Swedish pension fund AP7 has weighed into a politicised environmental tussle in the US by linking up with 34 investors to call on US states to cut methane emissions from the country’s oil and gas sector.
The SEK1.29trn state-run pension fund is taking part in the initiative led by ESG pressure group Ceres and the Interfaith Center on Corporate Responsibility (ICCR), according to announcements released on Wednesday by the group and Thursday by AP7.
Emma Henningsson, AP7’s head of active ownership, said: “Cutting methane leaks from this industry is one of the cheapest and most efficient ways to reduce greenhouse gas emissions in the short term.”
Other investors in the initiative include British Columbia Investment Management Corporation, KBI Global Investors, Legal and General Investment Management and Maryland State Retirement and Pension System.
A fortnight ago, in the face of challenges brought by industry groups and mostly Republican-led states, the US Supreme Court declined to put on hold new federal air pollution rules from president Joe Biden’s administration, which increase limits on mercury and methane.
Ceres cited a recent scientific report which found that methane emissions are increasing faster than any other major greenhouse gas, and that global levels were now 2.6 times greater than before the industrial era.
The group is calling on US states with significant oil and gas production – Colorado, Louisiana, New Mexico, Pennsylvania, Texas, Utah and Wyoming – to implement plans to reduce methane emissions from the oil and gas industry.
The states are being asked to develop, implement and enforce plans that meet or exceed the Environmental Protection Agency’s (EPA) federal standard to significantly reduce methane emissions from the US oil and gas sector, AP7 said.
“As a long-term diversified investor, we work for policies and guidelines that deal with systemic risks such as climate change,” said AP7’s Henningsson.
“Methane is a very powerful greenhouse gas and accounts for a large proportion of the emissions that cause global warming,” she said.
According to the International Energy Agency, about half of the oil and gas sector’s methane emissions can be reduced at no net cost, said AP7, which manages the default option in Sweden’s premium pension system.
By taking action against methane emissions, AP7 argued, states could promote responsible stewardship of natural resources, minimise financial risk, and help America’s oil and gas industry become cleaner.
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