Asset Managers Pledging Climate Action Drop Ball When Investing


Frances Schwartzkopff
Tue, August 1, 2023 


(Bloomberg) -- Despite commitments to sustainability, BlackRock Inc., Vanguard Group Inc. and Goldman Sachs Group Inc. are among the asset managers investing more in polluting companies than in those actively working to lower their carbon footprints, FinanceMap reported.

According to a review of $16.4 trillion in stocks held by 45 of the world’s biggest asset managers, only Natixis SA and Schroders Plc have more investments in companies working toward meeting the goals of the Paris Agreement than in companies tied to polluting technologies. The biggest laggards among the 45 asset managers are Sumitomo Mitsui Trust Holdings, HSBC Asset Management and Mitsubishi UFJ Financial Group.

“The data shows that while they may talk the talk, most asset managers aren’t walking the walk when it comes to using their influence to drive real change in investee companies and sustainable finance policy,” said Daan Van Acker, program manager at FinanceMap, in a statement. FinanceMap, which prepared the report, is affiliated with climate nonprofit InfluenceMap.

The report was the third by FinanceMap since 2019 and sought to determine whether a recent increase in the number of climate initiatives and commitments, such as the Net Zero Asset Managers initiative, has made a difference in how asset managers invest and engage with companies.

The 45 asset managers that were studied together have 2.8 times more invested in companies involved fossil fuel production ($880 billion) than in green investments ($309 billion). The assessed equity funds for Goldman Sachs and State Street Corp. are the most exposed to the fossil fuel production value chain, both with 2.2 times higher exposure to the sector than the average asset manager, the report said.

Asset managers in Europe, where environmental disclosure requirements have become more rigorous, scored the highest in terms of working with companies to transition, led by Legal & General Investment Management plc, UBS Asset Management, and BNP Paribas Asset Management, FinanceMap said.

Some investors are sharpening their focus on the environmental and social impacts of their holdings in response to this summer’s extreme weather events. In Canada, where almost 12 million hectares of forest have burned in extraordinary fires, investors are avoiding companies that contribute to climate change, according to a survey of financial advisers by Ortec Finance BV, a risk management firm.

 Bloomberg Businessweek