The Church of England Pensions Board, alongside 41 other leading institutional investors worth a combined €4.75 trillion in assets under management, has today supported a call urging EU regulators to uphold ambition on regulations on methane reduction.
In a joint letter from investors, the Board calls on the European Commission, European Parliament and EU Member States to maintain and swiftly implement the EU Methane Emissions Regulation (EU MER) as adopted, warning that backtracking would undermine regulatory uncertainty and market stability.
The Church of England Pensions Board, Nordea Asset Management, and Royal London Asset Management are among the 42 signatories.
The signatories stress that regulatory clarity is critical for companies and markets as they plan for compliance and manage long-term risks. Strong monitoring, reporting and verification requirements, as set out in the EU MER, provide accountability, help mitigate portfolio risks and strengthen companies’ operational resilience and competitiveness. Companies will also benefit from timely guidance from the Commission to prepare for compliance – successful implementation depends on sustained collaboration with industry and investors.
Signatories add that reducing oil and gas methane emissions remains one of the fastest and most cost-effective strategies to limit near-term global warming.
“Managing the financial risks of climate change remains a core priority for the Pensions Board,” said Sara Taaffe, Responsible Investment Analyst at the Church of England Pensions Board. “Reducing methane emissions is essential to this – helping mitigate portfolio risks and advance decarbonisation. That’s why we urge EU regulators to uphold the ambition of the EU MER, which provides the clarity and accountability businesses and investors need to act effectively.”
Performance on methane is increasingly viewed as a marker of management quality, process safety, and operational excellence, all factors closely linked to long-term shareholder value.
The letter urges EU policymakers to avoid reopening the regulation, ensure consistent and timely implementation across Member States, and apply rigorous standards for third-country equivalency. Doing so will provide predictability for businesses, safeguard market integrity and reinforce the EU’s global leadership on methane.
To view the full list of signatories, you can read the letter here.
The Church of England Pensions Board’s engagement with the mining sector on methane emissions
The Pensions Board has engaged with the mining sector on climate and nature topics for many years. To date, this has included our leadership of Mining 2030, leading to the development of a Net Zero Standard for Diversified Mining and ongoing direct and collaborative engagement with mining companies.
Methane is a by-product of mining for both thermal and metallurgical coal. While the Board has a thermal coal screen, we do have some exposure to metallurgical coal, which is used in the production of steel and for which there is no current alternative lower-emissions process. This means that engaging on the lifecycle emissions profile of metallurgical coal and iron ore is key to being a responsible investor in this industry.
Challenge
Methane emissions from metallurgical coal operations are understood to have been underestimated due to challenges in measurement, particularly for open-cut mines. Abatement technology is at a relatively early stage.
Action
In 2024, we led a collaborative engagement on methane emissions from metallurgical coal mines with Anglo American and BHP. We did this because methane emissions from coal facilities have received relatively little attention from investors compared to other issues for mining companies like energy sourcing and downstream emissions, and in the case of steel, processing-related emissions. We sent letters to the CEOs of both Anglo American, supported by 16 investors, and BHP, supported by 19 investors.
We had several meetings with the companies and also delivered a statement at the Anglo American AGM in April 2024.
Outcome
Following this engagement, Anglo American committed to developing a methane abatement plan. BHP committed to conducting pilot methane assessments at its open-cut mines and to further research and development.
We also contributed to an IIGCC paper on ‘Addressing methane emissions from fossil fuel operations’, which was published in July 2024.
