Paris, April 21st 2021 – Reclaim Finance has today released the first edition of a scorecard on leading asset managers’ climate commitments, focusing on their approach to the coal sector (1). Produced with four partner NGOs from across Europe and North America,* the report compares 29 asset managers, with a focus on the European market (2). 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.

Less than half of the asset managers assessed have a public policy to limit coal investments – titans like Vanguard, Schroders and PIMCO are notable absences. Where policies do exist, they allow for so many exceptions (3) that only 25% of all the assets managed within the sample are covered by a coal exclusion criterion.

The analysis unveils that while €23 trillion of assets under management are covered by long term climate commitments (like net zero pledges), only €3.4 trillion exclude companies with coal expansion plans. This comes despite a series of highly-publicized net-zero pledges from leading asset managers recently, with 13 of those surveyed having joined the Net Zero Asset Managers’ Initiative, among them BlackRock and Allianz GI last month. Despite that, six signatories to the NZAMi are yet to adopt any coal exclusion policy whatsoever.

Lara Cuvelier, Sustainable Investment Campaigner at Reclaim Finance, remarked: “Asset managers have rained down net zero commitments in recent months, but this report exposes these as little more than hot air. Simply put, genuine climate action is incompatible with coal investments. Hiding behind a lack of data and self-imposed technical problems just won’t cut it, especially as coal is not only one of the most polluting fossil fuels but also the easiest to get rid of.”

The Asset Managers Under Fire

Of the 29 asset managers reviewed, just one, AXA IM, achieves half the points available. The scorecard makes unhappy reading for the world’s largest asset managers, with Vanguard ranking towards the bottom, alongside State Street. Despite multiple climate announcements in recent months, BlackRock scores just 17/100, with weak coal restrictions, alongside ongoing support to coal developers.

The scorecard will potentially embarrass this year’s COP26 co-hosts. In the UK, LGIM follows BlackRock’s bad example, while Schroders and Aberdeen SI have no coal policy whatsoever. In Italy, the country’s biggest asset manager, Generali Investments, has also yet to start acting on coal.

Katrin Ganswindt, Finance and Energy Campaigner at Urgewald commented: “BlackRock and Vanguard account for almost 20% of global investments in the coal sector, yet both continue to support companies building new coal plants. By failing to take immediate action to end coal support, they symbolize the greenwash of toothless net-zero commitments. European asset managers also need to put their money where their mouth is: in particular, UK managers with no coal policies, like Schroders or Aberdeen, will be under pressure to take action before COP26 in Glasgow.”

Actively Passive – How Asset Managers Are Hiding Behind a Self-Made Problem

While the share of assets managed ‘passively’ has doubled in Europe over the last 10 years (4), the report highlights the danger of asset managers refusing to tackle the inherent climate problems currently built into such funds. The report finds that only 3% of the ‘passive’ portfolios of the biggest managers are covered by a criterion to restrict investments in coal (5). It lays out the measures required to make coal exclusions (6) a reality across both active and passive portfolios, including applying them in all default funds.

Moira Briss From Stop the Money Pipeline commented: “Asset managers want us to think their funds are passive, when in fact they’re actively choosing to be passive in the creation and management of index funds. And they want us to be distracted by their creation of more ‘ESG’ funds, when many of those funds are still chock-full of climate-damaging companies. If asset managers want their climate commitments to mean anything, they must actively decarbonize their entire portfolios”

Press contacts:

  • Angus Satow, Press Officer at Reclaim Finance, angus@reclaimfinance.org, +447847754046
  • Lara Cuvelier, Sustainable Investments Campaigner at Reclaim Finance, lara@reclaimfinance.org, +33668451893
Notes:

* The report is entitled Slow Burn: the Asset Managers Betting Against the Planet and is endorsed by NGOs urgewald, Re:Common, Sunrise and Amazon Watch.

You can read the full report here.

1. The first edition of this scorecard focuses on coal, as one of the easiest asset classes to begin to act for financial institutions and as the sector that requires the most urgent exit. Limiting global heating to 1.5ºC will only be possible if we put a complete end to coal-fired power generation by 2030 in Europe and OECD countries and 2040 worldwide. This means that substantial action needs to start now.

2. The 29 asset managers were selected based on their AUM (each managing at least €300 bln). 24 are headquartered in Europe, to which were added the top five US managers.

3. While 13 asset managers have adopted a coal policy, only two have adopted robust criteria (Ostrum and AXA IM). Four asset managers have a particularly weak policy in terms of criteria used (BlackRock, LGIM, UBS AM and APG AM).

4. ‘Passive’ index investing now makes up more than 33% of the European equity market, meaning that index trackers have doubled their market share in ten years. The share of ‘passive’ has also doubled in the US equity market and represents more than 50% of all assets.

5. This figure reflects an analysis on the top nine ‘passive’ asset managers of thescorecard: BlackRock, Vanguard, UBS AM, SSGA, JP Morgan AM, Amundi, LGIM, Invesco and DWS.

6. A link to our detailed demands for robust coal policies here