Investors have stepped up pressure on Norway's state-backed oil and gas company Equinor to cut its carbon emissions more quickly by holding the first direct talks with the government.
The group of investors, which advise on or manage more than $2 trillion in assets, wrote in January to ask for a meeting, on concern that Equinor was not aligned with the world's goal of capping global warming at 1.5 degrees Celsius above pre-industrial levels by mid-century.
"Our concern is that it's up to the company to show that they are aligned with the 1.5-degrees trajectory. We don't see the alignment there," Xander Urbach, an advisor for responsible investment at MN Services, told Reuters.
"It's the first time we are engaging with the government directly," he added after holding a first round of talks on March 6.
"I'm confident that there will be improvements on the (company's) emissions trajectory."
Investors are increasingly pushing the world's biggest energy companies for faster action, with a raft of climate-related shareholder votes slated for this season's annual general meetings, including at Shell and BP.
The need for rapid change was highlighted last week after U.N. scientists warned time was running out to act.
Pension investor MN said it engaged on behalf of pension fund PMT. Others to sign the letter, obtained by Reuters, include Dutch pension scheme PGGM, Norwegian pension investor KLP, local asset management peer Storebrand, Danske Bank, Swiss-based UBS Asset management, and the governance advisory arm of asset manager Federated Hermes. All are members of Climate Action 100+, the world's largest investor engagement initiative on climate change, with members holding $68 trillion in assets.
The move for direct talks with Norway's government followed a government report in late 2022, in which it said that as an owner, it would like to set clearer expectations on climate policy from companies such as Equinor.
In a statement to Reuters, Minister of Trade and Industry Jan Christian Vestre said the government aims to achieve "the highest possible return over time in a sustainable manner". Urbach said the investors will seek another government meeting ahead of Equinor's annual general meeting, slated for May 10.
Equinor said in an email to Reuters that it had "a good and active" dialogue with its shareholders, who approved its transition plan in an advisory vote last year.
The investors said they had seen an improvement since they began talks with the company in 2019, but say they want to see more ambition, with Equinor taking initiatives such as speeding up investments in low-carbon energy, phasing out spending on carbon-intensive activities, or both.
Equinor aims to bring its net carbon intensity, including Scope 3, down by 20% by 2030 compared to 2019, and to net zero by 2050 by investing more in renewable energy and low carbon solutions.
However, it also said it expected its petroleum production in 2030 to remain broadly unchanged from current levels, as it wants to remain a reliable energy supplier to Europe after Russia's Gazprom cut gas deliveries after the Ukraine invasion.
"We clearly understand that recent events in Ukraine have resulted in short-term grounds to increase Equinor's fossil fuel production," the investors said in the letter.
"Nevertheless, the climate crisis requires a never more urgent response on the part of governments, companies and investors," it added.
(Reuters - Reporting by Nerijus Adomaitis in Oslo and Simon Jessop in London; Editing by Sharon Singleton)