Key highlights
- UN has instructed financial institutions, including 10 Nigerian firms, to set agenda for oil and gas development.
- Net Zero Asset Owner Alliance under UN calls for reduction in supply and demand of oil and gas while aligning operations with 1.5°C pathways.
- The directive could affect Nigeria’s plans to increase oil and gas production and attract more investments.
Ten Nigerian financial institutions are among the financial institutions that have been instructed to set agenda for oil and gas development.
The Net Zero Asset Owner Alliance under the United Nations Environment Program Finance Initiative (UNEPFI) has set an agenda for members’ involvement in oil and gas development.
In a March 29 statement released by the alliance, members were urged to adopt a position that considers all available options for concurrently reducing the supply and demand of oil and gas and overall economic systems. A part of the statement read:
- “The Net-Zero Asset Owner Alliance today outlines new guidance for members regarding their approach to the oil and gas sector, calling on consumers and suppliers of oil and gas to set Scope 1, 2, and 3 greenhouse gas emission reduction targets while aligning their operations activities, including capital expenditure, with established 1.5°C pathways.
- “This Position on the Oil and Gas Sector underscores the Alliance’s recognition that unabated climate change poses significant economic and investment risks.
- “Members are committed to mitigating these systemic risks on behalf of their clients and beneficiaries and, as such, should consider how economies can transition away from dependency on activities that contribute to climate change, including the combustion of oil and gas.”
Günther Thallinger, the Chairman of UN convened Net-Zero Asset Owner Alliance, said:
- “The world must achieve a net-zero economy by 2050, with a maximum of 1.5°C of temperature rise. This is necessary to avoid the most extreme effects of climate change.
- “How energy is provided and consumed must therefore dramatically change. This includes the need to phase out non-renewable sources like oil and gas in many, if not most, of their current uses.
- “This challenge must be tackled while balancing the supply of oil and gas on the one hand, and society’s demand for affordable and reliable energy on the other. Investors want to support this transition and the Alliance Position on the Oil and Gas Sector describes how our members will do that.”
Nigeria’s financial institution members
The Nigerian financial institution members named under the finance initiative are; Access Bank, Jaiz Bank, Zenith Bank, Bank of Industry, Continental Reinsurance, Custodian Investment Limited, Fidelity Bank, Guaranty Trust Bank, Polaris Bank, and Wema Bank.
Why this matters
Nigeria is focused on increasing its oil and gas exploration and production, especially on frontier basins. Nairametrics had earlier reported that the Nigerian National Petroleum Company (NNPC) Limited had successfully spudded the Ebenyi-1 well in Nasarawa state.
The company has also started the integrated oil and gas development of the Kolmani project in the Bauchi and Gombe states.
In February 2023, Mele Kyari, the Group Chief Executive Officer of the NNPC Limited promised to get Nigeria’s crude oil production to its OPEC quota of 1.8 million barrels per day within three months.
If oil and gas investments are limited in Nigeria because of reduced involvement by these financial institutions and their clientele, the plans to increase production and attract more investments could be affected by the directive issued by the Net Zero Asset Owner Alliance.
What you should know
The Net-Zero Asset Owner Alliance is convened by the United Nations and is a member-led initiative of 85 institutional investors, with over $11 trillion in assets under management, committed to transitioning their investment portfolios to net-zero greenhouse gas emissions by 2050.