World’s Top Sovereign Wealth Fund Seeks More Climate Disclosure From Shell

Norway’s $1.66-trillion sovereign wealth fund, the world’s biggest, is encouraging UK-based supermajor Shell to shed more light on its eased climate targets.

The fund, which is commonly referred to as ‘Norway’s oil fund’ because it was created with oil and gas revenues, is a shareholder in many large companies in the world, including Big Oil, and has the power to influence other investors with its investment decisions.

As of the end of 2023, Government Pension Fund Global, as the fund is officially known, held stakes in 220 energy firms in 35 countries, representing 2.6% of all investments. The fund held 3.4% in BP, 2.88% in Shell, 2.42% of TotalEnergies, 1.35% in ExxonMobil, and 1% in Chevron.

Earlier this year, Shell reaffirmed its ambitions to be a net-zero energy business by 2050 but eased its carbon intensity target for 2030 as it has shifted away from clean power sales to retail customers. 

The oil and gas giant said in its updated Energy Transition Strategy 2024 that it would aim for a 15-20% reduction in its net carbon intensity target by 2030, compared to 2016 levels, against a previous target of a 20% cut. The eased emissions target is the result of Shell prioritizing value over volume in power, with a focus on select markets and segments and selling more power to commercial customers and less to retail customers.

Shell is also retiring its interim 2035 target of a 45% reduction in net carbon intensity, “acknowledging uncertainty in the pace of change in the energy transition,” the supermajor said.

In light of these changes to interim targets, Norway’s fund said on Friday ahead of Shell’s annual general meeting next week, “Shell's Energy Transition Strategy has evolved under the new CEO. We nevertheless believe that it sufficiently retains the core components of a Paris-aligned transition plan.”

“We have encouraged Shell to make additional strategy disclosures that could reduce uncertainty about the company’s direction in the mid-2030s.”

The fund, however, plans to align with Shell’s management recommendation and vote against an independent resolution proposed by some investors to make the supermajor align its medium-term Scope 3 emissions reduction targets with the goal of the Paris Climate Agreement.

By Tsvetana Paraskova for Oilprice.com

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