A reclassification of companies on the London Stock Exchange (LSE) has diverted Oil and Gas companies to be listed as a 'non-renewable energy' in order to help to distinguish them between heavy polluting companies and greener producers.
Companies affected include:
These companies previously listed as 'Oil and Gas producers' - along with Coal companies which were previously listed as 'Basic Materials/Mining' - are now changed to be listed under 'non-renewable energy'.
Companies that work to produce greener energy, previously grouped as 'Alternative Energy', have also been reclassified as 'Renewable Energy'. Susan Quintin, the managing director of product management at FTSE Russell (the company in charge of the London Stock Exchange data) has stated that these changes to the industry classification benchmark would provide "greater visibility to other forms of energy such as renewables".
This was met with concern from Oil & Gas UK who argued that they - and other companies - were attempting to broaden their strategies and that many companies have a diversity of energy interests, being active across both the renewable and non-renewable energies - this means that they were involved in a large range of endeavours and would worry that the reclassification may hinder their ability to lead to a low carbon future.
The classification of companies on the LSE is based on their main source of revenue - therefore oil and gas companies would need to invest substantial sums of money into greener energy revenue streams in order to be correctly classified as 'Renewable'. Investment into the greener sectors would be good for the environment as more income means more development, so this is a step in the right direction.
