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Largest asset managers failing to support climate targets

The world’s 15 largest asset managers are collectively failing to invest in a way that supports international climate change targets, a new study has uncovered.

28 DEC 2019 | CHRIS SEEKINGS
Eco money no idea what to put here!
@istock

These institutions manage $37trn (£29trn), yet their equity portfolios in the automotive, power and fossil fuel industries are significantly misaligned with the Paris Agreement.

The research by InfluenceMap also found that only Allianz, Legal & General and UBS strongly engage with investee companies to align their business models with the climate targets.

The UK-based think tank warned that US firms like BlackRock urge companies to consider climate risks, but do not drive behaviour change around climate models nor policy lobbying.

Fidelity and Capital Group appear to have "very limited" engagement with businesses on climate, according to the study.

"If asset managers wish to support the Paris Agreement and remain invested in the automotive, power and fossil fuel industries, then they must engage robustly with companies,” said InfluenceMap research director, Thomas O’Neill.

The Paris Agreement aims to limit global warming to 1.5˚C above pre-industrial levels, with scientists warning that exceeding this threshold would be disastrous for the economy and society.

InfluenceMap analysed 50,000 listed funds managed by 150 financial groups and identified $8.2 trillion of holdings in the oil and gas, coal mining, automotive, and electric power sectors.

It also found that companies’ climate performance is closely reflected in their record of voting on shareholder resolutions designed to support the Paris targets.

BlackRock and Capital Group voted against 90% of resolutions in 2018, while other US asset managers voted against the majority of them.

InfluenceMap said that five smaller UK and US asset managers appear to be doing “all the heavy lifting” for the industry, filling 20% of all climate resolutions in 2018.

These include Trillium Asset Management, Hermes Investment Management, Sarasin & Partners, Walden Asset Management, and Zevin Asset Management.

"While there are many climate leaders in the investment community, there are also many laggards," said Fiona Reynolds, CEO of the Principles for Responsible Investment.

“This new work by InfluenceMap will become another significant reference point in the finance sector to help track and inform decisions around institutional investment strategies and good governance in responding to the climate challenge."