Net-Zero Pledges Aren’t as Green as You Think, Says New Study

Of the 25 asset managers studied that were members of the Net Zero Asset Manager Initiative, not a single one required companies in their portfolios to stop developing new projects with coal, gas, and oil.

Net-zero pledges have been dominating the world of corporate social responsibility. Over 100 companies with large carbon footprints have signed pledges to commit to net-zero emissions by 2050, according to Climate Action 100+. Investors have looked to these pledges as a source of proof that their engagement strategies are working. Asset managers have also taken the plunge, with 236 managers signing on to the Net Zero Asset Managers initiative, accounting for $57.5 trillion in assets under management.

But a new analysis by Reclaim Finance and three partner NGOs has revealed that despite the promises, many asset managers are not requiring companies to stop developing new coal, gas, and oil projects.

Reclaim Finance created a scorecard system to rank 30 different asset managers based on their climate friendliness. Twenty-five of these managers were members of the Net Zero Asset Managers initiative.

“Leading asset managers are kicking the can down the road without even asking companies to stop worsening the climate crisis,” said Lara Cuvelier, a campaigner at Reclaim Finance, in the press release. “Let’s be clear: drilling a new oil well or opening a new coal mine is not a normal thing to do in a widespread climate catastrophe.”

For more stories like this, sign up for the CIO Alert daily newsletter. 

The report claims that net-zero criteria is often very vague and leaves room for exclusions and exceptions. While seven of the studied companies do restrict investments in companies that are engaging in new coal projects, three of those companies have created exceptions for this policy.

“Asset managers are not engaging companies on the key climate issues when it comes to limiting global warming to 1.5°C,” said Cuvelier. “Asset managers that provide fresh cash to companies that are ignoring climate science are purely and simply pouring more fuel in the fire.”