NextEra, Renewables Giants Among 15 Kicked Off Clean Energy Index

Source: By Todd Gillespie, Bloomberg • Posted: Tuesday, October 19, 2021

Wind turbines owned by NextEra Energy Inc., in Whitewater, California.

Wind turbines owned by NextEra Energy Inc., in Whitewater, California. Photographer: Bing Guan/Bloomberg

Three heavyweights in renewable technology have been removed from a key S&P Dow Jones clean energy index, as the ratings agency tightened membership requirements.

NextEra Energy Inc, Drax Group and Enel SpA were among 15 companiesremoved from the Global Clean Energy Index on Monday. The index predominantly includes utility companies with low exposure to weapons, thermal coal, oil, shale and gas exploration.

The clean-out followed a consultation “to enhance index diversification, improve transparency, further reduce the index’s carbon footprint, and align the index methodology with market trends and sustainable investing norms,” according to a spokesperson. They declined to comment on specific companies.

Firms are coming under increasing scrutiny from investors over environmental concerns. In April, S&P said it would remove Adani Ports from the Dow Jones Sustainability Indexes because of its links to the Myanmar military. Its stock dropped as much as 5.5%.

Seven of the 15 companies removed from the Global Clean Energy Index are American, including solar and wind giant NextEra, a $160 billion company that’s taken heavy advantage of government subsidies to grow its portfolio. A NextEra representative declined to comment.

S&P said the firm was removed due to a rise in its carbon-to-revenue footprint standard score, calculated by Trucost, its ESG intelligence arm.

Enel SpA, the Italian utility, was removed for the list due to an update to its exposure score, S&P said. Enel declined to comment.

Drax, which was excluded after its carbon-to-revenue footprint standard score rose, has come under scrutiny from campaigners for claims that its biomass-fueled power stations can operate with carbon neutrality. Chief Executive Officer Will Gardiner also said last month that it could keep its coal-fired power plants operating to help U.K. energy supply.

“Drax’s biomass meets the highest sustainability standards,” a Drax spokesperson said in a statement, adding that the firm has reduced its carbon emissions by more than 90% in the last decade and plans to be carbon negative by 2030. S&P still includes biomass generation within the scope of renewable generation for the purposes of the index.

— With assistance by Alastair Marsh, Alberto Brambilla, Josh Saul, and Jess Shankleman