The world’s top 30 fund managers, collectively holding US$50 trillion in assets, get mixed marks on steering the global economy into alignment with the targets set in the Paris climate agreement, an annual report released yesterday said.
The assessment from London-based think tank InfluenceMap graded investment giants across three criteria: support for climate-related shareholder resolutions, the “greenness” of portfolios and engagement with the companies in those portfolios.
“Given the huge influence these asset managers have over the global economy, it is vital they take action to ensure the world can meet the climate goals of the Paris agreement,” InfluenceMap executive director Dylan Tanner said.
Photo: EPA-EFE/JUSTIN LANE
The 2015 climate treaty enjoins nations to cap global warming at below 2oC compared to preindustrial levels, and 1.5oC if possible. On current trends, the planet would heat up at least 3oC.
With 1.1oC of warming so far, the world has seen a crescendo of deadly extreme weather, including superstorms made more destructive by rising seas.
When it comes to public encouragement for companies to “green” their business models and lobbying practices, European asset managers continued to outperform their US counterparts, the report showed.
Among the top 10 companies, each with at least US$1.5 trillion under management, Legal & General Investment Management, Allianz Global Investors/PIMCO and Amundi SA all got top marks. Fidelity Investments Inc, Capital Group and Goldman Sachs Asset Management — all US-based — were at the bottom of the class.
BlackRock Inc, the world’s biggest asset manager with more than US$7 trillion under management, improved its grade last year after announcing steps to divest from coal.
However, the US-based giant got a failing mark when it came to supporting shareholder resolutions calling for more proactive climate policies.
Such shareholder initiatives have become an increasingly powerful driver of change in companies, as well as a signal to the broader market.
“More and more, we are seeing investors wanting to know that corporate lobbying and business models are aligned with Paris targets,” Tanner said.
Vanguard Group Inc, Capital Group and Fidelity Investments all scored even more poorly than BlackRock in this area.
Last year saw BlackRock and two other top 10 fund managers join the Climate Action 100+ investor initiative, a “promising development” that could speed up corporate transition toward carbon neutrality, InfluenceMap said.
A portfolio analysis of the world’s largest funds — looking at 3,000 firms with more than US$20 trillion in market capitalization — showed that they deviated strongly from the Paris temperature target, especially in certain sectors.
“The world’s automakers are not transitioning to electric vehicles at a fast enough pace, the coal production sector is winding down too slowly, and the power sector is not phasing out fossil fuel generation nor introducing renewables quickly enough,” Tanner said.
Sectors and companies that fail to accelerate the transition to low-carbon economies face a massive risk of stranded assets, he added.
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