(Bloomberg) — For TotalEnergies SE Chief Executive Officer Patrick Pouyanne, the difference in the performance of his company’s stock and that of Exxon Mobil Corp., the largest US producer of oil and gas, is in no small part explained by an acronym: ESG. Exxon’s aggressive oil and gas strategy has been rewarded by investors, with its shares more than doubling in the past three years.
For Europe’s second-biggest oil company, in contrast, pressure on the region’s asset managers to invest using environmental, social and governance standards has capped gains and prompted Pouyanne to flirt with the idea of listing shares in the US. The French oil giant isn’t alone in pointing to the skewing effect of ESG regulations that critics say have put European businesses at a competitive and valuation disadvantage to their US peers, with potentially long-lasting effects for the bloc’s economy. Companies from Mercedes-Benz Group AG to Unilever Plc are pushing back.
The European Round Table for Industry, whose members have combined annual sales of €2 trillion ($2.2 trillion), says overly stringent regulations are “accelerating loss of competitiveness” and warn that members’ prospects “are better outside Europe.” Over the past five years — a period during which Europe started formulating the world’s most ambitious ESG regulatory framework — the US’s S&P 500 Index has soared more than twice as much as Europe’s benchmark Stoxx 600 Index.
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