Providers face tough questions on ESG and energy
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PA Consulting’s Celia Larkin, financial services expert, comments on predictions that energy companies, and the Exchange Traded Funds (ETFs) funding them, are to benefit from gas and nuclear’s inclusion in the EU’s green taxonomy in an article by Benjamin David in Funds Europe.
Commenting on this, Celia explains that “energy producers can now tap into a significant and growing flows of fresh funding from ESG investors. Many nuclear-focused ETFs, for example, are likely to be first beneficiaries given their cost-efficient manner to provide investors with exposure to such asset classes.”
Celia goes on to express concern over the European Commission’s (EC) latest decision, saying “the decision seems counter-intuitive, especially given the CO2 released by the gas industry every year.”
She stresses that “these types of energy sources are viewed by some as important transitional steps to becoming greener and less reliant on more polluting fuels such as coal.”
Adding that, the EC stated at the time of the ruling that there is “a role for private investment in gas and nuclear activities in the green transition and that the EC has proposed the classification of certain fossil gas and nuclear energy activities as transitional activities contributing to climate change mitigation.”
Celia concludes by saying that for ETF investors who see the ruling as a good opportunity, the EC’s decision is a “much-needed boost to flagging [nuclear and gas] energy industries but for others however, the ruling might mean we may have depleted our EU ‘gold standard for green’”.
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