A group of 42 institutional investors managing more than €4.5trn in total assets have called on the European Union to maintain current methane regulation in order to protect beneficiaries from climate risks.
The group – which includes pension funds such as AP3, NEST, Railpen and Church of England Pensions Board (CEPB), investment pool Brunel Pension Patnership, and asset managers Scottish Widows and Nordea Asset Management – signed a statement asking the European Commission, European Parliament and EU member states to maintain and swiftly implement the EU Methane Emissions Regulation (EU MER) as adopted.
Signatories stress that the regulation should remain intact, with its existing timeline and core provisions upheld. The group argues that reopening or delaying it, through omnibus legislation or other mechanisms, would create regulatory uncertainty, undermine progress, and discourage companies already investing in compliance.
Investors are concerned the EU’s methane rules will be brought into the scope of the bloc’s simplification agenda after US energy secretary Chris Wright said recently the current legislation would prevent the US from exporting liquefied natural gas to Europe, according to a Reuters report.
The investors added that reducing oil and gas methane emissions remains one of the fastest and most cost-effective strategies to limit near-term global warming.
“Performance on methane is increasingly viewed as an indicator of the quality of management teams, operational excellence, process safety, and companies’ long-term competitiveness,” the letter stated.
Eric Christian Pederson, head of responsible investments at Nordea AM, said: “Regulatory certainty is fundamental to long-term business planning, and methane reductions are essential for limiting near-term global warming. The EU methane rules as they stand aren’t just good climate policy – they’re needed to reduce risk for companies, portfolios, the securities market and society at large.”
He added: “Watering down regulation that companies have already based investment decisions on is counterproductive and risks undermining globally agreed methane reduction efforts.”
Sara Taaffe, responsible investment analyst at CEPB, added: “Managing the financial risks of climate change remains a core priority for the Pensions Board. Reducing methane emissions is essential to this, helping mitigate portfolio risks and advance decarbonisation. That’s why we urge EU regulators to uphold the ambition of the EU Methane Emissions Regulation (EU MER), which provides the clarity and accountability businesses and investors need to act effectively.”
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