A banner reading “The time is up for fossil fuels” hangs on a bridge in front of the U.S. Capitol on the day of President Joe Biden’s first address to a joint session of the U.S. Congress in Washington, U.S., April 28, 2021 .
Erin Scott | Reuters
Huge global wealth managers are still pouring tens of billions of dollars into new coal projects and hundreds of billions of dollars into big oil and gas companies.
That’s according to a report released on Wednesday by Reclaim Finance, an organization that discloses financial sector investments in fossil fuels.
The report, titled “The Asset Managers Fueling Climate Chaos,” found that 30 asset managers have a combined $82 billion in companies developing new coal projects and $468 billion in 12 major oil and gas companies.
“Is the wealth management industry changing its investment practices in line with climate science and reducing investments in coal, oil or gas expansion? Unfortunately, the answer is an emphatic ‘no,'” said Lara Cuvelier of Reclaim Finance in a statement released alongside the report. “Leading wealth managers are kicking the can out onto the street without even asking companies to stop the worsening climate crisis.”
The majority of asset managers – 25 of the 30 – are members of the Net Zero Asset Manager Initiative (NZAM), a collective of asset managers with lofty climate goals: “Committed to supporting the goal of net-zero greenhouse gas emissions by 2050 or sooner, in line with the Global efforts to limit warming to 1.5 degrees Celsius and support investments that aim for net-zero emissions by 2050 or sooner.”
However, according to Reclaim Finance, none of the 30 asset managers surveyed in the report have asked companies in their portfolios to abandon coal, oil and gas projects.
Vanguard was one of six companies to score the worst possible — zero out of 30 — but drew particular ire for its size and lack of meaningful action. More than 100 organizations representing over 6 million people have released an open letter to Vanguard CEO Tim Buckley, also released Wednesday.
“With over $300 billion in fossil fuel investments, Vanguard has become increasingly isolated as the biggest climate laggard in the asset management sector,” the open letter reads.
“Vanguard is the second largest (and currently fastest growing) asset manager in the world after BlackRock, and these two giants are the two largest investors in the world in fossil fuels and companies driving deforestation around the world,” said Myriam Fallon, spokeswoman by The Sunrise Project, to environmental organization that supported the Reclaim Finance report.
“While BlackRock has taken steps to address the climate crisis and their contributions to it, Vanguard has done next to nothing,” Fallon said.
Vanguard views climate change “as a fundamental risk to many companies and the long-term financial success of their shareholders,” a company spokesman told CNBC. Additionally, the spokesperson added, it is Vanguard’s responsibility to ensure investors are aware of these risks and that portfolio companies are “taking the appropriate steps to manage and mitigate these risks on behalf of their shareholders.”
BlackRock CEO Larry Fink has been a leader in saying that climate change is a financial issue. “Climate change has become a critical factor in the long-term prospects of companies,” Fink wrote in his 2020 annual letter to CEOs. “But awareness is changing fast, and I think we’re on the brink of a fundamental transformation in finance.”
Even though BlackRock has been a climate catalyst on Wall Street, its investment portfolio still has climate issues, according to Reclaim Finance. “BlackRock embodies most of the hypocrisy of too many money managers: Despite being the largest member of the NZAM, it still invests in the 11th largest coal producer in the world and massive coal expansionist Glencore,” Cuvelier said.
BlackRock did not immediately respond to requests for comment.
This story has been updated to include comment from Vanguard.