Investors are calling for Yara, Europe’s largest fertiliser manufacturer, to make deep cuts to polluting emissions of greenhouse gases. 

Five shareholders in the company have filed a vote calling for Yara to strengthen its climate targets at its AGM later this month (28 May). If successful, the motion would see the corporation forced to set climate targets in line with a 1.5C warmed world – the vital internationally agreed goal for limiting temperature rise.

The Norwegian chemical giant is the largest natural gas user in the EU. At almost 63 tonnes a year, its carbon footprint is equivalent to the annual emissions of over 16 coal-fired power plants – according to sustainable finance organisation ShareAction, the group behind the investor call. 

ShareAction’s initiative is backed by four major investment firms that have shares in Yara Cardano, Ethos Foundation, PGGM, and Greater Manchester Pension Fund.

High-polluting companies from the chemical, energy and finance sectors face growing pressure from their investors to address their carbon emissions – which are increasingly seen as a major threat to future corporate profits. 

At their most recent AGMs, fossil fuel giants including Exxon, Chevron and Shell have all faced climate resolutions, which in the U.S. reached an all-time high of over 20 percent of total proposals filed in 2022 – although shareholders have until now largely resisted calls for stronger action.

Norwegian environmental campaigners are urging the Norwegian government and the country’s pension fund – which collectively own over 40 percent of the company – to back the climate targets call.

“Yara’s carbon footprint simply isn’t sustainable for people or the planet,” Penny Fowler from ShareAction said. “The climate crisis our planet is facing means we have to take action. If Yara is unwilling to do so, then it falls to responsible shareholders to take the lead. 

Cari Anna King, board member of the Norwegian environmental advocacy group Spire, told DeSmog: “As the largest shareholder in Yara, Norway has a responsibility for the years of damages Yara has caused to people and the environment. We demand that the Norwegian government takes responsibility and uses their power to ensure that Yara takes the first steps in reducing its climate impact.”

A spokesperson for Yara’s board referred DeSmog to the directors’ response to the climate proposal, and told DeSmog, “We value that we have shareholders dedicated to decarbonising, a dedication we share. … we continue supporting efforts to establish a science-based pathway for how the ammonia and fertiliser sector can deliver on the Paris agreement goals.” 

The Norwegian Ministry of Trade, Industry and Fisheries, which controls the state’s 36 percent share, declined to answer regarding its plans for the vote. 

Karl Mathisen, the Chief Investment Officer Equities for Folketrygdfondet which manages the Norwegian pension fund’s 7 percent share, told DeSmog that it planned to vote against the resolution, stating, “this is a question which should be handled by the board and the management.”

Major Carbon Emitter 

Fertilisers contribute around 5 percent of all global emissions – more than aviation and shipping combined. 

While Yara, which had a turnover of £12.2 billion last year, has promoted a green image in Europe, environmental groups have questioned the company’s claims. 

Yara claims to be the largest producer of nitrates – the most common form of chemical fertiliser – in the world. Almost all chemical fertilisers are currently produced with natural gas, which combines with other compounds to produce a nitrogen-rich substance to speed plant growth. 

While fertilisers have enabled massive increases in food production over the past decade, scientists say they are being overused – and at high cost to the planet. As well as requiring gas as an input, fertilisers also have a high greenhouse gas footprint once in use. When applied to the field, they release large amounts of nitrous oxide, a gas nearly 300 times as powerful as CO2. 

In the upcoming vote shareholders will decide whether Yara should introduce so-called “science-based targets” across all emissions. Under such targets companies commit to limiting global temperature rise to 1.5C above pre industrial levels.

Yara told DeSmog that it was “committed to setting science-based targets”. 

But while ShareAction acknowledged Yara’s plans to set “more comprehensive” targets by 2027, it said that the move was “too little, too late”, adding: “While limiting global temperature rise to 1.5C is still in reach, there is no time to waste: we must take ambitious action within this decade to reduce emissions as quickly as possible.”

State Secretary Tore O. Sandvik from the Norwegian Ministry of Trade, Industry and Fisheries told DeSmog, “the State expects that the company … sets targets and implements measures to reduce greenhouse gas emissions in both the short and long term in line with the Paris Agreement”. 

He added that the Ministry’s goal as an owner in the company was achieving the “highest possible return over time in a sustainable manner.” 

Ignoring 75 Percent of Footprint

Yara’s board has so far called on shareholders to vote against the resolution, pointing to its existing climate measures. “Yara’s ambition of growing a nature-positive food future remains firm and our strategy is focused on profitable decarbonization, across all scopes and processes,” the company has said.

In an email Yara told DeSmog, “We already eliminate about 45 percent of our scope 1 emissions” – which includes emissions from its fertiliser production. 

However, the rebel shareholders say that measures are so far insufficient. According to the climate-focused investors, Yara’s long-term reduction targets exclude those from its supply chain (such as from the extraction and processing of natural gas) as well as the use of its products. Known as ‘scope 3’ emissions, these make up around 75 percent of its footprint, according to the group. 

The majority of Yara’s fertiliser emissions occur when the chemicals are applied to fields. To meet international climate goals, scientists are calling for major cuts to fertiliser use, particularly in wealthy nations. 

However, Yara has said that it may in the future focus on targets to reduce the “emission intensity” of its products in the field. “Intensity” targets focus on reducing the CO2 per tonne of product produced – rather than on absolute reductions. 

Critics point out that under such targets companies can increase emissions indefinitely if they are still expanding production. Yara says that it plans to increase production by 8 percent between 2023 to 2025. 

In the U.S., Yara is planning a number of new plants, where it will produce ammonia – a key  ingredient for fertiliser – which is usually made from natural gas. Such investments could increase the company’s emissions and “lock in long-term dependence on fossil fuels”, the shareholders have warned.

During a meeting on 13 May, Cardano, an investment manager that is one of those behind the climate call, told shareholders that the May resolution comes after more than two years of pressure on the company from within. 

“We repeatedly asked Yara to publish comprehensive Scope 3 targets,” Mariet Druif from Cardano said. “But [Yara] couldn’t give us the assurance that it’s operating, and has plans, that are in line with the Paris agreement – the world’s most significant international climate treaty, which has seen almost every country commit to climate goals for averting catastrophic climate change.