A recent report by FinanceMap has revealed that the world’s largest asset managers have not made significant progress towards their climate goals since 2021. Specifically, North American firms are falling behind, facing an anti-ESG (Environmental, Social, and Governance) backlash within the United States.
According to the analysis conducted by FinanceMap, the top 45 asset managers globally hold a total of $309 billion in green investments. However, shockingly, they hold nearly three times more in fossil fuel investments.
FinanceMap, a research program by the climate think tank, InfluenceMap, evaluated the firms based on three criteria: equity portfolios, stewardship, and sustainable finance policy engagement. The findings indicate that the largest asset managers are far from meeting their own net-zero commitments by 2050. Furthermore, it was revealed that major U.S. asset managers are falling even further behind their European counterparts.
Although the big four U.S. asset managers face challenges in meeting their climate commitments, they are not alone. The report indicates that globally, only 18% of asset managers have a stewardship score in the A band. This band reflects “ambitious, effective, and transparent” practices in addressing climate issues. This figure has declined from 33% in 2021.
The findings of the report serve as a wake-up call for asset managers worldwide to prioritize their climate commitments and take more robust actions towards a sustainable future.
Slow Progress in Climate Action Amid Backlash Against ESG Investing in the U.S.
The recent report highlights a sluggish advancement in climate action, which stands in stark contrast to the increasing number of climate targets being set through the Net Zero Asset Managers (NZAM) pact – an international agreement aimed at carbon reduction. Additionally, there has been a growing opposition to environmental, social, and governance (ESG) investing in the United States.
Notably, Vanguard announced its withdrawal from the NZAM in December, while BlackRock, the world’s largest asset manager with $9.4 trillion in assets, has become a central target for the campaign against ESG and climate initiatives. BlackRock’s CEO Larry Fink recently stated that he would no longer use the term “ESG” due to its appropriation by extremist groups.
The report also acknowledges that several state governments have taken measures to discourage financial institutions from considering ESG factors and have implemented restrictions on conducting business with companies boycotting fossil fuels.
According to Van Acker, there has been a significant decline in support for climate-related resolutions among asset managers. In 2021, the average U.S. asset manager supported 50% of relevant resolutions, which dropped to 36% in 2023.
BlackRock and Vanguard have chosen not to comment on the matter but have referred to their respective resources and policies concerning climate risk and stewardship. Fidelity has not responded to the request for comment.
On a positive note, two smaller U.S. firms – Boston Trust Walden and Trillium Asset Management – have made the “A list” for their commendable stewardship practices.