ESG Fund Bosses Under Rising Pressure to Ax Gas as War Rages

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Article Date
March 9, 2022

Asset managers are under pressure to remove gas from ESG funds as activists slam the European Union for its plan to call the fossil fuel a “green” energy source. In a letter, 92 non-profit group called on financial institutions to stop selling gas to ESG funds. They said the proposal undermines scientific and ethical standards.

The European Union is pushing ahead with plans to include nuclear energy and gas in a new taxonomy aimed at steering investors towards ESG investing. Critics of the plan include governments, investors and climate activists. The conflict in Ukraine highlighted the region’s dependence on Russian gas.Critics say that excluding fossil fuel from the index should be an important step.

Paul Schreiber, a climate activist from Reclaim Finance, said the EU's decision to call fossil fuels a sustainable resource paves the way for a renewed dependence on them. At the same time, gas prices are expected to continue their meteoric rise. In a letter to the financial industry, the groups urged them to exclude nuclear assets from its ESG products.

In their letter, the organizations said that asset managers should exclude nuclear and gas from their funds and comply with the EU's sustainable finance disclosure regulations.Frans Timmermans, the EU's climate chief, admitted that some member states might still continue to use coal in light of the war, despite the organization's efforts to transition to clean energy.

Despite the efforts to exclude nuclear and gas from the taxonomy, both of these energy sources are expected to be included in the future. A survey by Barclays revealed that a majority of clients would purchase green bonds that fund nuclear energy.