by Sean Moran, Breitbart:
An ESG loophole led investors to pile billions of dollars into Saudi Aramco, the world’s largest oil company, whose chief executive has criticized ESG investing.
Bloomberg reported that Saudi Aramco has become an unlikely beneficiary of anti-climate change investing funds.
Amin Nasser, the chief executive of Saudi Aramco, said that ESG policies have an “automatic bias against any all conventional energy projects ” that would lead to global problems surrounding energy affordability and energy security.
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Bloomberg explained:
The unlikely tie-up between Aramco and ESG began with the creation of two subsidiaries — the Aramco Oil Pipelines Company and the Aramco Gas Pipelines Company. Aramco sold 49% of the shares in each unit to consortiums led by EIG Global Energy Partners LLC and BlackRock Inc., respectively. These investors used bridge loans from banks to fund those transactions.
In order to generate cash to repay the bank loans, the EIG and BlackRock consortiums created two special purpose vehicles: EIG Pearl Holdings and GreenSaif Pipelines Bidco, both registered at the same Luxembourg address. These SPVs then sold bonds, which, since they had no direct links to the fossil-fuel industry, ended up getting an above-average score in a widely-used JPMorgan Chase & Co. sustainability screening based on third-party ESG scores.
The bonds made it into JP Morgan’s ESG indexes, and investors in the SPV bonds include funds managed by UBS Group AG, Legal & General Investment Management, and the investment arm of HSBC Holding Plc.
Ulf Erlandsson, CEO of the Anthropocene Income Institute, said that these complex financial structures complicate investing in purportedly climate-friendly funds.
