Oslo-listed insurer Storebrand, which has about $91 billion under management, has changed its climate policy in an effort to accelerate the green transition, dropping its support of oil and gas giants ExxonMobil, Chevron, ConocoPhillips and Husky Energy, among others.
This year alone, funds with over $7 trillion-worth of assets have said they would start pulling back on activities in the fossil fuel sector, including BlackRock — the world's largest investment firm.
The latest move by Storebrand, announced on Monday, comes as the asset management company acknowledged climate risk as “one of the greatest risks facing humanity”.
It now plans to distance itself from oil and gas as well as coal-focused companies.
“This realisation is causing a massive shift of capital, away from the highest emitters of greenhouse gas emissions towards companies that provide solutions to the climate crisis,” Storebrand said in a statement.
According to chief executive Jan Erik Saugestad, the fund expects the recovery from the pandemic to help redirect further finances towards a greener and more climate-resilient economy.
“As we combat Covid-19, we need to take the opportunity to refinance the recovery and growth in line with the Paris Accord and the UN Sustainable Development Goals.
"The rebuilding period will be our best opportunity to make substantial progress towards a greener and more climate resilient economy,” Saugestad said.
New climate policy
Among the initiatives highlighted in the policy are steps to make sure all its investment decisions are in line with the Paris Agreement.
Storebrand will now exclude companies that actively lobby against the Paris Agreement and climate regulation, and also those that derive more than 5% of their revenues from coal or oil sands.
As a result, Storebrand sold its holdings in ExxonMobil and Chevron and German chemicals giant BASF – the parent company of explorer Wintershall Dea.
It also quit ConocoPhillips, Husky and Japan Petroleum Exploration as a result of their links to oil sands.
ExxonMobil reacted by saying in a statement that it supports the goals of the Paris Agreement.
“The company is focused on the dual challenge of meeting the growing demand for energy and minimising environmental impacts and the risks of climate change.
"Over the past two decades, we have invested more than $10 billion in technology programs to reduce emissions,” an ExxonMobil spokesperson said.
ConocoPhillips declined to comment. The other oil and gas companies concerned have not yet commented on Storebrand's move.
Increased capital flow
In addition, the Storebrand fund now aims to increase the flow of capital into low-carbon, climate-resilient and transition companies in order to avoid risks, identify opportunities and improve resilience to the effects of climate change, it said.
Currently, Storebrand has a total of $34 billion in fossil-free investment solutions.
“We aim to maintain our position as a leading provider of sustainable solutions,” Saugestad said.
“With this policy we will excel and improve our work on climate and greening the financial system. We will use all the tools at our disposal, including divestment, investing more in solutions and engaging with companies in order to achieve substantial change."
Supporting the Paris Agreement
However, while investors have started pushing for change and increasingly putting pressure on fossil-fuel producers, firm targets have not been set across the industry.
For example, ExxonMobil and Chevron have joined the global Oil & Gas Climate Initiative (OGCI), but have not set any firm targets for cuts across their emissions, as opposed to many European rivals.
As recently as July, however, the OGCI unveiled a new target to reduce the average carbon intensity of its member companies’ aggregated upstream operations in 2025 by at least 8.7% compared to 2017.
The goal is to reach between 20 and 21 kilogrammes of CO2 equivalent per barrel of oil equivalent within five years from a collective baseline of 23kg CO2e/boe in 2017.
OGCI’s members include BP, Shell, ExxonMobil, Total, Chevron, Saudi Aramco, China National Petroleum Corporation, Eni, Equinor, Occidental Petroleum, Petrobras and Repsol.