, and ACCR challenges Equinor's planned increase in fossil fuel output, particularly in the context of environmental science and the expectations of the Paris Agreement.
- Investors, such as Sarasin & Partners, are concerned about Equinor's approach towards climate-change, arguing that its plans for oil and gas production contradict the Paris Agreement's aim to limit global warming.
- Despite Equinor's claims of progress towards a transition strategy focused on low carbon, industry experts like Jacob Ehlerth Jørgensen of Sampension raise concerns over the company's alignment with the Paris climate goals, given its continued expansion of fossil fuel development.
