12 December 2024 – More than US$7.3 billion of pension fund and other asset owners’ money was recently invested in new bonds issued by companies developing fossil fuel projects, according to an analysis of the investments of 25 of the biggest European and US asset managers, published today (1). Reclaim Finance found that asset managers are supporting fossil fuel developers both through their investments and through their votes at Annual General Meetings, disregarding the long-term interests of asset owners who entrust them with their money. Reclaim Finance urges asset owners to engage with asset managers and stop entrusting new mandates to those that overwhelmingly support fossil fuel expansion.
Most asset owners, including pension funds, hold and manage investments on behalf of beneficiaries, such as savers or pension holders, over the long term, making them vulnerable to climate risks. Asset owners contract asset managers via their mandates to manage investment decisions and to conduct climate-related stewardship on their behalf. But a new analysis published today finds that almost all of the 25 European and US asset managers assessed continue to support new fossil fuel development, exacerbating climate change and putting a 1.5°C target for global temperature rise out of reach (2).
Reclaim Finance argues that the 25 asset managers (3), which include key players in Europe such as Amundi, Allianz Global Investors and UBS Asset Management, are failing to align their practices with climate science. The analysis shows that they overlook systemic climate risks, while providing new capital for companies expanding fossil fuel activities through new bond investments. The analysis found the 25 asset managers held more than US$7.3 billion in bonds issued by fossil fuel developers between 1 January 2023 and 30 June 2024.
Analysis of the voting practices of the asset managers reveals that they also supported the management decisions of the largest fossil fuel developers at company Annual General Meetings, with 79% of their votes in favour of resolutions approving the actions of the boards of directors in 2024 (4), including the re-election of directors.
Asset managers are entrusted with asset owners’ money, but they fail to follow through on managing climate risks. Asset owners should look at how their money is being invested and challenge asset managers’ overall practices. Allocating new assets to fossil fuel developers will exacerbate climate change and increase climate risks for generations to come, which is in total contradiction with pension funds and other asset owners’ long-term horizon.
Agathe Masson, Sustainable Investment Campaigner at Reclaim Finance
Among the asset managers assessed, Union Investment is noteworthy for its voting practices, having opposed 80% of resolutions which sought approval of the actions of the boards of directors at the largest fossil fuel developers.
French asset manager, BNP Paribas Asset Management stands out for their recently announced policy to end new investments in bonds issued on the primary market by oil and gas exploration and production companies from November 2024.
Reclaim Finance calls on asset owners to check the performance of asset managers in their assessment published online and to stop entrusting new mandates to asset managers supporting fossil fuel expansion. It also urges them to engage them to change their practices.
