Assessing the risks ESG factors pose to fossil fuels

ESG rules won’t significantly deter investment in International Oil Companies (IOCs) or reduce fossil fuels production. Instead, output is likely to be guided by underlying oil prices, which we expect to fall over the medium-term. We suspect that price declines will be the key driver of divestment in the oil industry, though ESG factors may hasten IOCs attempts to transform into renewable energy companies.