​Sampension, Folksam take Norway’s Equinor to task on net zero ‘inconsistency’

Pension funds from Denmark and Sweden have filed a shareholder proposal for Equinor’s annual general meeting (AGM) in neighbouring Norway, challenging the state energy giant on plans to boost oil and gas production.

The proposal from Sampension and Folksam alongside shareholder advocacy organisation Australasian Centre for Corporate Responsibility (ACCR) calls on the Equinor board to assess whether the company’s planned increase in oil and gas production is consistent with the expectations of the majority shareholder – the state of Norway, which holds a 71% stake.

The parties behind the filing for the 14 May AGM said Norway’s Ministry of Trade, Industry and Fisheries told the 2023 Equinor AGM that it expected the company to set targets and implement measures to reduce greenhouse gas emissions in line with the Paris Agreement.

Sampension, Folksam and ACCR said: “The resolution co-filers are concerned that the company’s new strategic direction, with an increased focus on upstream oil and gas exploration and expansion, is materially inconsistent with Paris Agreement alignment.”

They said they were also concerned about the inadequate returns generated by the international oil and gas segment in the past, which appeared in conflict with Norway’s goals for Equinor to deliver the highest possible returns over time, sustainably.

‘The wrong path’ 

Jacob Ehlerth Jørgensen, Sampension’s head of ESG, said: “With its updated strategy, Equinor is turning down its green ambitions and turning up its fossil fuel ambitions. That is simply the wrong path to take at a time when climate change is accelerating.”

“We understand that investing in renewables is difficult in the current environment. But if Equinor can’t make its renewables business profitable, it should return excess capital to its investors – not double down on fossil fuel projects that clearly run counter to society’s climate goals,” he said.

Investing in extraction that would not lead to production for perhaps a decade or two could not be justified on the basis of European security of supply, he added.

At Folksam, Emilie Westholm, head of responsible investments and corporate governance, said: “As a net zero investor, we hope this resolution will bring more clarity on Equinor transition work, including how it aims to achieve its  long-term net zero target.”

In its response to the proposal, Equinor’s board of directors said in documentation published ahead of the AGM that it considered the company’s strategy and business model to be “compatible with the transition to a sustainable economy in line with the goals of the Paris Agreement”.

Equinor’s whole portfolio composition was regularly assessed in relation to overall strategy, the assets’ economic development, and “other relevant aspects including energy demand, energy security and climate risk”, the board said.

“Scenarios of future energy needs, including those aligned with limiting global warming to 1.5°C, indicate that oil and gas will be required for decades to come,” it noted, adding: “To meet the needs of society, Equinor intends to be a reliable supplier for the foreseeable future.”

The shareholder resolution comes after Sarasin & Partners, the co-lead for Equinor in the collaborative engagement group Climate Action 100+, in January divested its shareholding in the company because of concerns that the company was not aligning its capital expenditure plans with a shift away from fossil fuels.

The asset manager wrote to the board to explain its reasons for selling, and made its letter public in March.

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