Institutional investors with a collective $5.35 trillion in assets are calling on the Biden administration to get tougher about methane emissions as it seeks to address climate change.
On his first day in office, President Joe Biden ordered the Environmental Protection Agency to come up with new performance standards and emissions guidelines for oil and gas industry emissions by September, but the investors are pushing for mandatory regulations and strong enforcement to ensure compliance and to protect shareholder value.
A statement released by 147 investors Thursday, including the $291.7 billion California State Teachers' Retirement System, West Sacramento, Allianz, Legal & General Investment Management, and Wespath Benefits and Investments, an agency of the United Methodist Church, Glenview, Ill., with about $28 billion in assets, said that comprehensive regulations backed up with enforcement, will benefit the oil and gas companies whose stock they hold.
"As prudent fiduciaries, we believe virtually eliminating methane emissions as part of a low carbon transition can support the financial goals of both companies and investors. By taking action on methane emissions, government can achieve valuable greenhouse gas reductions while helping American industry become cleaner and more competitive," the statement said.
The investors, organized by Ceres and the Interfaith Center on Corporate Responsibility, a shareholder advocacy group of faith communities, pension funds, asset managers and other socially responsible investors with $4 trillion in combined assets, cited data from the Environmental Defense Fund showing that in 2019, U.S. oil and gas operations emitted 16 million metric tons of methane emissions, having a greater near-term climate impact than all U.S. coal-fired power plants.
Several major oil and gas companies including BP and Shell support methane regulation, the investors said, and a 75% reduction in global methane emissions is possible with current technology, and up to 40% of emissions could be mitigated at no net cost.
"The debate is not whether there should be methane regulations, it's about how strong the methane regulations should be and how strongly they should be enforced," said CalSTRS portfolio manager Brian Rice in a group statement.