According to a study released Thursday, the world’s top 30 fund managers, who collectively oversee $50 trillion in assets, get mixed reviews for guiding the global economy toward Paris climate targets.
InfluenceMap, a London-based think tank, scored investment behemoths on three fronts: support for climate-related shareholder resolutions, portfolio greenness, and involvement with the companies in those portfolios.
“Given these asset managers’ enormous clout in the global economy, it’s critical that they act to ensure the world meets the Paris Agreement’s climate goals,” said Dylan Tanner, executive director of InfluenceMap.
The 2015 climate deal requires countries to keep global warming to “well below” two degrees Celsius relative to pre-industrial levels, and to limit it to 1.5 degrees Celsius if possible. The world would warm by at least 3 degrees Celsius if current patterns continue.
With 1.1 degrees Celsius of warming thus far, the planet has seen a surge in deadly severe weather, like superstorms exacerbated by increasing sea levels.
According to the report, when it comes to public encouragement for corporations to green their business strategies and lobbying efforts, European asset managers continue to outperform their American counterparts.
Legal & General IM, AllianzGI/PIMCO, and Amundi all earned top marks among the top ten companies, each with at least $1.5 trillion under management.
The bottom of the class included Fidelity Investments, Capital Group, and Goldman Sachs AM, all of which are located in the United States.
After announcing plans to divest from coal, BlackRock, the world’s largest fund manager with more than $7 trillion under administration, earned a better grade in 2020.
However, when it came to endorsing shareholder resolutions asking for more ambitious climate policies, the US-based behemoth received a failing grade.
Shareholder efforts have been a strong catalyst of progress in businesses and a warning to the wider market.
“Investors are increasingly demanding proof that corporate lobbying and business models are consistent with Paris targets,” Tanner said.
In this category, Vanguard, Capital Group, and Fidelity Investments all performed worse than BlackRock.
According to InfluenceMap, BlackRock and two other top 10 fund managers joined the Climate Action 100+ investor initiative in 2020, a “promising move” that could hasten corporate transitions to carbon neutrality.
Finally, a portfolio review of the world’s largest funds, which looked at 3,000 companies with a market capitalization of more than $20 trillion, revealed that they deviated significantly from the Paris temperature goal, especially in certain sectors.
Tanner told AFP that “the world’s manufacturers are not switching to electric vehicles at a rapid enough pace,” that “the coal manufacturing market is winding down too slowly,” and that “the power sector is not phasing out fossil fuel generation or installing renewables rapidly enough.”
He added that sectors and businesses that do not accelerate the transition to low-carbon economies risk having their assets stranded.