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* Energy sector under scrutiny ahead of U.N. climate summit
* Oil and gas companies out of step with temperature goals
* Utility sector making more progress
(Adds graphic)
By Simon Jessop and Matthew Green
LONDON, Sept 18 (Reuters) - Investors managing $15 trillion
in assets turned up the heat on oil and gas sector on Wednesday
ahead of a United Nations summit in New York aimed at
accelerating efforts to fight climate change.
Energy companies are on the front line of the global
transition to a low-carbon economy, with investors potentially
on the hook for hefty losses if the companies do not overhaul
their business models in time.
In its most detailed analysis of the energy sector, the
Transition Pathway Initiative (TPI) said 31 out of 109 energy
firms were aligned with commitments governments have so far made
under the 2015 Paris Agreement to curb greenhouse gas emissions.
However, of the 50 oil and gas companies assessed, just two
- Royal Dutch Shell Plc and BP Plc - were
aligned with existing national emissions targets. The remaining
29 companies on track to meet such commitments were all electric
utilities.
"We, as a major institutional investor, are concerned that
transition risk - the large and growing gap between government
targets and company ambitions - is a major source of investment
risk," said Helena Viñes Fiestas, global head of stewardship and
policy at BNP Paribas Asset Management.
United Nations Secretary-General Antonio Guterres wants
governments to make more ambitious pledges to cut emissions at
the U.N. summit on Monday, which he convened to boost the Paris
Agreement ahead of a crucial implementation phase next year.
Current pledges by governments to cut emissions are nowhere
near enough to meet the Paris target of keeping the rise in
average global temperatures to well below two degrees Celsius,
with a goal of limiting warming to 1.5 degrees Celsius.
That means that some companies' targets can bring them in
line with existing national plans under the Paris Agreement, but
remain far from adequate to avert the worst of the natural
disasters and economic damage forecast for a warming world.
TPI, which includes major pension funds and asset owners,
said none of the oil and gas companies it assessed are doing
enough to align their businesses with the changes needed to meet
the Paris temperature targets.
The findings echoed a report published this month by
financial think-tank Carbon Tracker, which found that big oil
companies had approved $50 billion of projects since last year
that will not be viable if governments implement the Paris
deal.
By contrast, TPI found that nearly half of the utility
companies are aligned with national commitments already made
under the Paris Agreement, and more than 20% are on target to
meet a temperature rise of below 2 degrees Celsius, the TPI
said.
That is partly because some utilities have been quicker to
pivot their business models toward renewable energy than oil and
gas companies.
"There is no doubt that oil and gas companies are in a
difficult position in navigating the transition to a low carbon
economy," Euan Stirling, global head of stewardship and ESG
investing at Aberdeen Standard Investments.
"That makes it all the more important that we have at least
some sector constituents who are starting to respond to the
climate crisis by repositioning their businesses from the top
down in the same way that many power generators have."
The TPI is one of several investor initiatives launched in
recent years aimed at helping boost the quality and
effectiveness of investor engagement with companies on climate.
Among its other 45 signatories are firms including Legal &
General Investment Management and U.S. pension scheme CaLPERs.
"We believe that investors should use their voice to hold
top management of investee companies accountable for
incorporating climate-related issues in their corporate
strategy," Carola van Lamoen, head of active ownership at Dutch
asset manager Robeco.
(Reporting by Simon Jessop and Matthew Green; Editing by Lisa
Shumaker)
