In an otherwise daming report into asset management’s investment around climate and biodiversity, it emerged that European firms were at least leading the charge to tackle climate change.
Unofficial watchdog ShareAction found that of the world’s 77 largest asset managers, only ten, all European, have committed to restricting investment in the most harmful of fossil fuels in their funds.
Nevertheless, ShareAction claimed that the 77 firms we’re “allowing the destruction of the planet and its species” by lacking ambition on net-zero, deforestation and “many key climate and biodiversity issues”.
ShareAction’s report – called Point of No Returns 2023 Part IV: Climate and Biodiversity – uncovered 20 key findings from the 77 fund firms surveyed, with over 100 questions put to these brands.
The report found that 18 firms – or 23% – were committed to restricting investment in thermal coal, which is used for coal power, across all funds. This is up from 16% in 2020. However, only five extend this restriction to metallurgical coal, which is used in the production of steel.
Ten of these asset managers also have at least one restriction on unconventional oil & gas investment – for example Arctic oil, tar sands oil, or fracking – which applies to all their strategies.
Many more firms have restrictions for either coal (77%) or unconventional oil & gas (62%) that only apply to a small fraction of funds.
In the report, ShareAction said: “The strong consensus on the harm these fuels cause, and the fact most asset managers in our sample have implemented at least some restrictions, suggests there is potential to strengthen existing restrictions, and to impose them across a wider range of funds or launch new funds incorporating strong restrictions.”
Of the 77 surveyed, 39 firms were European, with 25 from the Americas and 13 from the Asia Pacific region.
Overall, the report found that firms were failing to take adequate measures to tackle climate change. Outside of oil and gas, almost three-quarters of asset managers had made no commitments on deforestation and none had commitments on the conversion of other types of natural habitat.
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