The world’s largest asset managers are “far off track” to meet their 2050 net zero commitments, a new report by FinanceMap has revealed.
According to the analysis, the world’s largest asset managers have not improved their climate performance over the past two years and in some cases, have reversed positive trends. While US asset managers have always lagged their European competitors, they appear to have pulled back even further this year amid a ‘anti-ESG’ trend driven by a number of state legislators, the report said.
FinanceMap’s ‘Asset Managers and Climate Change 2023’ report scored the 45 largest asset management companies based on three criteria: equity portfolio analysis, stewardship of investee companies and sustainable finance policy engagement. The group, which collectively holds $72 trillion in assets under management, holds 2.8 times more equity value in fossil fuel production companies than in green investments.
The report stated that since 2021, asset managers’ portfolios are still misaligned with net zero targets, while environmental stewardship efforts have stagnated and asset managers are failing to support “effective sustainable finance policy.”
Daan Van Acker, program manager at FinanceMap, said: “The data shows that while they may talk the talk, most asset managers are not walking the walk when it comes to using their influence to drive real change in investee companies and sustainable finance policy.”
The report found that European asset managers top the chart when it comes to engagement with investee companies on climate. Legal & General Investment Management and the asset management arms of BNP Paribas and UBS all scored A grade. European managers Natixis and Schroders received the highest Portfolio Paris Alignment scores, while BNP Paribas Asset Management was found to have 2.7 times higher exposure to green investments than the average asset manager in the assessed equity fund sample. However, in the US, BlackRock recorded a drop in stewardship score from B to C, while Vanguard scored D+, Fidelity Investment E+ and State Street Global Advisers scored C+.
Support for climate-positive shareholder resolutions also saw a notable decline in 2022, with the average asset manager supporting just 50% of such resolutions, compared to 61% in 2021. US-based asset managers displayed a trend of voting against a large portion of climate-related resolutions last year, with the average US manager supporting just 36% of climate resolutions, compared to 50% in 2021.
The research also revealed that 86% of asset managers surveyed are members of at least one industry group opposing sustainable finance policy required to enable decarbonisation pathways.
The scores for the world’s ten largest asset managers are as follows:
Source: FinanceMap
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