This criterion rates how investors condition financial services to the end of oil & gas expansion plans.
| Grade | EXPANSION COMPANIES |
|---|---|
| 0 | No policy. |
| 1 | When assessing companies, “oil and gas expansion” is a criterion that can lead to undefined sanctions. |
| 2 | No new investments in companies that develop oil and gas projects, but no timeline specified. |
| 3 |
By the end of 2023, no new investments in companies that develop oil and gas projects, but weak coverage of the oil and gas industry (exceptions, 1 unconventional sector, etc.). OR By the end of 2030, no new investments in some companies that develop oil and gas projects. |
| 4 |
By the end of 2023, no new investments in companies that develop oil and gas upstream projects in some unconventional sectors. OR Systematic and defined sanctions for some companies in portfolio that continue to develop oil and gas projects. OR By the end of 2025, no new investments in some companies that develop oil and gas projects, with large exceptions. |
| 5 |
By the end of 2023, no new investments in companies that develop unconventional oil and gas upstream projects. OR By the end of 2025, no new investments in companies that develop oil and gas upstream projects. |
| 6 |
By the end of 2025, no new investments in companies that develop oil and gas upstream projects. AND Systematic and strong defined sanctions for companies in portfolio that continue to develop oil and gas upstream projects. |
| 7 |
By the end of 2024, no new investments in companies that develop oil and gas upstream projects. AND Systematic and strong defined sanctions for companies in portfolio that continue to develop oil and gas upstream projects. OR By the end of 2025, no new investments in companies that develop oil and gas upstream and midstream projects. |
| 8 |
By the end of 2023, no new investments in companies that develop oil and gas upstream projects. AND Systematic and strong defined sanctions for companies in portfolio that continue to develop new oil and gas upstream projects. OR By the end of 2025, no new investments in companies that develop oil and gas upstream and midstream projects. AND Systematic and strong defined sanctions for companies in portfolio that continue to develop oil and gas upstream and midstream projects. |
| 9 |
By the end of 2024, no new investments in companies that develop oil and gas upstream and midstream projects. AND Systematic and strong defined sanctions for companies in portfolio that continue to develop oil and gas upstream and midstream projects. |
| 10 |
By the end of 2023, no new investments in companies that develop oil and gas upstream and midstream projects. AND Systematic and strong sanctions for companies in portfolio that continue to develop oil and gas upstream and midstream projects. |
Bonus & penalties
- Bonus +1 the end of some downstream expansion (oil or gas-fired power plants, refineries, etc.) is a request leading to investment restrictions.
- Bonus +1 when bonds are divested by 2025.
- [Unconventional] Penalty -1/2 if commitment only applied by 2024/2025.
- [Unconventional] Penalty -1 when the definition of the unconventional sector is restrictive (e.g. limited/no definition of the Arctic region, offshore or onshore, oil or gas, etc.).
- [For scores between 1 and 8] Penalty -2 if commitment only applies to oil or gas.
- [For scores between 1 and 8] Penalty -1 when no sanctions are taken for companies in portfolio that continue to develop new oil and gas upstream projects.
- Penalty -1 when a delimited number of companies benefit from an exception.
-
Penalty -1 when the deadline considered for the Final Investment Decision of new oil & gas upstream projects is set at a later date than December 31st, 2021.
- Penalty -1 when a commitment only applies to some oil & gas upstream expansion plans or to oil & gas upstream and some midstream expansion plans.
- Penalty -2 when the policy only covers new investments in shares.
- Penalty -1/2 when the policy does not apply to a significant part of assets.
- Penalties do not apply below score 1.
Remarks
We recommend that exclusion policies targeting companies expanding their oil & gas production be based on the Global Oil & Gas Exit List (GOGEL), and especially on the short-term expansion metric relying on resources under development and field evaluation (in mmboe) per company. This metric allows financial institutions to identify oil and/or gas resources that will come into production in the near future.
The following four unconventional sectors must be covered in order to get points at levels 4 and 5: Arctic oil and gas, shale oil and gas, tar sands, and ultra-deep water oil and gas. Reclaim Finance recommends using the GOGEL’s definition of unconventional, and the database to identify and exclude companies with unconventional oil and gas expansion plans.
