Thirty of the largest asset managers in Europe and the US do not block or drop companies in their portfolios as they roll out new fossil fuel projects, with BlackRock and Vanguard providing 58% of the recent investments in this space, according to a new report that was shared with Net Zero Investor.
The claims were published by a group of European NGOs who are calling on asset owners on both sides of the pond to step up their efforts to pressure asset managers into changing coure.
The groups urge pension funds, insurance companies and other institutional investors to force asset managers to "urgently strengthen their policies."
Published by Reclaim Finance, ReCommon, Sierra Club, The Sunrise Project and Urgewald, the groups studied the investment decisions of the 25 largest European and 5 largest American asset managers in relation to oil and gas expansion.
Fossil fuel investments
The groups said the 30 asset managers invested $3.5 billion in bonds issued in the last 18 months by some 40 companies actively involved in fossil fuel expansion.
21 of the 30 asset managers were found to have invested in the latest bond issued by TotalEnergies, the world's 7th largest developer of new oil and gas supply projects.
The groups also said that, while 4 asset managers have committed to stop purchasing new bonds from all companies developing coal projects, none have stopped new bond purchases from oil and gas developers.
They found that just one asset manager, Ostrum AM, did ask oil and gas companies to halt their expansion plans.
"None have systematic sanctions in place to encourage oil and gas developers to change, either through votes or investment restrictions," said Lara Cuvelier, sustainable investment campaigner at Reclaim Finance.
She went on to call BlackRock and Vanguard "by far the worst offenders," claiming that "together providing 58% of the recent investments in fossil fuel expansion, while setting very few expectations of fossil fuel companies to pivot away from business as usual."
Cuvelier noted that US asset manager Vanguard has the highest level of investments in these new fossil fuel bonds internationally, holding at least $1.2 billion in bonds recently issued by 19 major fossil fuel developers, including by ConocoPhillips, the company behind the controversial oil drilling Willow project.
"German asset managers like to hide behind net zero lingo and dismiss calls for stricter policies."
European investors
The German group Allianz, parent company of PIMCO and Allianz GI, and the French group BPCE, parent company of Natixis IM, are the biggest European investors.
Cuvelier stressed they hold respectively at least $193 million and $122 million in bonds recently issued by major fossil fuel developers.
Meanwhile, Julia Dubslaff, finance campaigner at Urgewald, zoomed in on German investments.
“German asset managers, including market leader DWS, systemically neglect the oil and gas sector's role in driving the climate crisis," she said.
"They like to publicly stress their rather untransparent and inconsistent engagement activities, hide behind net zero lingo and dismiss calls for stricter policies," Dubslaff argued.
Assessment
Asset managers were assessed by the group of NGOs on three main indicators. Firstly, whether they have stopped purchasing new bonds issued by the biggest developers of new fossil fuel projects.
Secondly, whether they set the expectation for the companies they invest in to end fossil fuel expansion and, thirdly, whether they have sanctions in place in the case of non-compliance with this request.
"Asset managers continue to add fuel to the fire by buying the bonds from the worst fossil fuel polluters," said Cuvelier.
"It is time for asset managers’ clients to challenge them on this issue and ask them to put in place robust policies to stop this scourge," she concluded.
