Nest divests from ExxonMobil and other ‘unresponsive’ fossil fuel giants on road to net-zero
UBS Asset Management and the UK's largest pension scheme, Nest, have divested from five fossil fuel firms which they say have not responded well to climate-related engagement.
The companies confirmed on Monday (20 December) that shares in US-based ExxonMobil and Canadian refining firm Imperial oil, in which ExxonMobil has a majority stake, have been sold.
UBS AM and Nest have also divested from the Korea Electric Power Corporation (Kepco), Marathon Oil and Power Assets. The decision was taken following a three-year engagement process, during which the five companies were “unresponsive” and identified as lagging on climate-related topics, including reducing emissions and investing in low-carbon assets for the future.
Nest’s divestment covered £40m of share ownership. UBS AM has not disclosed how much it has divested. Both firms have stated that the five energy firms will not be returning to their main portfolios unless they are able to “demonstrate clear progress in preparing for a low-carbon economy”.
“At Nest, we aim to work with companies to encourage sustainable business decisions but will draw the line somewhere,” said the organisation’s senior responsible investment manager Katharina Lindmeier. “The five companies being excluded have not done enough to convince us that we should remain shareholders.”
Lindmeier added: “COP26 showed the need for immediate action. The prospect of a 2.4C global temperature rise will cause dramatic changes to our ways of life and businesses need to be preparing now to remain profitable and successful.”
Nest first announced plans to align its financed emissions with the UK’s national, legally binding 2050 net-zero target in summer 2020. It also set a 2030 goal to halve financed emissions, outlining plans to remove thermal coal, oil sands and Arctic drilling from its portfolio while increasing investments in renewable energy. Nest’s decision sparked a string of similar commitments across the UK’s pensions sector.
Building on these commitments, Nest has this month set a further target, to reduce the carbon emissions associated with all “key” asset classes by 30% by 2025.
Swiss firm UBS AM also has a 2050 commitment to net-zero financed emissions and this April appointed its first executive board member with responsibilities for sustainability, Suni Harford. It is notably a founding member of the Net-Zero Banking Alliance.
This week, UBS AM confirmed plans to extend its climate engagement programme, which originally covered only oil, gas and electric utilities, to other sectors considered highly exposed to climate risk. Sectors that will be covered include chemicals, metals, mining and automotive. In total, 46 companies will be covered by the extended engagement scheme.
Exxon under fire
The news comes shortly after a shareholder resolution was filed at ExxonMobil that would require the firm to align emissions goals with climate science and finally face up to its Scope 3 (indirect) emissions.
ExxonMobil published new climate targets earlier this month. There are new targets through to 2030 which the firm has stated will reduce the company’s direct (Scope 1) and power-related (Scope 2) emissions by 20% against 2020 levels.
Groups including Follow This have argued that the new targets are not science-based, as the reductions are not steep enough and the firm is not properly considering indirect emissions.
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