EDF and Ceres developed the Climate Principles for Oil and Gas Mergers and Acquisitions through a series of roundtables and consultations with asset managers, private equity firms, banks, oil and gas companies and nonprofit organizations. The process was oriented to develop a series of principles that would be ambitious, effective, and practical for use in real-world transactions. Â
At the core of the Climate Principles is the belief that buyers of assets should continue to uphold the maintenance of climate standards after a change in ownership. As more banks and financial institutions adopt financed greenhouse gas emissions reduction targets and make net zero pledges, the sale of high emitting assets to operators with fewer or less ambitious targets and less stringent disclosures will be more challenging to finance and advise. Â
The Climate Principles highlight the need for diligence performed prior to the initiation of deals, including an assessment of both the climate standards of potential acquirers and their financial capacity to maintain those standards.Â