Insights

A Week in Impact: Fossil fuels feel the burn

This week, the gulf widened between US and European approaches to responsible finance, fossil fuel companies ran into controversy, and MSCI acquired data prover Carbon Delta.

FRANCE SHOWS THE US HOW IT’S DONE (AGAIN)

Two months after Vanguard came under fire for holding oil & gas companies in a supposedly fossil-free sustainable fund—and just one month after JP Morgan CEO Jamie Dimon spearheaded a statement committing the Business Roundtable to a more sustainable form of capitalism—US asset managers are, once again, under fire for greenwashing. The FT has revealed that "funds labelled by BlackRock, JP Morgan and Vanguard as sustainable frequently sided with a company’s management and against shareholder proposals on issues ranging from political spending to diversity disclosures,” according to new reports filed with the US Securities and Exchange Commission.

Commitment to sustainability appears to be more sincere on the other side of the Atlantic, however: particularly in Paris. This week, BNP Paribas announced plans to go 100% sustainable across its entire active fund range, with ESG criteria integrated across all investment strategies. Meanwhile, at the UN PRI in Person conference in Paris (from where this email is winging its way), French finance minister Bruno Le Maire has issued “a rallying cry to reform capitalism.” Speaking this morning, Le Maire said the effects of climate change and surge in populist sentiment had laid bare the need for a new economic model and new form of capitalism for the 21st Century: "one which is more sustainable and which allows us to reduce inequalities among nations and within nations.” He added that France will be pushing for a new green deal imminently.

FOSSIL FUELS FEEL THE BURN

About $50 billion of projects recently approved by oil & gas companies, including Shell and BP, will fail to deliver economic returns if the world meets the Paris climate goals, according to Climate Tracker research. The think tank found that no major oil company is investing to support the Paris goals of keeping well below 2˚C, instead piling into projects that not only undermine climate targets but also risk shareholder returns.

The bad news for Shell and BP: the Paris climate accord has seen a sharp rise in the number of investors divesting from fossil fuel stocks, according to the FT. Reporting on a recent study from 350.org  it writes that the number of institutional investors committed to cutting fossil fuels has risen from 180 in 2014 to more than 1,100 today. In monetary terms, that’s a group representing $52 billion in 2014 versus $11 trillion in 2019. The shift is so significant that “Shell [has] listed divestment campaigns as a material risk in its latest annual report, [while] BP chief executive Bob Dudley said in 2018 that these activists’ efforts could threaten energy security and the global economy.”

Meanwhile, renewable energy is riding high on a decade-long growth spurt, according to the new UN report Global Trends in Renewable Energy Investment 2019. The research finds that “global investment in new renewable energy capacity over this decade is on course to hit $2.6 trillion, with more gigawatts of solar power capacity installed than any other generation technology."

IN OTHER INDUSTRY NEWS

On Monday, it was announced that MSCI had snapped up another data provider with the acquisition of climate change analytics firm Carbon Delta.