An ESG Loophole Helps Drive Billions into Gulf Fossil Fuel Giants
Title: ""An ESG Loophole Helps Drive Billions into Gulf Fossil Fuel Giants""
Source:
https://www.bloomberg.com/news/articles/2023-07-11/saudi-aramco-getting-cash-meant-for-sustainable-investment-reveals-esg-loophole
No Paywall:
https://archive.is/Y57Qi
Bonds linked to the world’s biggest oil company have ended up in ESG funds, highlighting a major flaw in how the sector is regulated.
The Details...
- JPMorgan Chase & Co. constructs its ESG indexes using a model that grades and ranks issuers’ sustainability profiles. It uses scores from external data providers Sustainalytics and RepRisk to divide issuers into quintiles.
- The SPVs used to finance the Aramco oil and gas pipelines sit in the second-highest quintile, according to proprietary index data reviewed by Bloomberg. Aramco itself, meanwhile, falls into the lowest quintile and is therefore blacklisted from the index.
- The ESG scores are based on data that doesn’t span the entire financing chain, and therefore don’t reflect Aramco’s involvement.