By Sarah Kent in London and Nina Adam in Oslo
Some big investors and banks are rethinking investments in an
oil and gas industry wrestling with uncertain oil demand,
government regulation and disruptive technology like electric
vehicles.
The biggest is in Norway, where the government says it will
decide this year whether to wind down its $1 trillion
sovereign-wealth fund's investments in the oil and gas sector. Its
assets include multibillion-dollar stakes in Exxon Mobil Corp.,
Royal Dutch Shell PLC, Chevron Corp. and BP PLC.
Others, including French insurance giant AXA Group and Dutch
bank ING Groep NV, are pulling back from parts of the industry that
contribute most to climate change, like Canada's oil sands. In a
world where the heaviest polluting industries could be penalized,
some investors say the financial risks of such investments could
outweigh the rewards. For instance, Canada is introducing a carbon
tax this year to limit greenhouse gas emissions from oil sands.
The moves are distinct from calls from environmentalists and
so-called ethical investors for divestment from the oil industry,
although those sentiments have been taken up by large, mainstream
financial institutions more often since the 2015 Paris agreement to
fight climate change. The World Bank said last month it will stop
financing oil and gas exploration and drilling by 2019, in support
of the Paris goals. French bank BNP Paribas says it will no longer
finance some oil projects seen as environmentally damaging.
The trend resembles--on a smaller scale--the early investor
movement against the coal industry, which was rocked by an
explosion in production of cheap, cleaner-burning natural gas in
the U.S. over the past decade. Norway's parliament decided that the
country's sovereign-wealth fund should stop investing in companies
with a heavy exposure to coal in 2015, ahead of the Paris
agreement. The decision came against a backdrop of mounting
scrutiny on the financial risk, as well as environmental impact,
associated with coal.
Similar market forces are now applying pressure on oil.
Renewables--once hampered by high costs--have become cheap
enough to compete with coal and gas in some instances. The U.K.,
France, China and India have signaled they plan to ban sales of
vehicles with traditional combustion engines, undercutting a
potential source of crude demand.
Norwegian officials say the current debate is entirely
pragmatic. The country may be overexposed to a sector undergoing
turbulent change by having both a large national oil company,
Statoil ASA, and billion-dollar-plus holdings in other
international oil companies.
"This is really a question of risk diversification," Yngve
Slyngstad, chief executive of Norges Bank Investment
Management--which manages the fund--told The Wall Street Journal.
Statoil's profits and other energy-focused revenue in Norway is
plowed into the fund and invested elsewhere.
Mr. Slyngstad said the transition from dependency on fossil
fuels to alternatives like solar, wind and other renewables would
take several decades. But he said investments in traditional oil
companies should come with a "high-risk premium," considering "all
the uncertainty around the energy transition."
The Norwegian concerns have "put those industries on alert,"
said Matt Christensen, global head of responsible investment at
AXA's asset-management arm. "The risks which climate change
presents are becoming more understood as existential in
nature."
To be sure, wholesale divestment from the oil and gas sector
remains rare. The sheer size of oil giants like Exxon and Shell
make it difficult for fund managers to say they will exclude them
outright. And they have advantages over coal companies because oil
is harder to replace quickly and natural gas is viewed by many as
an emission-reducing fuel.
Big oil companies say they are doing enough now to manage the
financial risk from climate change, moving their businesses more
toward natural gas and experimenting with renewables and
electricity.
"The current risk from climate change regulation, even in a
restricted greenhouse gas scenario, is minimal and manageable over
time," a Chevron spokesman said.
In an interview, BP Chief Executive Bob Dudley said Norwegian
officials had been "pretty clear with me" that their concerns
weren't about climate but about diversification. "I can't argue
with that really," he said.
Norway's oil fund owns over 2% of BP's stock, according to
S&P Global Market Intelligence. Any Norwegian oil divestment is
likely to be carefully managed and take place over a number of
years so as not to disrupt markets.
U.S. investors appear committed to the oil industry but have
begun pressuring it to change. Last year, a task
force--commissioned by the G-20 and including major financial
institutions like JPMorgan Chase & Co and BlackRock
Inc.--published guidelines pushing for better disclosure of the
impact of climate change. Across the U.S., utilities and
oil-and-gas companies faced shareholder revolts this summer as
investors clamored for more information about how they view climate
risk.
"We think we can have more influence from inside the tent," said
Rob Main who sits on the investment stewardship team of Vanguard
Group, which holds $4.5 trillion under management.
This summer, it voted against the boards at Exxon and Occidental
Petroleum, demanding more disclosure of the potential business
risks presented by efforts to limit global warming in line with the
Paris agreement.
Last month, Exxon capitulated to shareholder demands, agreeing
to publish new details about how climate change could affect its
business.
Write to Sarah Kent at sarah.kent@wsj.com and Nina Adam at
nina.adam@wsj.com
(END) Dow Jones Newswires
January 03, 2018 10:22 ET (15:22 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
Exxon Mobil (NYSE:XOM)
Graphique Historique de l'Action
De Sept 2024 à Oct 2024
Exxon Mobil (NYSE:XOM)
Graphique Historique de l'Action
De Oct 2023 à Oct 2024