Last week, Sarasin & Partners alongside like-minded global investors representing $1.3 trillion in assets wrote to Norway’s Financial Supervisory Authority (FSA) to ask it to review Equinor ASA’s climate disclosures, expressing concerns that the company’s repeated claims of alignment with the Paris Agreement and a 1.5°C pathway may be misleading.
The investors argue that Equinor’s strategy — which includes growing oil and gas production to 2027, investing $10bn annually in new fossil fuel reserves, and lacking plans to cut absolute Scope 3 emissions before 2050 — diverges sharply from science-based 1.5°C scenarios set out by the International Panel on Climate Change and the International Energy Agency.
Equinor has repeatedly stated that its business model “supports” or is “aligned with” the Paris goals, a position that has shaped shareholder votes at recent Annual General Meetings. However, the investor coalition warns that such language creates a false impression that the company is furthering the global pursuit of a 1.5°C pathway, potentially leading to misinformed investment and voting decisions.
This is of particular concern with Equinor because the Norwegian state owns 67% of the company, and has committed to ensuring its companies support the Paris Agreement. The recent International Court of Justice opinion serves to further underline the duties of nation states in fulfilling their climate commitments under international law.
Equinor is not alone. Most European oil and gas companies are claiming, at one level or another, to be aligned with the Paris Climate Agreement. Wordsmithing varies but the common thread is that these companies can continue to produce fossil fuels – often investing in new long-lived reserves and infrastructure – while simultaneously stating that they are committed to keeping temperatures well below 2C and even to 1.5C. This sounds too good to be true, probably because it is.
Misleading claims of climate leadership are harmful. Not only for shareholders but they breed public complacency: people are led to believe that the oil and gas companies have our backs when it comes to climate change. Financial regulators like Norway’s FSA have the mandate and tools to act. We hope they will do so.
The letter to the FSA can be read here.
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