415 institutional investors worth $32 trillion, are calling on COP24 leaders to "update and strengthen their national contributions to meet the emissions reduction target set by the Paris Agreement". Will the latest in a long line of statements finally have an impact? One can only wonder. The figures published by InfluenceMap show that the largest global management companies have indeed increased their exposure to coal reserves over the past three years.
On one hand, the world's major investors are formally asking states to phase out thermal coal and fossil fuel subsidies. On the other hand, it appears to be even more difficult to apply the same approach to global asset management as a whole and to remove coal reserves from the financial markets.
This has been the argument presented by British think tank InfluenceMap, which measures thermal coal intensity (TCI), expressed in tons of CO2 per million dollars of assets under management (AUM). The findings of their study are troubling in regard to the effectiveness of many global investors’ coal exclusion policies.
In fact, these policies have very little weight on financial markets given the complexity of these markets and the multiplicity of intermediaries. Management companies also do not apply such policies it to their entire fund whether equities, bonds or indices. This would require that all of their customers ask them to do so, which can take a great deal of time given the lack of motivation many have for the approach!
The fossil fuels shareholder chain, according to InfluenceMap
BlackRock leading in CO2 emissions
The funds analysed by InfluenceMap represent a total of 40 trillion in assets. This would have increased the quantity of indirectly held thermal coal reserves by 20% since the signing of the Paris Agreement.
InfluenceMap has particularly called into question American giant BlackRock, which tops the list of fund managers with the largest coal portfolios. The coal, gas and oil reserves controlled by the fossil fuel producers BlackRock owns represent a total of 9.5 billion tonnes of CO2 emissions, or 30% of all global energy-related emissions in 2017, according to the International Energy Agency (IEA).
These figures show that the path to a low-carbon economy is still riddled with obstacles. The increasingly urgent messages from the IPCC are not bringing about the kind of change that was expected.
"Passive management should be forbidden until it is aligned with a 2°C trajectory”, exclaimed Michel Lepetit during the presentation of his study "To Coal! An Analysis of Life Insurance Investment Policies”, on 7 December in a meeting organised by the Positive Investors Forum in Paris. In any case, one should question the excessive use of stock market indices of any kind. These indicators do not determine the global temperature.
Anne-Catherine Husson-Traore, @AC_HT, CEO of Novethic