The EU has excluded oil and gas from the definition of fossil fuels in draft proposals for its sustainable disclosure scheme.

EU banking regulators have defined fossil fuels as solid energy which includes mainly coal. As a result, fund managers will be able to apply laxer standards to investing in oil and gas companies than coal producers. Some investment firms have said that the proposals could mean climate risks will be underestimated. ESMA, the European Securities and Markets Authority, has pointed out that fund managers will still have to declare their oil and gas holdings under the requirement to disclose “high emission fossil fuel companies”.