In a first for the sector, Reclaim Finance has undertaken an extensive analysis of major European and US asset managers’ climate records, through the prism of their coal policies. The report, named “Slow Burn: The Asset Managers Betting Against The Planet” for its first edition, finds that asset managers are shrugging off their climate responsibilities and are still big supporters of the coal industry. With only 25% of all the assets managed by the 29 institutions analyzed covered by a criteria to restrict coal investments, the industry will need to react quickly to ensure they decarbonize their entire portfolios without leaving out ‘passive’ funds.

Net zero but zero action

29 major asset managers, based in Europe and the US, have been questioned and evaluated on their approach to the coal sector, a benchmark of urgent climate action. While 16 now have long term climate commitments, we find that they are at square one when it comes to quitting coal, an essential first step to climate action. Despite climate science warning that immediate action must be taken now to achieve a coal exit by 2030/2040, only two asset managers have a robust policy to plan for a coal phase out by these dates and exclude companies with coal expansion plans. This leads to only €3.4 trillion out of the €33 trillion managed by the sample to exclude companies with such plans and reveals a large gulf between words and action.

This lack of ambition of the policies comes as a surprise with the last months having rained down big climate announcements from asset managers. Whilst being signatories of the ‘Net Zero Asset Managers Initiative’, six asset managers such as Vanguard, LGIM, Allianz GI and Aberdeen SI still support companies with coal expansion plans, an unsustainable contradiction.

The myth of ‘passive’ investing

But perhaps the most worrying finding from the scorecard is that asset managers are ignoring the investments they manage ‘passively’. By hiding behind technical issues that the industry created itself, an increasing proportion of assets is escaping any restriction. As a result, only 3% of the ‘passive’ portfolios of the biggest managers in our sample are covered by restrictions on coal investments.

In the US, ‘passive’ giants BlackRock and Vanguard’s holdings in coal add up to 17% of all institutional investments in the whole coal industry. In Europe, this management technique is now 33% of the equity market, with players like Amundi trying to grab a bigger share of the market.

Asset managers’ claims that they cannot be selective about the companies they invest in via their ‘passive’ funds is untrue, the report argues. ‘Passive’ management is a combination of active choices: managers choose the indexes they track, which funds to put forward, but also how loosely the funds will track their underlying index. Ultimately, given their growing power, managers can sell and use the threat of divestment. Applying a robust coal criterion to all ‘passive’ funds is the next step asset managers will need to take, and fast.

The Asset Managers Under Fire

No asset manager comes out of our scorecard well, with just one (AXA IM) scoring more than half the 100 points available. Despite a dizzying range of net-zero commitments – with Allianz and BlackRock among 13 of those surveyed who are members of the Net Zero Asset Managers Initiative – few achieve more than 20 points.

Some of the world’s largest asset managers, based in the US, perform particularly poorly, such as the ‘passive’ giants State Street and Vanguard. With COP26 looming, attention will also turn towards the UK, where major asset managers like Schroders and Aberdeen SI don’t even have a coal policy.

What needs to happen

To actively decarbonize their entire portfolios, asset managers should immediately divest from companies developing coal projects and start divesting now from coal companies for a complete exit by 2030/2040. Divestment should cover all assets under management and be applied by default. This would bring a solution to the low percentage of assets covered by some coal policies, as is the case for BlackRock and Legal & General Investment Management.

The report outlines first steps that should be taken immediately regarding ‘passive’ portfolios, such as committing to not launch any new product without robust coal screens and switching default options in order to systematically offer climate-friendly funds. For existing funds relying on standard indexes, collective action by big asset managers will be needed, to ask index providers to exclude coal. That’s what real climate commitment would look like.

Asset managers constitute an increasingly influential industry managing more than $100 trillion in assets globally. How they step up their action in the coming year will be key. Failing to radically change their most-used default funds and to start changing the market indexes they use will risk not just their clients’ assets but also our chances of effecting the rapid energy transition required.


Following additional information that was sent to Reclaim Finance after the publication of this report, the score attributed to Generali Investments has been changed from 1 to 20 (out of 100). This change has an effect on the scoring reflected in pages 14,15 and 19 of the report.

Find out more:

* The report was written by Reclaim Finance and endorsed by NGOs urgewald, Re:Common, Sunrise and Amazon Watch.

  • Read the full report here.
  • Read our press release here.