Norway’s oil fund sides with climate activists against ExxonMobil and Chevron

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The world’s largest sovereign wealth fund will side with climate activists against ExxonMobil and Chevron in a bid to force policy changes on emissions after the investor came under pressure to back European oil and gas companies.

$1.4 trillion Norwegian oil fund to back shareholder proposals at Exxon and Chevron annual meetings next Wednesday for U.S. oil and gas major to introduce targets for the reduction of greenhouse gas emissions deriving from the use of its products.

This contrasts with the fund’s refusal to back similar proposals – designed to ensure global warming limits below 2C to meet the Paris climate accord – to European majors such as BP, Shell and TotalEnergies, the French group whose annual meeting is underway on Friday.

Carine Smith Ihenacho, the fund’s chief corporate governance officer, told the Financial Times that there is a difference between how the European and US oil majors view so-called Scope 3 emission targets, which occur when their products are burned or consumed.

“Exxon really doesn’t believe in the value of setting Scope 3 goals. We think the company should. Chevron, we don’t think they’re ambitious enough in their transition plans. . . Both BP and Shell have good Scope 3 targets, they have good transition plans,” she said.

The Norwegian oil fund is one of the most influential investors, owning on average 1.5% of every company globally.

But it is the drive that takes the lead environmental, social and governance (ESG) investments have put it on a collision course with some of the biggest companies in the world, as well as drawing criticism and self-righteous cries from environmental pressure groups.

Mark van Baal, founder of Follow This, the leading activist group behind the shareholder proposals at the oil majors, he said he welcomed the oil fund’s backing for Exxon and Chevron, but was “surprised” it failed to do the same for BP, Shell and Total.

“The fund has a great responsibility. This vote jeopardizes their credibility as stewards of the global economy. Basically, they’re telling Shell, BP and Total: You don’t have to reduce your emissions this decade. We expect them to correct this oversight next year,” she added.

Ihenacho said the issue was not “black and white” and that one group was “hopeless” and the other “awesome”. But he stressed that the European oil majors are ahead on the issue.

Van Baal said BP and Shell had made “empty promises” for 2050 as European companies took “baby steps” on climate change. “In a camp of latecomers, it’s very easy to be the leader,” she added.

The Norwegian fund voted down some of its biggest holdings this year, including Apple and LVMH over executive pay, and JPMorgan and Goldman Sachs for merging the roles of chief executive and chairman.

It has also begun filing its own shareholder resolutions on climate change with US companies.

But the fund, whose inflows come from Norway’s oil revenues, has been accused of hypocrisy for telling energy companies what to do when its home country makes record sums from oil and gas.

Ihenacho countered that climate risk was a financial risk to the fund. “Our task in the fund is to create value for future generations, but in a responsible way.

“We have no vision whatsoever when it comes to Norwegian politics. When you look at how you can create long-term value from a financial perspective, it makes sense that the fund has companies that can thrive in a net zero society.”

Exxon and Chevron both urged shareholders to refuse to support Follow This’s proposal and said oil and gas companies would play an important role in the energy transition. “We believe setting Scope 3 goals can have significant unintended consequences for society,” Exxon added.

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