Asset managers not on track for climate target: report
by AFP Staff Writers
Paris (AFP) Aug 1, 2023

Asset managers are not doing enough to attain the target of climate neutrality in 2050, according to a report published on Tuesday, with US firms backsliding.

InfluenceMap research programme FinanceMap studied the portfolios of the world's top 45 asset managers including giants Blackrock and Vanguard, which have $72 trillion under management.

The think tank found that 95 percent were misaligned with the scenario to achieve carbon neutrality by 2050, as established by the International Energy Agency.

"Across the board, the world's largest asset managers' equity funds invest in companies misaligned with net zero goals," said the report.

Overall, the value of investments in fossil fuel companies was 2.8 times than in green investments as defined by European criteria.

The report found "a significant gap between the increase in net-zero commitments by the world's largest asset managers and their lack of meaningful short-term climate action".

Only two asset managers received positive scores putting them in line to meet carbon neutrality in 2050: France's Natixis and Britain's Schroders.

Japan's Mitsubishi UFJ Financial Group received the worst score.

Overall, the report found that asset managers had not made significant progress on attaining their climate goals since 2021, despite an increase in targets through industry initiatives such as Net Zero Asset Managers.

Part of that was due to a backlash against climate-aligned investment in the United States.

"Particularly, the ambition of US asset managers appears to have decreased, reversing an upwards trend up until 2022," said the report.

"This reversal coincides with the recent 'anti-ESG' trend in the country, with some state legislators seeking to limit investors' use of ESG factors and the phase-out of fossil fuel investments," it added.

Using ESG -- Environmental, Social and Governance -- criteria to evaluate the sustainability of companies and countries has become contentious in the United States, with Texas banning its towns and cities from signing new contracts with a list of ESG-aligned funds that don't invest in fossil fuels.

jvi/rl/lcm

HSBC

Related Links
Climate Science News - Modeling, Mitigation Adaptation