U.S. asset managers have rushed to incorporate ESG (environmental, social and governance) factors in their funds. What does this portend for funding flow in energy, an area already striving to deliver a returns-based strategy to investors?
Oil and Gas Investor
Boston represents a hotbed of institutional funds facing pressure to consider ESG in their investments. (Source: Sean Pavone/Shutterstock.com)
Primary industry activities, whether in farming, mining or drilling for oil and gas, often affect the environment and society. Deciding what level of impact is appropriate is typically set by a region’s regulations or guidelines. For today’s energy sector—a key driver of growth for many economies—the conversation is rapidly broadening as goals are set in pursuit of a low-carbon economy.
Are such trends influencing worldwide portfolios by tilting them away from energy investments? And is anti-fossil fuel sentiment growing to the point that it’s a factor in overall investment decision-making? How widespread are divestments driven by anti-fossil fuel policies—both now and looking to the future?
Christopher D. Sheehan, CFA is senior financial analyst at Hart Energy. He contributes financial analysis to Midstream Business and Oil and gas Investor. He was vice president of equity capital markets at Petrie Parkman & Co. and an analyst at RBC Capital Markets.
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