Institutional Investors Hold $4.3 Trillion in Fossil Fuel Companies: Report

Germany-based environmental non-profit Urgewald has found that institutional investors currently hold $4.3 trillion in bonds and shares of fossil fuel companies, based on investment data retrieved in May.

Urgewald and 17 non-governmental organization (NGO) partners recently released the 2024 edition of Investing in Climate Chaos, a website that reveals the fossil fuel holdings of over 7,500 institutional investors worldwide. The research was conducted by non-profit research firm Profundo.

The fossil fuel investments are held by pension funds, insurance companies, asset managers, hedge funds, sovereign wealth funds, endowment funds and asset management arms of commercial banks, Urgewald said in a statement.

Less than one third, $1.2 trillion, is invested in bonds and shares of companies on Urgewald’s Global Coal Exit List (GCEL), while $3.8 trillion or 88 percent is invested in companies on the organization’s Global Oil & Gas Exit List (GOGEL). Meanwhile, $0.7 trillion is invested in companies listed on both GCEL and GOGEL, which are public databases that provide detailed information on 2,928 companies operating in the fossil fuel sector.

According to the study, investors and asset managers from 10 countries are responsible for 91 percent of institutional investments in the fossil fuel industry – namely the USA, Canada, Japan, the United Kingdom, India, China, Norway, Switzerland, France, and Germany.

Further, the world’s four biggest institutional investors in fossil fuels are all headquartered in the USA. Mutual fund company Vanguard has coal, oil, and gas holdings of $413 billion. The world’s largest asset manager BlackRock has fossil fuel investments of $400 billion. State Street holds $171 billion in fossil fuel holdings, while Capital Group holds $165 billion. Collectively, the four asset managers hold and manage fossil fuel investments of $1.1 trillion.

Urgewald noted that oil and gas companies account for 89 percent or $2.5 trillion of U.S. institutional investors’ holdings in fossil fuels, with the biggest beneficiaries being domestic oil and gas companies such as ExxonMobil, Chevron, and ConocoPhillips.

“2024 needs to become the turning point, the year where central banks and regulators finally act on Article 2.1(c) of the Paris Agreement and take measures to ensure that financial flows are in line with Paris instead of pitted against it. Institutional investors need to start shifting the trillions to supercharge the energy transition and not fossil fuel expansion,” Katrin Ganswindt, head of financial research at Urgewald, said in the statement.

In November 2023, Urgewald published the second update of GOGEL, a public database that provides a detailed breakdown of the activities of oil and gas companies worldwide. The organization found that 96 percent of a select 700 upstream companies were developing new oil and gas fields, while 1,023 firms were planning new liquefied natural gas (LNG) terminals, pipelines, or gas-fired power plants.

According to the update, the industry’s annual capital expenditure on oil and gas exploration has risen by more than 30 percent since 2021. Over the past three years, the oil and gas companies in the database spent a total of $170.4 billion on exploring for new oil and gas reserves. GOGEL lists 384 companies whose average capital expenditure on exploration exceeded $10 million between 2021 and 2023.

GOGEL covers 1,623 companies active in the upstream, midstream, or gas-fired power sector. Companies listed on GOGEL account for 95 percent of global oil and gas production.

Source: www.rigzone.com