Equinor just became the latest European energy company to cave to investor pressure over climate change.
The Norwegian state producer joins major oil companies Total, Royal Dutch Shell and BP, as well as coal mining and commodities giant Glencore, in taking steps to make their businesses more green.
While none of the companies have immediate plans to slash their production of fossil fuels, they have taken steps to increase transparency over emissions and invest in clean energy.
The flurry of activity suggests that pressure applied by investors is having an effect in Europe. But activist shareholders face a much tougher task in the United States, where oil companies show little appetite for change.
The risk for American energy companies is that they could end up being more exposed to an eventual crackdown on carbon emissions.
Equinor, which used the name Statoil until 2018, said Wednesday that it will align its strategy with the goals of the Paris climate agreement and link executive bonuses to climate targets.
The Norwegian firm will also review its lobbying activities, investment portfolio and strategy to ensure they align with the 2015 accord, which seeks to reduce carbon emissions and thereby limit temperature rises to well below 2 degrees above pre-industrial levels.
Equinor agreed to the changes following talks with Climate Action 100+, a group of 300 investors with over $33 trillion in assets under management that is pressuring energy companies to ditch fossil fuels.
The investor coalition has already scored several victories in Europe.
Shell and BP (BP) have both announced in recent months that they will link compensation for some employees to hitting climate targets. Glencore (GLCNF) has agreed to cap coal production after talks with Climate Action 100+.
Total (TOT), the French oil and gas company, has established short-term climate change goals and a broader plan to reduce the carbon intensity of its products and operations.
Major US energy producers are lagging behind their European rivals when it comes to climate change.
ExxonMobil blocked a shareholder vote this month that would have urged the oil company to adopt greenhouse gas emissions targets for its business and products that align with the Paris agreement.
Chevron (CVX) tried to scrap a similar shareholder vote, but was prevented from doing so by the Securities and Exchange Commission. It has agreed to burn less excess gas, but has not answered calls to address its carbon footprint.
Another sign of the divide: Shell recently said it would quit a major US oil lobby over its climate policies.
“European companies are in the driving seat here,” said Odd Arild Grefstad, CEO of Norwegian asset manager Storebrand Group, which was involved in talks with Equinor.
“We see a lot more renewables in the mix in Europe, and Europe is ahead in legislation on climate change,” the CEO added.
For some investors, however, the pledges from Equinor and its rivals don’t go far enough.
One sticking point is whether the companies should count the emissions generated by their products — the oil or coal they sell to their customers — in their emission reduction targets.
Activists say that without including emissions from products, setting targets is of little use. So far, Shell is the only major oil producer to commit to reducing emissions from its products.
“Oil and gas companies had previously always taken the position that the emissions of their products fell outside the domain of their own responsibility,” Mark van Baal of activist group Follow This said of the move by Shell.
Like Climate Action 100+, Follow This is using investor pressure to seek change at energy companies. The group has filed investor resolutions asking Equinor, BP and Chevron to set targets that include product emissions.
BP has already advised shareholders to vote against the motion at its annual general meeting in May. Chevron has previously rejected the idea.
Equinor didn’t go as far as committing to cut product emissions on Wednesday, but said it would report on the carbon intensity of its products and “explore additional approaches to drive decarbonisation.”