Collaboratively Engaging to Lower Carbon Emissions at an Oil and Gas Company
We engaged with an oil and gas company alongside other investors to encourage it to strengthen its commitments to lowering its carbon emissions. We felt that, while management were taking steps to reduce their carbon emissions, there was scope for them to strengthen decarbonization commitments.
We sought to change the behaviour of the company regarding their ‘no’ carbon business, such as renewables, hydrogen and biofuels, as they are spending less than 5% of capital expenditure.
While there are short-to-medium targets in place, there has been a lack of disclosure on a long-term target beyond 2030, even though the company reportedly has emissions scenarios mapped out to 2080. Over the past 12 months, we met with fellow investors to discuss the questions we were going to put forward. We then had two meetings with the company where we raised several issues related to its decarbonization strategy. During the meetings, the company indicated their preference to be conservative regarding their scope 1–3 targets.
Outcomes of the Collaborative Engagement
In a recently published five-year plan, the company has announced target spending of US$2.8 billion on decarbonization (scope 1 and 2 and scope 3 progress too), which compares to US$1 billion under their previous five-year plan. The company also has an extra US$0.25 billion in the five-year plan not allocated to any specific project as yet. This is positive; however, we will continue to engage the company to understand target setting beyond 2030, as we believe more progress can be made relative to peers.
2250837
