Europe wants to help protect oil majors’ good intentions from themselves

RASHMEE ROSHAN LALL February 15, 2020

BP, which is practically synonymous with the fossil industry, has pledged be carbon-neutral by 2050 or sooner. Only Spain’s Repsol, a much smaller oil and gas producer, has set so ambitious a 30-year goal.

Unsurprisingly, everyone’s wondering how, or even if, BP will make good on its promise. But Europe’s markets regulator is taking steady aim at greenwashing.

Earlier this week, European Securities and Markets Authority’s chairman Steven Maijoor called for more “public scrutiny and supervision” of companies’ ESG ratings. For those who aren’t au fait with ESG, Environmental, Social and Corporate Governance are the three factors that measure the sustainability and societal impact of a business. ESG is increasingly important in making investment decisions.

Anyway, Mr Maijoor was very clear in his wariness of greenwashing. “As the number of products that claim to be linked to the sustainability performance of firms increases, driven by market demand, we need to be careful to ensure that investors do not end up buying products which are marketed as sustainable when in reality they are not.”

“Personally, I believe that, where ESG ratings are used for investment purposes, ESG rating agencies should be regulated and supervised appropriately by public sector authorities,” he added.

This sounds eminently sensible. It’s probably the only way to keep good intentions honest.