A new report from Reclaim Finance, a nonprofit that published a scorecard grading investment firms on their environmental commitments, found broken promises on the part of bankers and asset managers who a year ago pledged to fight global warming. None of the world’s largest asset managers has definitively called on fossil-fuel companies to stop the development of new oil and gas projects.
The report revealed that 30 of the biggest asset managers have at least $550 billion invested in oil, gas and coal companies that have expansion plans, and even more alarmingly, they continue to provide “fresh cash to companies that are ignoring climate science,” said by Lara Cuvelier, the sustainable investment campaigner at Reclaim Finance.
“More than seven years after the Paris Agreement was signed, our 2022 scorecard reveals that the biggest asset managers still have not taken appropriate steps to tackle fossil fuel expansion, a basic prerequisite to keeping global warming in check. While many acknowledge the need to organise a managed decline of the oil and gas industry, these firms are still investing billions into companies whose fossil fuel expansion plans make this objective impossible to achieve”, highlights the report.
And this happens while the world’s leading climate finance experts and economists already warned that too much money is poured into fossil fuels, which puts the planet on track to blow past its limit to avoid catastrophic global warming.
Also, Reclaim Finance found that all 30 of the fund managers’ policies and investment guidelines are “too flawed” for them to align their entire portfolios with a net-zero emissions target. The investment firms included in the survey ranged from BlackRock and Vanguard Group Inc. in the U.S. to Axa Investment Managers and Amundi SA in Europe.
Here are six key findings of the report:
- Twenty-three of the 30 firms allow investments in companies that are starting new coal projects.
- None completely restricts holding shares or bonds of companies that are involved in new oil and gas projects.
- And none are calling for companies to “immediately and progressively decrease” their overall fossil-fuel production.
- Twenty-five say they’re pushing companies to improve on climate-related issues. However, case studies indicate this engagement work has thus far failed to lead to concrete changes.
- Ten of the asset managers have released 2030 decarbonization goals, but the targets only cover a small proportion of their total portfolios and financed emissions.
- None apply their existing fossil-fuel restrictions to their index-tracking assets, which is particularly concerning given that “passive” investments keep growing and represent 46% of the assets covered by the report. (Amundi has exclusion policies for oil, gas and coal that cover less than 40% of its passive assets, which is “insufficient,” Cuvelier said.)
Overall, asset managers must adopt policies tackling fossil fuel expansion, demand for fossil fuel companies to stop developing new coal, oil and gas projects, phase down the production and adopt short term absolute emission reduction targets.
The unfortunate conclusion is inescapable: The investment industry is “adding fuel to the fire” by funding the world’s worst polluters.
Editor’s Note: The opinions expressed here by Impakter.com columnists are their own, not those of Impakter.com. In the Featured Photo: Fossil fuel power stations. Featured Photo Credit: Flickr.com
