09-09-2024 11:00

Award-winning methane engagement expands reach and impact

Nordea Asset Management has for several years been driving an investor collaboration engaging with oil and gas companies and more recently utilities on reducing their methane emissions. The initiative now includes 65 oil and gas companies and utilities.
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The collaboration is one of Nordea’s climate engagements and last year it included a successful field trip to Texas where we had dialogues with several oil and gas companies with a positive outcome. 

In our engagement with the companies we ask them to join the Oil and Gas Methane Partnership (OGMP 2.0), which is the global ‘gold standard’ in methane measurement, reporting and target-setting. By joining the OGMP 2.0, companies commit to establishing methane emissions targets in line with a 45% reduction by 2025 and 60-75% by 2030. A total of fourteen companies in the engagement group have now joined. 

We asked Eric Pedersen, Head of Responsible Investments, and Renée Tengberg, ESG Director, Climate and Nature, why it’s crucial to reduce methane emissions and why investor and partner collaboration is important for the success of this initiative. 

Eric Pedersen, Head of Responsible Investments

Eric, why is this engagement so important to Nordea?

“As a responsible asset manager, we’re mindful of the acute risks that climate change poses to investment portfolios and the real economy. Reducing these risks is critical for our mission to deliver returns with responsibility." 

"Moving swiftly to reduce methane emissions offers one of the best near-term opportunities for doing so, especially for investors who opt to stay invested across all sectors of the economy. And, it's all the more important since most companies in the oil and gas industry are currently not on track with their deliveries related to climate change.”

“We also have the opportunity to have a real-world impact. Methane is a powerful greenhouse gas, contributing to 30% of global warming today. If methane emissions from human activities were cut in half, it would reduce the global warming impact in the next 20 years by the same amount as closing all the world’s coal-fired power plants. The International Energy Agency estimates that 75% of methane emissions in oil and gas could be eliminated with existing technologies. Reducing methane emissions provides critical short-term benefits and is a cost-effective reduction strategy for the oil and gas sector.”

If methane emissions from human activities were cut in half, it would reduce the global warming impact in the next 20 years by the same amount as closing all the world’s coal-fired power plants. 

Eric Pedersen

Renée Tengberg, ESG Director, Climate and Nature.

Renée, how has the engagement progressed so far? 

“The engagement has progressed well and delivered substantive results. Since 2022 we have been prioritising methane in our engagement efforts towards the energy, utilities and waste management sectors as part of a three-year engagement with investee companies." 

"Nine target companies joined the OGMP 2.0 in 2023: Aker BP, Coterra, Chesapeake, Diamondback, EOG Resources, INPEX, KazMuynayGas, Petrobras and PPT E&P. ExxonMobil, Chevron, Woodside, OMV and Pertamina joined in 2024, bringing the total to fourteen. Four of the companies we met with in Texas have joined since the trip and are preparing for their first reporting to the OGMP 2.0.”

“We also follow up as companies progress towards the Gold Standard for their operated and non-operated assets. Equinor, Petrobras and Pioneer were assessed as on the Gold Standard pathway in 2023 on the basis of credible implementation plans.” 

Eric, why is it important to collaborate with other investors and expert partners?

"One reason is that raising the collective ownership share in target companies and involving investors across relevant markets increase the likelihood of engagement success. We have onboarded around 20 investors with over EUR 3.7 trillion in assets under management and have more influence when we tackle this issue together. Another reason is that a collaborative engagement is an effective way to facilitate knowledge sharing, elevate investor expertise and shape opinion on methane. We can also draw on expert partners such as the Environmental Defense Fund (EDF), Carbon Tracker and the United Nations Environment Programme (UNEP), which contribute scientific expertise and data insights.”

 

Did you know?

Nordea’s methane engagement was awarded 2023 Global Pollution Reduction Initiative of the Year by Environmental Finance. 

Read more

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Watch this video for highlights from the 2023 investor trip to Texas.

Renée, how do we engage with the companies?

“We use various approaches to influence the company employees best positioned to define the roadmap to near-zero methane emissions and drive mitigation. For example: letters to the board and CEOs; one-on-one meetings with company leadership and specialists; practical workshops together with UNEP and EDF experts and OGMP 2.0 member companies; and field trips to meet with plant personnel."

"Since the trip to Texas we did an investor trip to Calgary in Canada in September last year. We co-hosted a half-day engagement workshop for Canadian companies with the Californian State Teachers’ Retirement System (CalSTRS), spoke at a conference and engaged with more than five companies during that week. Outside of investor trips, we engage with companies throughout the year in virtual meetings, e-mail dialogue and face-to-face, when possible.”  

And have we seen any tangible results when it comes to emissions reduction?

“Many of the companies in the engagement group are reporting significant methane emissions reductions but with varying data quality and often based on estimated emissions. Company reported methane emissions likely represent the tip of the iceberg of actual methane emissions. Direct measurements of methane in the US have shown emissions to be four times greater than earlier estimates, and eight times higher than current industry targets. It is therefore imperative that these companies achieve near-zero methane emissions backed by the credible OGMP 2.0 Gold Standard reporting”. 

Investors and partners in the engagement

The collaborating investors represent over EUR 3.7 trillion in assets under management and consist of: 

 

Canada

British Columbia Investment Management Corporation (BCI)

Caisse de dépôt et placement du Québec (CDPQ)

 

Denmark

PenSam

Sampension

Lærernes Pension

P+

 

Finland

The State Pension Fund of Finland

ELO Mutual Pension Insurance Company

Varma Mutual Pension Insurance Company

The Church Pension Fund 

 

France 

Amundi

 

Sweden

AP7

 

Norway 

Grieg Investor

Church of Norway National Council

Save the Children, Norway

The Norwegian Society for Sea Rescue

 

United Kingdom

Brunel Pension Partnership

 

United States

California State Teachers’ Retirement System (CalSTRS)

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