Slow Burn: The asset managers betting against the planet
Reclaim Finance has published the first edition of a scorecard on leading asset managers’ climate commitments, focusing on their approach to the coal sector. The report compares 29 asset managers, with a focus on the European market. The authors reveal that despite 16 asset managers holding long-term climate commitments, nearly all are failing to take the first step to making them a reality: exiting coal. This report was authored by Reclaim Finance in partnership with Re:Common, the Sunrise Project and Urgewald.
Long-term promises but short-term passivity
Out of the 29 asset managers’ policies assessed, not even half have adopted a public policy to phase out coal, despite 13 of them being members of the Net Zero Asset Manager Initiative (NZAMI) and four of the Paris Aligned Investment Initiative (PAII) . Even worse, Vanguard, DWS and Allianz GI, whereas they are signatories to the NZAMI principles do not even have adopted any public coal policy.
If half of the asset managers are publicly recommending that companies adopt Paris-aligned strategies and almost half of them also publicly state that they might take voting or divestment sanctions regarding climate issues, only two (Aviva Investors and Aberdeen SI) have started to specify the conditions for these sanctions to take place. But even existing coal exclusion policies are far from robust.
Stopping coal expansion is still not a priority for asset managers
The UNEP Production Gap report shows fossil fuel production must decrease by 6% annually until 2030 but only 6 of the 29 asset managers assessed are excluding companies with coal development plans whereas these companies are one of the biggest threats to climate.
Existing policies cover only a fraction of their portfolio
Another key problem is the partial coverage of coal policies: they apply to a very limited portion of their total portfolio. When looking at their ‘passively’ managed assets, which is a growing issue for the climate, the problem is obvious: only three asset managers, managing rather small amounts of ‘passive’ investments, apply their coal policy to all or most of their ‘passive’ investments. Overall, 18 asset managers do not have public rules to exclude coal from most of their ‘passive’ investments.
The problem is similar with mandates: only eight asset managers assessed apply their exclusions by default to their investments via mandates. Altogether this means concretely than less than 25% of the total combined assets of all managers are currently covered by coal exclusion criteria.
To remedy this situation, asset managers must immediately divest from companies developing coal projects and start divesting now from coal companies for a complete exit by 2030/2040. By that, the report specifically advocates asset manager to apply such recommendations to their whole portfolio. This also means dealing with the growing issue of ‘passive’ investment.
