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ESG: Why Europe’s energy conversation is less confrontational than that of the US

Anti-ESG boycotts are unlikely to cross the Atlantic.

Photo: iStock

Two months ahead of the US midterm elections, US red-state governors are riding a wave of legal attacks at pro-ESG banks and asset managers. The governors state that fund managers have a fiduciary duty to maximize profit for their investors, and that socially responsible investment (SRI) policies limiting exposure to fossil fuels betray this commitment.

Will we see a similar trend in Europe? Unlikely. Europe now faces transformational demand for alternatives to Russian gas, which has changed the ESG discourse firmly to favour co-existence over exclusion.

In the US, the states of Texas and West Virginia are boycotting several European banks – including BNP Paribas, Credit Suisse and Danske Bank – based on their ESG policies towards energy investments. Similar moves in Idaho, Louisiana, Kansas and Wyoming mean that the list could get longer as climate change becomes a more partisan issue in the country.

Unlike in the US, Europe’s oil and gas producers have a leading role in the conversation around transition

It is not impossible to imagine a similar situation in Europe. Politically powerful fossil-fuel companies are profiting from the continent’s sharply changed energy needs.

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