Three UK pension fund investors have joined a group of asset managers in writing to the Norwegian financial supervisory authority (FSA) to ask it to review the veracity of climate disclosures made by the state-controlled oil and gas company Equinor.
In the letter to Finanstilsynet, Brunel Pension Partnership, Railpen and West Yorkshire Pension Fund said that Equinor’s statements about its strategy being supportive of the Paris Agreement goals, and specifically a 1.5°C temperature pathway, are potentially misleading.
“Given the importance of reliable reporting to financial stability and well-functioning markets, we would welcome the FSA’s attention to this matter,” they wrote.
The lead signatory of the letter is Natasha Landell-Mills, partner and head of stewardship at Sarasin & Partners, with KBI Global Investors, Rathbones and Robeco, the other asset managers backing it.
For Sarasin, the move to seek change at Equinor via supervisory action comes after it divested its shareholding in January. In a public statement about the exit, it said it had had “years of constructive engagement” but that it now believed the board, “with apparent government backing”, was prioritising short-term returns over long-term sustainable capital creation.
Last year, Sarasin, which had been a co-lead on Equinor engagement within Climate Action 100+, made an unsuccessful Paris-alignment shareholder proposal at Equinor’s 2024 annual general meeting (AGM) alongside an arm of Danish pension fund Sampension, West Yorkshire Pension Fund and Achmea Investment Management.
Equinor is majority-owned by the Norwegian government, which voted against the shareholder resolution as well as one filed this year by Sampension and Swedish pension fund Folksam, alongside the Australasian Centre for Corporate Responsibility (ACCR).
In their letter to the Norwegian FSA, the asset managers and pension fund investors said this year’s shareholder resolution showed that the concerns about the veracity of Equinor’s claim of 1.5°C compatibility remained pertinent.
According to the investor group, the evidence includes that the firm has no target to reduce its absolute Scope 3 emissions before 2050 and plans to grow oil and gas production to 2027.
Public complacency, too
In a statement to the press about the letter to the FSA, the investors said the language used by Equinor about its strategy’s link to the Paris Agreement “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”.
The statement said this was of particular concern given that the Norwegian state, which owns 67% of the company, had committed to ensuring its companies support the Paris accord.
It also cited the recent opinion by the International Court of Justice about states’ legal duties with regard to climate change.
In the statement, the investors also implied that other European oil and gas companies were likely greenwashing, too.
“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 2°C and even to 1.5°C.
“This sounds too good to be true, probably because it is.”
The statement continued to say that misleading claims of climate leadership were harmful not only for shareholders but “breed public complacency”.
The investors did not spell out why they think the Norwegian FSA has a mandate to act on Equinor’s climate disclosures, but in their letter, they said that financial regulators like Finanstilsynet acknowledged that the materiality of the consequences of climate change for investment decision-making was rising.
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