The London Stock Exchange (LSE) has reclassified the oil and gas firms listed on the stock exchange under the non-renewable energy category. The reclassification has been done to distinguish the heavily polluting companies from the greener producers, the Guardian reported.
Crude oil producers, oil refining firms, integrated oil and gas firms, offshore drillers, oil equipment and services, pipelines and also coal have been classified as non-renewable energy.
Similarly, producers of alternative fuels such as ethanol, methanol, hydrogen and biofuels and renewable energy equipment have all been grouped under renewable energy category.
Recently, Norway’s Government Pension Fund Global (GPFG), the world’s largest sovereign wealth fund decided to stop investing in oil and gas firms globally. The organisation undertook the largest fossil fuel divestment to date by pulling out more than $13 billion of investments in the coal and oil sector.
Many bilateral and multilateral companies have also stopped investing in firms that contribute to climate change. The LSE’s decision to reclassify oil and gas companies could be influenced by these recent developments.
The changes, made by FTSE Russell, have now reclassified companies such as Royal Dutch Shell, Cairn Energy, Petrofac, Premier Oil, and Tullow Oil, formerly labeled as oil and gas producers, in the non-renewable energy sector.
Similarly, Danish wind turbine manufacturer Vestas Wind Systems and the Spanish offshore wind group Siemens Gamesa Renewable Energy, which were earlier classified under alternative energy have now been reclassified under renewable energy.
The classifications are done on the basis of the company’s main source of revenue. For oil and gas companies to be reclassified again, they have to invest heavily in renewable energy and make it their main source of revenue.