Climate crisis: fund managers stick to fossil fuels

None of the world’s largest asset managers has definitively called on fossil fuel companies to halt development of new oil and gas projects.

Given all the climate-conscious talk from Wall Street top guys like BlackRock Inc. Chief Executive Officer Larry Fink, you would think that the investment industry would use all its power to pressure the world’s worst polluters into producing dangerous greenhouse gases.

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Instead, the opposite is true.

Together, 30 of the largest asset managers have invested at least $550 billion in oil, gas and coal companies that have plans to expand, and even more alarmingly, they continue to “provide new cash to companies that ignore climate science,” said Lara Cuvelier, sustainable investment campaigner. at Reclaim Finance, a nonprofit that released a scorecard Wednesday that assessed investment firms for their environmental obligations.

In fact, the fund industry is “adding fuel to the fire,” she said.

And this is happening against a backdrop where the world’s leading climate finance experts and economists are warning that too much money is flowing into fossil fuels, putting the planet on track to blow past its limit to cause catastrophic global warming. to prevent.

The Reclaim Finance-led report also provides a check-up on an industry that the Glasgow Financial Alliance for Net Zero unveiled nearly a year ago, when bankers and fund managers called out how they are committed to helping fight climate change.

Instead, Reclaim Finance found that all of the fund managers’ 30 policies and investment guidelines are “too flawed” to align their entire portfolios with a net-zero emissions target.

The investment firms that participated in the survey ranged from BlackRock and Vanguard Group Inc. in the US to Axa Investment Managers and Amundi SA in Europe.

Here are six key findings:

  1. Twenty-three out of 30 companies allow investment in companies starting new coal projects.
  2. None completely restrict holdings of shares or bonds of companies involved in new oil and gas projects.
  3. And none are calling on companies to “immediately and gradually reduce their overall fossil fuel production.
  4. Twenty-five say they are pushing companies to improve climate-related problems. However, case studies indicate that this engagement work has so far not led to concrete changes.
  5. Ten of the asset managers have disclosed their 2030 decarbonisation targets, but the targets cover only a small portion of their total portfolios and funded emissions.
  6. None of them are applying their existing fossil fuel restrictions to their index-tracking assets, which is especially concerning given that “passive investments continue to grow and represent 46 percent of the assets covered by the report.

The bottom line is that “leading asset managers are missing the point without even asking companies to stop worsening the climate crisis,” Cuvelier said.

The Reclaim Finance survey found that while none of the 30 companies scored very well, Natixis SA’s Ostrum Asset Management and Axa Investment Managers scored highest.

Ostrum was singled out for its coal exclusion policies and to a lesser extent for its oil and gas policies, and Axa for better engagement policies with regard to the fossil fuel sector than other companies, Cuvelier said.

In general, asset managers don’t engage companies on important climate issues to limit global warming, Cuvelier said. The report calls on investors to force fossil fuel companies to end their expansion plans.

“Let’s be clear,” she said. “Drilling a new oil well or opening a new coal mine is not normal in a widespread climate catastrophe.”

Funds advertised as sustainable are booming, and the number of new ETFs in the lucrative space has doubled from last year.

But ESG investors are nonetheless beaten in the global credit market.

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