ESG Resistance Brewing as Europe Continues to Enfo
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Posted On: 09/16/2024 5:19:08 PM
ESG Resistance Brewing as Europe Continues to Enforce Strict Rules
Environmental, social and governance (ESG) regulations in Europe have put companies such as TotalEnergies in a tight spot as they continue to pressure asset managers to invest in ESG standards. These regulations, which aren’t imposed on companies in America, have put businesses in Europe at a valuation and competitive disadvantage to their American peers.
Now, companies such as Unilever Plc and Mercedes-Benz Group AG are pushing back against these rules. The European Round Table for Industry recently stated that the strict rules were speeding up loss of competitiveness and warned that prospects were better outside the bloc. In the last five years, America’s S&P 500 Index has performed significantly better than the Stoxx 600 Index, Europe’s benchmark. During this period, nearly 8,000 acts were ratified, most of them being ESG-related.
While some factors have contributed to the richer valuation on the American Index, ESG rules in Europe haven’t helped either. Currently, energy companies in Europe trade at a 40% discount to their peers in the United States.
Calculations by Bloomberg show that if TotalEnergies was valued in accordance with the average crude producer in the United States, the company’s market cap would increase by $108 billion. Patrick Pouyanne, TotalEnergies CEO, recently revealed that he has toyed with the idea of listing shares in the United States due to this difference in performance.
Other companies are also weighing their options as they grapple with these different rules, with some, such as FREYR Battery Inc., moving their headquarters to the U.S., while others such as RWE AG direct more investments into the United States than Germany.
Some expect Glencore Plc, which is currently listed in London, to list its shares in New York. Titan Cement International SA’s Dimitri Papalexopoulos explained that Europe’s approach to ESG had placed the energy-intensive industry at a disadvantage.
It doesn’t help that the number of European Union companies in the Fortune Global 500 continues to drop, with the bloc going from a chemicals’ exporter to a net importer. As Europe continues to add more regulations on ESG, the U.S. continues to offer additional incentives to players in the market. For example, President joseph Biden recently signed the Inflation Reduction Act 2022, which will drive investment in different fields, from solar panels to electric cars.
Disclosure requirements stipulated in climate directives such as the Corporate Sustainability Reporting Directive and the Sustainable Finance Disclosure Regulation are only burying companies even deeper, with compliance costs suffocating companies with all the data capture that needs to be done.
While these entities may have reason to feel aggrieved, many North American companies such as Reflex Advanced Materials Corp. (CSE: RFLX) (OTCQB: RFLXF) are, of their own volition, implementing ESG practices after appreciating the benefits that can come from moving in that direction.
NOTE TO INVESTORS: The latest news and updates relating to Reflex Advanced Materials Corp. (CSE: RFLX) (OTCQB: RFLXF) are available in the company’s newsroom at https://ibn.fm/RFLXF
Please see full terms of use and disclaimers on the ESGWireNews website applicable to all content provided by ESG, wherever published or re-published: https://www.ESGWireNews.com/Disclaimer
Environmental, social and governance (ESG) regulations in Europe have put companies such as TotalEnergies in a tight spot as they continue to pressure asset managers to invest in ESG standards. These regulations, which aren’t imposed on companies in America, have put businesses in Europe at a valuation and competitive disadvantage to their American peers.
Now, companies such as Unilever Plc and Mercedes-Benz Group AG are pushing back against these rules. The European Round Table for Industry recently stated that the strict rules were speeding up loss of competitiveness and warned that prospects were better outside the bloc. In the last five years, America’s S&P 500 Index has performed significantly better than the Stoxx 600 Index, Europe’s benchmark. During this period, nearly 8,000 acts were ratified, most of them being ESG-related.
While some factors have contributed to the richer valuation on the American Index, ESG rules in Europe haven’t helped either. Currently, energy companies in Europe trade at a 40% discount to their peers in the United States.
Calculations by Bloomberg show that if TotalEnergies was valued in accordance with the average crude producer in the United States, the company’s market cap would increase by $108 billion. Patrick Pouyanne, TotalEnergies CEO, recently revealed that he has toyed with the idea of listing shares in the United States due to this difference in performance.
Other companies are also weighing their options as they grapple with these different rules, with some, such as FREYR Battery Inc., moving their headquarters to the U.S., while others such as RWE AG direct more investments into the United States than Germany.
Some expect Glencore Plc, which is currently listed in London, to list its shares in New York. Titan Cement International SA’s Dimitri Papalexopoulos explained that Europe’s approach to ESG had placed the energy-intensive industry at a disadvantage.
It doesn’t help that the number of European Union companies in the Fortune Global 500 continues to drop, with the bloc going from a chemicals’ exporter to a net importer. As Europe continues to add more regulations on ESG, the U.S. continues to offer additional incentives to players in the market. For example, President joseph Biden recently signed the Inflation Reduction Act 2022, which will drive investment in different fields, from solar panels to electric cars.
Disclosure requirements stipulated in climate directives such as the Corporate Sustainability Reporting Directive and the Sustainable Finance Disclosure Regulation are only burying companies even deeper, with compliance costs suffocating companies with all the data capture that needs to be done.
While these entities may have reason to feel aggrieved, many North American companies such as Reflex Advanced Materials Corp. (CSE: RFLX) (OTCQB: RFLXF) are, of their own volition, implementing ESG practices after appreciating the benefits that can come from moving in that direction.
NOTE TO INVESTORS: The latest news and updates relating to Reflex Advanced Materials Corp. (CSE: RFLX) (OTCQB: RFLXF) are available in the company’s newsroom at https://ibn.fm/RFLXF
Please see full terms of use and disclaimers on the ESGWireNews website applicable to all content provided by ESG, wherever published or re-published: https://www.ESGWireNews.com/Disclaimer
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