Equity holders question Equinor's consistency with Paris agreement prior to Annual General Meeting
In a move that has raised eyebrows in the global energy sector, Norwegian oil and gas giant Equinor has announced a hybrid strategy that combines increased oil and gas output with aggressive low-carbon innovation. The company aims to cut operated emissions by 50% by 2030 and reduce net carbon intensity by 30–40% by 2035, while maintaining significant hydrocarbon production to ensure stable cash flows.
This approach has garnered some shareholder support due to the promise of stable dividends and buybacks. However, it has also sparked concerns about alignment with the Paris Agreement goals, leading to some investor divestment.
One of the most vocal critics is Sarasin & Partners, a firm managing around £18.5bn, which has divested from Equinor, selling its remaining £3m stake. Natasha Landell-Mills, head of stewardship at Sarasin & Partners, stated that Equinor's refusal to reduce emissions puts long-term shareholder capital at risk.
Other notable investors, such as Investors Denmark's Sampension and Sweden's Folksam, have raised concerns about Equinor's strategy and its alignment with the Paris climate goals. They argue that the company's planned increase in fossil fuel output could lock in high-emission pathways if carbon capture and storage (CCS) technology does not scale or perform as hoped.
The Norwegian Ministry of Trade, Industry and Fisheries, which owns 71% of Equinor, will vote on a resolution filed by Sampension, Folksam, and the ACCR. The resolution calls on Equinor's board to explain how they reconcile 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.
As the controlling shareholder, the Norwegian state's position gives investors a potential lever of influence over Equinor. As a signatory to the Paris Agreement, the Norwegian state has the ability to shape broader public policy and market direction.
Equinor's planned expansion of oil and gas exploration and production is being challenged by shareholders. The company continues to invest in hydrocarbon projects such as Johan Castberg and Johan Sverdrup phase 3 to increase recoverable oil and gas volumes. Concurrently, it pursues renewable energy targets of 10–12 GW by 2030, expands CCS projects like Northern Lights, and develops low-carbon hydrogen projects.
Despite strategic positioning, some investors worry about reliance on fossil fuels and the scale of renewables versus continued oil and gas production. CCS, a key part of Equinor’s plan, faces criticism for potentially enabling continued fossil fuel dependence rather than deep decarbonization.
The annual general meeting of Equinor is scheduled for today, 14 May. The outcome of the shareholder vote could shape the company's future direction and its commitment to a low-carbon future.
- The controversial approach of Equinor, condensing oil and gas production with low-carbon innovation, has sparked debates within environmental science, as the company's commitment to carbon reduction seems discrepant with its increased hydrocarbon production.
- As investors delve into the financing aspects of businesses, the strategic positioning of Equinor - with its focus on fossil fuels and renewables - raises questions about the balance between investing in cleaner Energy and maintaining traditional oil and gas production for stable returns.
- The clash between Equinor's fossil fuel expansion and the objectives of the Paris Agreement has become a significant issue in financial circles, as shareholders consider the potential environmental risks and impact on long-term investments, driven by concerns about climate-change.