This criterion rates the quality of oil & gas phase-out commitments (considering both long-term and medium-term commitments).
| Grade | PHASE OUT |
|---|---|
| 0 | No policy |
| 1 | When assessing companies, “oil and gas production plan” is a criterion that can lead to undefined sanctions. |
| 2 | Unsystematic but defined sanctions for companies that do not immediately commit to reduce their oil and gas production. |
| 3 |
The financial institution has adopted a phase-out date for oil and gas upstream activities by 2050. OR The financial institution has adopted a phase-out date for unconventional oil and gas activities by 2030. OR Unsystematic but defined sanctions for companies that do not immediately commit to reduce their oil and gas production by 2030. |
| 4 |
The financial institution has adopted a phase-out date for oil and gas upstream and midstream activities by 2050. OR Systematic and defined sanctions for companies that do not immediately commit to reduce their oil and gas production by 2030. OR The financial institution has adopted a phase-out date for unconventional oil and gas activities by 2030. AND In the short term, no new investments in companies that do not immediately commit to reduce their unconventional oil and gas production before 2030. |
| 5 |
Systematic and strong defined sanctions for companies that do not immediately commit to reduce their oil and gas production by 2030. OR The financial institution has adopted a phase-out date for unconventional oil and gas activities by 2030. AND In the short term, no new investments in companies that do not immediately commit to reduce their unconventional oil and gas production before 2030. AND Systematic and strong defined sanctions for companies that did not commit to reduce their unconventional oil and gas production before 2030. |
| 6 |
Systematic and defined strong sanctions for companies that do not immediately commit to reduce their oil and gas production by 2030, aligned with a 1.5°C scenario with low or no overshoot and low reliance on negative emissions*. OR The financial institution has adopted a phase-out date for oil and gas upstream activities by 2050. AND Systematic and strong defined sanctions for companies that do not immediately commit to reduce their oil and gas production by 2030. |
| 7 |
The financial institution has adopted a phase-out date for oil and gas upstream activities by 2050. AND Systematic and defined strong sanctions for companies that do not immediately commit to reduce their oil and gas production by 2030, aligned with a 1.5°C scenario with low or no overshoot and low reliance on negative emissions*. OR The financial institution has adopted a phase-out date for oil and gas upstream activities by 2050. AND In the short term, no new investments in companies that do not immediately commit to reduce their oil and gas production by 2030. |
| 8 |
The financial institution has adopted a phase-out date for oil and gas upstream activities by 2050. AND In the short term, no new investments in companies that do not immediately commit to reduce their oil and gas production by 2030. AND Systematic and strong defined sanctions for companies in portfolio that did not commit to reduce their oil and gas production by 2030, aligned with a 1.5°C scenario with low or no overshoot and low reliance on negative emissions*. OR The financial institution has adopted a phase-out date for oil and gas upstream activities by 2050. AND In the short term, no new investments in companies that do not immediately commit to reduce their oil and gas production by 2030, aligned with a 1.5°C scenario with low or no overshoot and low reliance on negative emissions*. |
| 9 |
The financial institution has adopted a phase-out date for oil and gas upstream activities by 2050. AND In the short term, no new investments in companies that do not immediately commit to reduce their oil and gas production by 2030, aligned with a 1.5°C scenario with low or no overshoot and low reliance on negative emissions*. AND Systematic and strong defined sanctions for companies in portfolio that did not commit to reduce their oil and gas production by 2030, aligned with a 1.5°C with low or no overshoot and low reliance on negative emissions*. |
| 10 |
The financial institution has adopted a phase-out date for oil and gas upstream AND midstream activities by 2050. AND In the short term, no new investments in companies that do not immediately commit to reduce their oil and gas production by 2030, aligned with a 1.5°C scenario with low or no overshoot and low reliance on negative emissions**. AND Systematic and strong defined sanctions for companies in portfolio that did not immediately commit to reduce their oil and gas production by 2030, aligned with a 1.5°C with low or no overshoot and low reliance on negative emissions**. |
Bonus & Penalties
- Bonus +1/2 if additional commitment to phase out oil and gas-fired power generation activities by 2040 worldwide/and by 2030 in OECD countries.
- Bonus +1/2 if, in the short term, the financial institution will implement exclusion thresholds that correspond to an exit of some or all oil and gas upstream and midstream activities.
- [Unconventional] Penalty -1 if phase-out commitment for unconventional sectors applies between 2031 and 2040.
- [Unconventional] Penalty -1 if phase-out commitment only covers a few unconventional sectors.
- [For scores between 1 and 8] Penalty -2 if commitment only applies to oil or gas.
- Penalty -1 when exceptions are minimal, -2 when exceptions are significant.
- Penalty -1/2 when the policy does not apply to a significant part of assets.
