Pan-European funds may be required to sell their fossil fuel holdings due to a ruling by the French government, potentially resulting in billions of euros worth of divestments. Starting from 2025, funds operating under France's socially responsible ISR label will be prohibited from investing in companies involved in new hydrocarbon projects or the exploitation of coal and unconventional hydrocarbons. The broad scope of the regulations is expected to significantly impact ESG fund portfolios.
Pan-European funds claiming to invest on an environmental, social and governance basis may need to sell all their fossil fuel holdings following a ruling by the French government. The move could lead to billions of euros worth of forced divestments over the course of 2024.
France has ruled that funds operating under its “socially responsible” ISR label will, from the start of 2025, be barred from investing in any companies that launch new hydrocarbon exploration, exploitation or refining projects. Companies that exploit coal or “unconventional” hydrocarbons will also be off limits. The sweeping nature of the new regulations is likely to radically reshape ESG fund portfolios. “It is fair to assume that virtually every company focused on oil and gas exploration, production and refining is continuously looking to expand its oil and gas activities,” said Hortense Bioy, global director of sustainability research at Morningsta
French Government Ruling Pan-European Funds Divestment Fossil Fuels Hydrocarbon Projects Coal Unconventional Hydrocarbons ESG Fund Portfolios
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