INSIGHT by ShareAction
To mark United Nations’ World Environment Day (Monday 5th June), ShareAction is releasing its latest analysis revealing how the world’s largest asset managers are failing to use their influence to stem the dual crisis of biodiversity loss and climate change.
With over 20 findings, the report has been produced using the answers provided by 77 of the world’s largest asset managers to over 100 questions they were asked.
Among the key findings in the report and based on the asset managers own responses we found that:
〉Asset Managers are out of sync with the world’s leading scientists and the UN when it comes to emissions and net-zero. We found that:
- They have inadequate targets to reduce emissions.
- They are continuing to invest in companies that are expanding their oil & gas production.
〉Only a quarter of managers have commitments on deforestation, and none have commitments to avoid other forms of damage to natural habitats, such as wetland draining for agricultural use or ocean pollution.
〉Managers are stalling the move to green, clean energy by not investing enough in new low-carbon energy opportunities.
“It is alarming to see too many asset managers are failing to adapt their investments to tackle climate change and the destruction of our valuable and vital biodiversity. Asset Managers need to use the huge power they wield through the investments they hold to bring about a meaningful transition to a clean and sustainable future.”
-ShareAction’s Claudia Gray, Head of Financial Sector Standards
In addition to key findings about insufficient net-zero strategies and habitat destruction, asset managers are blaming bad data in a way that doesn’t stand up to scrutiny. Managers are deploying manpower and resources to collect the data but are simply not using it: For example, most managers perform climate scenario analysis, yet less than a third reported that they use these results to inform their approach to investment.
In addition to key findings about insufficient net-zero strategies and habitat destruction, asset managers are blaming bad data in a way that doesn’t stand up to scrutiny. Managers are deploying manpower and resources to collect the data but are simply not using it.
Another finding is that only ten asset managers – all of which are European – have committed to restrict investment in the most harmful fossil fuels across all funds. These fossil fuels include coal which is the most emissions-intensive source of energy. They also include unconventional oil & gas, for example fracking or from the Arctic, which is extracted in a way that is more damaging to local communities and the local environment than other extraction methods.
ShareAction has a number of recommendations for asset managers:
〉Make commitments about the use of land and sea that protect not only forests but other critical ecosystems on land, rivers and oceans.
〉Take climate change seriously by setting detailed interim net-zero targets and ruling out investments in fossil fuel expansion.
〉Invest significant amounts in clean energy companies across all funds to help the best climate solutions access the funding they need.
〉Start using the available data on climate and biodiversity to inform investment decisions.
This report is part four in the Point of no Returns 2023 series
| All opinions expressed are those of the author and/or quoted sources. investESG.eu is an independent and neutral platform dedicated to generating debate around ESG investing topics.