Norway’s sovereign wealth fund, valued at €1.3 trillion, has announced its intention to vote for resolutions urging Chevron and ExxonMobil to adopt tougher greenhouse gas reduction targets. The fund will vote for shareholder proposals at both companies to adopt a medium-term Scope 3 greenhouse gas reduction target, despite recommendations from company management to do otherwise. Scope 3 emissions include those from the use of a company’s products by customers, and oil companies have different approaches on how to calculate and reduce them.
ExxonMobil currently does not set Scope 3 targets, while Chevron aims to reduce Scope 3 emissions intensity by 5% between 2016 and 2028. The Norwegian fund, which is the world’s single largest stock market investor, owns a 0.86% stake in Chevron and a 1.13% stake in ExxonMobil, according to the latest fund data available, which is from the end of 2022.
The fund, which invests the Norwegian state’s revenues from oil and gas production, stated last year that it would take a tougher line on companies that do not adopt credible climate plans. It also announced that it would vote for proposals to recalculate the greenhouse gas emissions baseline to exclude emissions from material divestitures at both companies’ respective annual shareholder meetings, both of which are scheduled for May 31.
In addition, the fund will back an ExxonMobil shareholder proposal on commissioning a report on reduced plastics demand. The fund cited sustainability risks, against ExxonMobil’s management’s recommendation. Finally, the fund objected to Chevron chief executive Mike Wirth and ExxonMobil chief Darren Woods also chairing the companies’ boards. The fund believes that the same individual should not hold the posts of both chief executive and executive chair.
In a separate development, an EU official has confirmed that the EU will not vote on phasing out so-called forever chemicals before 2025. The EU is moving to regulate the use of such chemicals, which are essential for industry but have long-term hazardous environmental impacts.
The Norwegian fund’s decision to vote for shareholder proposals urging Chevron and ExxonMobil to adopt tougher greenhouse gas reduction targets is significant, given the fund’s size and influence. It is also in line with the fund’s stated commitment to take a tougher line on companies that do not adopt credible climate plans. The fund’s decision to vote for proposals to recalculate the greenhouse gas emissions baseline to exclude emissions from material divestitures, as well as its support for an ExxonMobil shareholder proposal on reduced plastics demand, further underscores its commitment to sustainable investing.
The EU’s decision not to vote on phasing out forever chemicals before 2025 highlights the challenges of balancing environmental concerns with the needs of industry. While the use of such chemicals is essential for many industries, their long-term environmental impacts cannot be ignored. The EU’s move to regulate their use is an important step toward addressing these impacts, but it also underscores the need for continued research into alternative, more sustainable materials and processes.