Oil and gas corporations are facing increasing pressure to stay committed to net zero pledges as pension funds are interested in the long-term sustainability of the companies’ operations.
The Universities Superannuation Scheme (USS) and Borders to Coast – two of the largest UK pension pools that together manage over £130 billion ($156.36 billion) in assets, said they will vote against the renewal of top directors at BP Plc and Shell Plc at their annual meetings as actions on net zero targets are lagging. That is unless both companies strengthen commitments to tackling carbon emissions, reported the Financial Times on Sunday.
“Our new stewardship and voting policy will see us vote more personally against responsible directors where possible.” As a long-term investor, “we’ll do this where a company hasn’t disclosed its climate transition plan, doesn’t meet our diversity expectations, or where executive pay doesn’t align with company performance,” said USS in a statement to Reuters.
The voting against top directors lagging on climate change action is part of a push from pension funds to make oil companies and banks act faster on their climate change pledges. According to Colin Baines, stewardship manager at Borders to Coast, this kind of voting is “one of the most influential means of swaying company behavior, available to investors”.
In February, oil companies like Exxon, Chevron and Shell announced record revenues and profits for 2022, due to the Ukrainian war pushing oil and gas prices higher. However, it was also announced that those high profits will not go towards an increase in investments in renewables or other clean energy solutions.
Relevant: Record Oil Company Profits In 2022 Won’t Be Used For Decarbonization
In fact, Exxon shared that investments in new natural gas and oil developments rose 37% in 2022, reaching $22.7 billion. The corporation also said it will increase oil production over the next five years which would mean reaching 4.2 million barrels a day by 2028.
Those statements are in sharp contradiction with the companies’ net zero by 2050 pledge and show that oil and gas majors are engaging in greenwashing by not backing those commitments with short and medium-term decisive climate actions like expanding renewable energy production.
Relevant: Will Oil Companies Actually Profit From Biden’s Climate Bill?
BP and Shell have also committed to achieving net zero carbon emissions by 2050. They also have attracted criticism from the public and some shareholders for not transitioning their businesses more quickly.
To make matters worse, BP has decided to pare back its commitment to cutting oil and gas output by 2030 and Shell’s newly appointed chief executive also commented that the company might produce more oil for longer.
