Oil and gas companies listed on the London Stock Exchange have been reclassified under a non-renewable energy category in a move designed to distinguish between heavily polluting companies and greener producers.
The change has been made by the index provider FTSE Russell, which now groups companies such as BP, Royal Dutch Shell, Cairn Energy, Petrofac, Premier Oil and Tullow Oil, formerly labelled oil and gas producers, in the non-renewable energy index. Coal companies, previously classified under basic materials/mining, also now come under non-renewable energy.
Green energy producers, most of which were grouped under alternative energy, have been reclassified under renewable energy. They include the Danish wind turbine manufacturer Vestas Wind Systems and the Spanish offshore wind group Siemens Gamesa Renewable Energy.
There are no UK companies listed under renewable energy.
Susan Quintin, the managing director of product management at FTSE Russell, said the changes to the industry classification benchmark would provide “greater visibility to other forms of energy such as renewables”.
However, the trade body Oil & Gas UK expressed concern over the re-labelling, saying many oil and gas companies were broadening their strategies.
“Any change to classification has to recognise that many oil and gas companies have a diversity of energy interests and are active right across the energy spectrum,” said Mike Tholen, the group’s upstream policy director.
“We would hope that any change which seeks to help the advance to a low carbon future does not have unintended consequences which might in fact slow down the pace of change, having the opposite effect of what it’s set out to do.”
It comes after Norway gave the go-ahead for its $1tn sovereign wealth fund, the largest in the world, to undertake the largest fossil fuel divestment to date by ditching more than $13bn of investments in coal and oil producers. It uses the FTSE Russell classification system as the basis for its divestment decisions.
The classification of a company is based on its main source of revenue. Oil and gas companies would have to invest substantial sums in greener revenue streams to escape the “non-renewable” category.
The Guardian recently updated its style guide to ensure the language it uses about the environment more accurately reflects the scale of change. Instead of “climate change”, the preferred terms are “climate emergency” or “climate crisis”.