UK Rating Agency Affirms LNG Can Be Force for Good
FTSE Russell rating agency, a wholly-owned subsidiary of the London Stock Exchange Group (LSE), has kept Russian independent Novatek on its FTSE4Good Index following its June 2019 index review, the gas producer and exporter said July 5.
The positive news follows the LSE's recategorisation of oil and gas companies as 'non-renewable energy' companies with effect from July 1, lumping them together with coal producers; and the creation of a 'renewable energy' group that includes formerly 'alternative energy' companies.
“As a global leader in supplying clean burning energy to industries and residential consumers, Novatek provides high quality, timely and reliable information to all of our stakeholders to demonstrate how sustainability is at the core of our corporate strategy,” said Novatek's deputy chairman Mark Gyetvay. “We take sustainable development seriously in our day-to-day actions consistent with relevant environmental standards, industry best practices and evolving global initiatives, and are pleased again that the FTSE Russell rating agency recognises our environemental, social and governance (ESG) efforts and progress amid growing environmental awareness of global investors.”
Novatek operates in the hostile environment of Russia's far north and its first plant, Yamal LNG, is now operational, but a small town had first to be built to support the workers. Each of the piles supporting the three liquefaction trains had to be thermally insulated to protect the ice. Subsequent plants will use a different design, gravity-based structures, which will save a third of the capital cost.
The FTSE4Good Index Series is designed to identify companies that demonstrate strong ESG practices measured against globally recognised standards. FTSE4Good indexes are used by a wide variety of market participants to create and assess responsible investment funds and other products.
UK charity National Trust announced this week its plans to divest fossil fuel shares by 2022 as the companies have failed to make sufficient progress towards meeting the Paris Agreement goals; although at total value of £45mn ($56mn), it is a less than5% of its £1bn portfolio, according to Financial Times data. Collective divestments from these stocks by 1,000 institutions worldwide however total $8 trillion, the FT says. The list of sellers includes the Norwegian sovereign wealth fund, one of the world's largest, that was built up from sales of oil and gas over decades.