Investors concerned by ESG regulatory definitions

Author: Jimmie Franklin | Published: 21 May 2020

European investors have expressed disapproval of the EU regulators' classification of fossil fuels as 'solid’, which potentially means that the use of oil and gas will not be included in disclosures.

The move contrasts with the views of the EU’s technical expert group on sustainable finance (TEG).

"By creating mandatory disclosure of the proportion of the portfolio invested in solid fossil fuels, then labelling it wholesale as fossil fuel sectors, there is a risk that investors will be misled as to where their money is being invested," said Alyssa Heath, head of EU and UK policy, at the United Nations-supported Principles for Responsible Investment (PRI). "Many investors will likely assume that the term 'fossil fuel sectors’ refers to the common understanding and wider definition of fossil fuels and not the inaccurate and narrow regulatory definition proposed."

Wolfgang Kuhn, director of financial sector strategies at ShareAction agreed. "We’re still in...