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France’s new regulation, which will not allow funds invested in fossil fuel companies with new development plans to use a national ESG label, could result in forced divestments of $7.6 billion (7 billion euros) of oil and gas assets currently held by funds, according to a Morningstar Inc analysis carried by Bloomberg.
Last week, France’s Economy and Finance Minister Bruno Le Maire announced new rules regarding the French ESG label for funds. Under those new regulations, fund managers will not be given the so-called Socially Responsible Investment (SRI) label in France if they are invested in fossil fuel companies that launch new oil and gas exploration, production, or refining projects, or companies active in the coal and shale oil and gas sectors.
Currently, the SRI label in France is used by funds that manage a combined $835 billion (770 billion euros) in assets for clients, according to Morningstar.
The new SRI label rules could force $7.6 billion (7 billion euros) in oil and gas divestments, Morningstar’s analysts say, while the biggest French asset managers are still waiting for further details about the stricter ESG labeling policy in France before estimating the impact of the new regulation.
Amundi SA, the biggest asset manager in Europe is waiting to see all the details before it begins to “assess in detail the impact on our funds and to see how we will implement the new rules,” a spokesperson told Bloomberg.
Amundi currently uses the SRI label for around 110 of its funds that manage $260 billion (240 billion euros) in assets. That’s equivalent to about 12% of Amundi’s total assets under management.
France is expected to publish the final wording of the new rule by the end of this month, and the new labeling is expected to come into effect in March next year.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com