Green investment funds pushing money into fossil fuel firms, research finds
Investment funds branded as green or socially responsible are being used by some of the world’s largest asset managers to invest hundreds of millions of pounds in fossil fuel companies, according to a report.
The research by the Common Wealth thinktank showed that the US fund managers BlackRock and State Street and the UK-based Legal & General were among asset managers to use funds with an “environment, social and governance” (ESG) label to invest in fossil fuel firms.
The leftwing thinktank said that despite claims that ESG funds offer a green and socially responsible option for investors, “the research shows these funds are significantly exposed to fossil fuel companies”.
Between February and April this year, BlackRock, State Street and Legal & General alone were found to hold $1bn (£800m) in bonds issued by fossil fuel companies in their ESG funds.
Research by Sophie Flinders, a data analyst, found that more broadly ESG funds had invested more than $1.5bn in the bonds of top coal, oil and gas companies – raising questions about sustainability claims made by asset managers.
ESG funds account for a small portion of the world’s assets under management, which reached $126tn in 2022, according to the data provider Morningstar.
A report by the accountancy firm PwC last year said fund managers were expected to increase their ESG-related assets under management to $33.9tn by 2026, from $18.4tn in 2021.
However, critics of ESG have accused the asset management industry of “greenwashing” as it seeks to attract ethical investors.
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Mathew Lawrence, the director of Common Wealth, said
Read more on theguardian.com
