Malaysian state-owned energy company Petronas and Indonesian counterpart Pertamina are on a watchlist for removal from JPMorgan’s ESG EMBI index, the bank said in a statement on Tuesday. JPMorgan said both oil majors "are expected to exit the JESG suite at the June month-end rebalance" as their scores fell below a required threshold and they are no longer eligible for inclusion. The bank uses outside firms to assess the ESG score required for inclusion in the index. Sustainalytics, one of them, said some of Petronas’ or its affiliates' activities in "high-risk regions" may be viewed as a violation of a United Nations arms embargo, according to the bank's statement. Pertamina’s score decline was partly due to a refinery fire in West Java that forced the evacuation of close to 1,000 people as well as discussions with the government regarding a settlement over historical oil spills where cleanup is ongoing, JPMorgan's statement said.

Posted by

The EdgeMarket