The Environmental, Social, and Governance (ESG) movement has shaken up the oil and gas industry over the past 10 to 15 years.
Rising energy prices points ti the reality that the global demand for oil and natural gas exceeds its current supply.
Investments in oil and gas companies and the development of new projects are increasingly under scrutiny due to ESG, which, according to analysts at Deutsche Bank, could increase inflation in the long run. And higher inflation is already one of the biggest worries people have.
ESG stands for environment, social and governance. It is characterized as a responsible or sustainable investment.
According to ESG philosophy, a portfolio manager may not invest in a company if, for example, he or she considers the risk due to climate change to be too severe. Another scenario is that investors may only invest provided the company works to reduce the environmental risks such as climate change.
“If you systematically underinvest in oil and gas production for years, then that necessarily increases your reliance on foreign dictatorships abroad that don’t care about the green energy transition,” says Vivek Ramaswamy. “This is not by accident, this is by design.”
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