World’s Top Sovereign Wealth Fund Seeks More Climate Disclosure From Shell
Norway’s $1.66-trillion sovereign wealth fund, the world’s biggest, is encouraging UK-based supermajor Shell to shed more light on its eased climate targets.
The fund, which is commonly referred to as ‘Norway’s oil fund’ because it was created with oil and gas revenues, is a shareholder in many large companies in the world, including Big Oil, and has the power to influence other investors with its investment decisions.
As of the end of 2023, Government Pension Fund Global, as the fund is officially known, held stakes in 220 energy firms in 35 countries, representing 2.6% of all investments. The fund held 3.4% in BP, 2.88% in Shell, 2.42% of TotalEnergies, 1.35% in ExxonMobil, and 1% in Chevron.
Earlier this year, Shell reaffirmed its ambitions to be a net-zero energy business by 2050 but eased its carbon intensity target for 2030 as it has shifted away from clean power sales to retail customers.
The oil and gas giant said in its updated Energy Transition Strategy 2024 that it would aim for a 15-20% reduction in its net carbon intensity target by 2030, compared to 2016 levels, against a previous target of a 20% cut. The eased emissions target is the result of Shell prioritizing value over volume in power, with a focus on select markets and segments and selling more power to commercial customers and less to retail customers.
Shell is also retiring its interim 2035 target of a 45% reduction in net carbon intensity, “acknowledging uncertainty in the pace of change in the energy transition,” the supermajor said.
In light of these changes to interim targets, Norway’s fund said on Friday ahead of Shell’s annual general meeting next week, “Shell's Energy Transition Strategy has evolved under the new CEO. We nevertheless believe that it sufficiently retains the core components of a Paris-aligned transition plan.”
“We have encouraged Shell to make additional strategy disclosures that could reduce uncertainty about the company’s direction in the mid-2030s.”
The fund, however, plans to align with Shell’s management recommendation and vote against an independent resolution proposed by some investors to make the supermajor align its medium-term Scope 3 emissions reduction targets with the goal of the Paris Climate Agreement.
By Tsvetana Paraskova for Oilprice.com
Norway’s $1.66-trillion sovereign wealth fund, the world’s biggest, is encouraging UK-based supermajor Shell to shed more light on its eased climate targets.
The fund, which is commonly referred to as ‘Norway’s oil fund’ because it was created with oil and gas revenues, is a shareholder in many large companies in the world, including Big Oil, and has the power to influence other investors with its investment decisions.
As of the end of 2023, Government Pension Fund Global, as the fund is officially known, held stakes in 220 energy firms in 35 countries, representing 2.6% of all investments. The fund held 3.4% in BP, 2.88% in Shell, 2.42% of TotalEnergies, 1.35% in ExxonMobil, and 1% in Chevron.
Earlier this year, Shell reaffirmed its ambitions to be a net-zero energy business by 2050 but eased its carbon intensity target for 2030 as it has shifted away from clean power sales to retail customers.
The oil and gas giant said in its updated Energy Transition Strategy 2024 that it would aim for a 15-20% reduction in its net carbon intensity target by 2030, compared to 2016 levels, against a previous target of a 20% cut. The eased emissions target is the result of Shell prioritizing value over volume in power, with a focus on select markets and segments and selling more power to commercial customers and less to retail customers.
Shell is also retiring its interim 2035 target of a 45% reduction in net carbon intensity, “acknowledging uncertainty in the pace of change in the energy transition,” the supermajor said.
In light of these changes to interim targets, Norway’s fund said on Friday ahead of Shell’s annual general meeting next week, “Shell's Energy Transition Strategy has evolved under the new CEO. We nevertheless believe that it sufficiently retains the core components of a Paris-aligned transition plan.”
“We have encouraged Shell to make additional strategy disclosures that could reduce uncertainty about the company’s direction in the mid-2030s.”
The fund, however, plans to align with Shell’s management recommendation and vote against an independent resolution proposed by some investors to make the supermajor align its medium-term Scope 3 emissions reduction targets with the goal of the Paris Climate Agreement.
By Tsvetana Paraskova for Oilprice.com
Energy Giant Shell Reevaluates Emissions Reduction Targets
Royal Dutch Shell, a major player in the global oil and gas industry, is re-examining the pace of its carbon emission reduction targets. This comes amidst internal discussions and strategy updates focused on the company’s energy transition plans. According to anonymous sources familiar with the deliberations, Shell might announce a slower reduction rate for its carbon footprint later this week.
This potential shift follows Shell’s 2021 commitment to achieving net-zero emissions by 2050. The company also pledged a 20% decrease in net carbon intensity (the emissions produced per unit of energy sold) by 2030 compared to 2016 levels, with a target of 45% reduction by 2035. However, recent discussions suggest a potential revision of these specific reduction goals.
While details remain undisclosed until the official announcement, this news has drawn concern from environmental groups. They argue that any slowdown in emissions reductions would directly contradict the urgency of the climate crisis.
Shell maintains its commitment to net-zero emissions by 2050. A company spokesperson emphasized that the upcoming report on their energy transition strategy will outline their plans for achieving this goal. They reiterated that oil production peaked in 2019 and is expected to steadily decline over the next 30 years, reflecting a shift towards renewable energy sources.
The potential slowdown comes at a time when the energy sector is under immense pressure. Geopolitical tensions and global supply chain disruptions have caused significant volatility in oil and gas prices. This has led some industry analysts to speculate that Shell’s re-evaluation might be motivated by a desire to prioritize short-term economic stability while navigating a challenging market environment.
Environmental advocates, however, counter this argument. They point out that the long-term economic risks associated with climate change far outweigh any potential short-term benefits of delaying emissions reductions. They urge Shell to maintain its previous reduction targets and prioritize investments in renewable energy solutions.
The upcoming announcement from Shell is likely to be closely scrutinized by investors, environmental groups, and the energy sector as a whole. The decision will have significant implications for the company’s future trajectory and its role in the global energy transition. A slower emissions reduction pace could spark criticism and damage Shell’s reputation as a leader in sustainability efforts. Conversely, a commitment to ambitious reduction targets would solidify Shell’s position as a frontrunner in the race towards a cleaner energy future.
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