Stay informed with free updates
Sign up for the ESG investing myFT Digest and get it delivered directly to your inbox.
The concern about climate change remains the primary factor for financial groups excluding companies from their portfolios. New research by a coalition of non-profit environmental and sustainability groups reveals that 40% of exclusion decisions are motivated by climate change concerns. Meanwhile, 17% of exclusions are driven by worries about companies involved in weapons manufacturing, and 12% are due to tobacco-related concerns.
Despite the pushback against “woke” capitalism, financial groups continue to consider environmental, social, and governance (ESG) factors in their decisions. This is evident even as Republican politicians and state treasurers in the US lead a backlash against the idea that the financial industry should be responsible for policing companies.
The coalition of NGOs, including Friends of the Earth Netherlands, Fair Finance International, and Profundo, conducted the research by analyzing exclusions made by 150 pension funds, insurance companies, and banks. They compiled a list of 4,532 excluded companies from 87 financial institutions across 16 countries, including separately listed subsidiaries.
The aim of making this list publicly available is to increase pressure on the identified companies to change their practices.
The research identifies Poongsan Corporation from South Korea as the most excluded company, with 75 investors and banks excluding it due to its involvement in manufacturing controversial weapons like cluster munitions. Following Poongsan, the list includes US defense group Northrop Grumman and India’s industrial conglomerate Larsen & Toubro.
Fossil fuel companies are included in the climate category as well as categories related to human rights violations. Cenovus Energy, Suncor, and ExxonMobil were among the most excluded companies by investors and banks due to their investments in fossil fuels.
Norway’s $1.4tn oil fund, the world’s largest endowment fund, has also excluded Cenovus and Suncor from its investments due to “unacceptably high” greenhouse gas emissions.
Financial institutions are increasingly divesting from fossil fuel-intensive companies due to concerns about climate change and the associated financial risks. ABP, one of the world’s largest pension funds, sold its holdings in fossil fuel companies in 2021, and the Church of England announced plans to sell off shares in more than 10 oil majors, including Exxon and Shell.
The exclusive tracker reveals that fossil fuels are increasingly seen as a “sin” industry. Ward Warmerdam from Profundo believes this should prompt oil and gas companies to accelerate their transition efforts and take immediate actions to avoid losing investors.
Explore the FT’s coverage on Climate Capital, where climate change intersects with business, markets, and politics. If you’re interested in the FT’s environmental sustainability commitments, find out more about our science-based targets here.
Denial of responsibility! Vigour Times is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
