The world’s largest sovereign wealth fund was on a collision course this week with the board of one of the world’s largest oil and gas giants, as tension mounts between investors and energy companies over climate transition plans.

Norges Bank was set to vote against the reappointment of the chief executive at Exxon and Chevron, another US energy giant, to push the companies into moving quickly on cutting their greenhouse gas emissions. The votes are set to take place today (Wednesday), with other investors planning to vote with Norges Bank.

Last week, Carine Smith Ihenacho, Norges Bank’s chief corporate governance officer, told the Financial Times that much of the current clash revolved around Scope 3 emissions: indirect emissions caused upstream and downstream of an organisation.

“Exxon don’t really believe in the value of setting Scope 3 emissions,” said Smith Ihenacho. “We think the company should do so. Chevron: we don’t think they are ambitious enough in their transition plans…Both BP and Shell have Scope 3 targets; they have good transition plans.”

Norse majeure

Norges Bank has huge holdings in global listed companies, an average of 1.5% of every company. In recent weeks, the sovereign fund declared it would be more active in US markets. In a statement to news outlets in mid-May, Smith Ihenacho said: “We would like to do more on climate but also consider other areas across the ESG spectrum. It will most likely be in the US.”

That statement earned Norway a rebuke from Wall Street Journal columnist James Freeman. “By all means, Norway’s government can do as much as it wants on climate and impose as many costs on its citizens as voters will bear. But brazenly demanding that Americans pay for Norway’s virtue signalling is wrong.”

Seeing ESG activism as a sovereignty issue must strike many as strange, given the mobility of capital and a climate crisis that affects the whole world, not just Norway.

However, Freeman’s irritation is illustrative of the polarisation of US politics around ESG and, in particular, the perceived attack on energy companies. Last year, the attorneys general of 18 so-called “Red” (Republican) states wrote to fund manager BlackRock, complaining about its failure to remain “neutral” on energy companies.

Norges Bank’s intervention will no doubt raise further political hackles, but it also places energy companies everywhere on alert that they are under scrutiny and that the intensity is rising.