- Penalty -2 when the policy only covers new investments in shares.
- Penalty -1 if phase-out commitment applies only to new investments and not divestment.
- Penalties do not apply below score 1.
The total penalties in a sector cannot exceed the number of points earned by the financial institution regarding this specific sector.
Remarks
* The company has committed :
- not to develop new oil and gas upstream projects;
OR
- if developing new oil & gas assets, closing existing oil & gas assets in order to stay in a 1.5°C pathway: closed assets should total an equivalent amount of resources and, if possible, a similar production profile as developing assets. Sold assets must not be considered when assessing oil & gas production reduction aligned with a 1.5°C scenario.
** The company has committed:
- not to develop new oil and gas upstream and midstream projects;
OR
- if developing new oil & gas assets, closing existing oil & gas assets in order to stay in a 1.5°C pathway: closed assets should total an equivalent amount of resources and, if possible, a similar production profile as developing assets. Sold assets must not be considered when assessing oil & gas production reduction aligned with a 1.5°C scenario.
A phase-out from unconventional sectors after 2040 is not considered.
“Reclaim Finance reserves the right to equate a long-term commitment with the adoption of robust relative and/or absolute thresholds in the short term.
- Unconventional thresholds considered as phase-out: a relative threshold of 5% based on a production metric or an absolute threshold of 2 mmboe.
- Conventional oil & gas upstream thresholds considered as phase-out: an absolute threshold of 20 mmboe.
- Conventional oil & gas upstream & midstream thresholds: a relative threshold of 5% fossil fuel share of revenues.
Reclaim Finance reserves the right to equate a phase-out applied to the financial institution itself with the request for a phase-out to financed companies. The request for a phase-out strategy to the company must be done within a well-defined framework (well-defined duration of engagement, restriction of financing in case of engagement failure). If the exclusion does not apply within 3 years, then a penalty -1 will be applied.
This criterion rates policies by sector taking into account exclusion at the project level, exclusion of companies with expansion plans, companies above a certain relative or absolute threshold and a phase-out strategy for the sector.
Our assessment considers the following 4 unconventional sectors: Arctic oil and gas, shale oil and gas, tar sands, ultra-deep water activities. As a reminder, investors are not assessed on their project-level exclusions anymore; hence, this kind of exclusion will not be considered on this criterion.
| Grade | UNCONVENTIONAL SECTOR POLICY |
|---|---|
 |
No policy |
 |
Weak commitments regarding this unconventional sector: very partial exclusion of the sector, weak engagement commitments, etc. |
 |
The financial institution meets one of the following criteria: – No new investments in companies deriving more than 20% of their production from this unconventional sector; – No new investments in companies deriving more than 5% of revenues from this unconventional sector; – Systematic and defined sanctions for companies in portfolio that continue to develop new oil and gas projects in this unconventional sector; – Systematic and defined sanctions for companies that do not immediately commit to reduce their oil and gas production in this unconventional sector; – Has announced a phase-out strategy for the unconventional sector by 2030 and has adopted a short-term exclusion criterion for this unconventional sector. |
 |
The financial institution meets two of the following criteria: – No new investments in companies deriving more than 10% of their production from this unconventional sector; – No new investments in some companies that develop new oil & gas upstream projects in this unconventional sector; – Has announced a phase-out strategy for the unconventional sector by 2030 OR systematic and defined sanctions for companies that do not immediately commit to reduce their oil and gas production in this unconventional sector before 2030. OR The financial institution conditions new investments to the end of unconventional oil and gas expansion.* [Arctic] Adoption of an exhaustive definition of the Arctic area: AMAP definition or another definition covering at least 75% of the AMAP region. [Ultradeep water] Adoption of an exhaustive definition of “ultradeep”: offshore wells below 1500 meters. |
 |
The financial institution meets the following three criteria: – No new investments in companies that develop new oil and gas upstream and midstream projects by the end of 2023 in this unconventional sector. – Systematic and strong sanctions for companies in portfolio that continue to develop new oil and gas upstream and midstream projects in this unconventional sector. – Has announced a phase-out strategy for the unconventional sector by 2030 or for oil and gas upstream activities by 2050 OR systematic and defined strong sanctions for companies that do not immediately commit to reduce their oil and gas production in this unconventional sector by 2030. [Arctic] Adoption of an exhaustive definition of the Arctic area: AMAP definition or equivalent in terms of geographical coverage. [Ultradeep water] Adoption of an exhaustive definition of “ultradeep”: offshore wells below 1500 meters. |
Remarks
