Sarasin & Partners has sold its position in Norwegian energy company, Equinor, citing concerns over its willingness to deliver on its climate commitments in a letter to the board.
Natasha Landell-Mills, head of stewardship at Sarasin & Partners, shared a letter written to Equinor’s board explaining its reason for selling its position in the company – a position it had held since 2021. While the firm initially saw Equinor as “a potential leader in the energy transition” with “a unique opportunity to align its long-term capital creation with a shift away from fossil fuels”, years of engagement have led Sarasin & Partners to conclude that Equinor is putting long-term shareholder capital at risk by rolling back its efforts to address climate change.
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“Despite statements supporting a 1.5°C pathway, in our view, Equinor has not revised its strategy to deliver on these,” Sarasin & Partners’ letter reads. “At Equinor’s May 2024 annual general meeting, the board opposed our shareholder resolution calling for more determined action to align its capital expenditure plans with its climate commitment. Since then, Equinor has followed other oil and gas majors in rolling back its efforts.”
Sarasin & Partners also called out Equinor for discrepancies in its statements on aligning its strategy with a 1.5°C pathway. “In reality, it is clear to us that what Equinor means is that it could become aligned if the world transitions more quickly – a fundamentally different position from actually supporting such a pathway today.
“In the end, our commitment is to protect and enhance our clients’ capital through responsible long-term stewardship. While we have welcomed the open and professional interactions we have had with the company, we now believe the board, with apparent government backing, is prioritising short-term returns over long-term sustainable capital creation,” the letter concluded.
Energy transition ‘moving slower than expected’
Responding to the letter, Rikke Høistad Sjøberg, manager of financial communications at Equinor, told PA Future that although it remains committed to the “ambition” of being a net-zero company by 2050, the energy transition is moving slower than expected and “we have to adapt our speed of transition to the markets and opportunities”.
“We maintain our ambition to be a leading company in the energy transition, and as an example of this leadership, we are now preparing to receive the first shipment of CO2 at the Northern Lights transport and storage facility.”
Sjøberg continued: “We consider our strategy and business model to be compatible with the transition to a sustainable economy in line with the goals of the Paris Agreement. Our approach is divided into three parts: we reduce emissions from our operations in line with science-based trajectories, we invest and take actions to advance decarbonisation and transformation, and we stress-test the resilience of our investments and portfolio against scenarios that meet the global temperature outcomes outlined in the Paris Agreement.”
Equinor recently published its Q4 and full-year 2024 results document, in which the company announced a more than 10% increase in oil and gas production to 2027 while reducing investments to renewables and low carbon solutions to around $5bn and lowering expected capacity in renewables to as little as 10 gigawatts by 2030.
The company “is well positioned for further growth and competitive shareholder returns”, said Anders Opedal, president and CEO of Equinor ASA, as it looks to strengthen its expected free cash flow compared to last year’s outlook. “We do this by high-grading the portfolio, reducing the investment outlook for renewables and low carbon solutions and improving cost across our organisation,” he added.
Equinor is expected to issue an updated version of its Energy Transition Plan later this week.
