The American NGO As You Sow, together with South Pole and Your SRI, reveals on the website fossilfreefunds.org which of the 6,500 US pension funds support fossil fuels.
The world of finance is showing itself to be increasingly sensitive to environmental issues. At least in words. So how can one tell whether financiers are honouring the commitments they have made? The American NGO As You Sow has addressed this with the website fossilfreefunds.org
On fossilfreefunds.org, the composition of 6,500 pension funds in which more than $11,000 billion is invested is analysed under the microscope. Users simply need to type the name of their pension plan or investment products into the search engine to find out whether they are fossil free or not. And, if not, to what extent the fund in question is involved in financing carbon-intensive companies. Andrew Behar, CEO of As You Sow, explains how the idea came about:
We developed Fossil Free Funds after realising that our defined-contribution pension fund was made up of retirement funds that were investing in major oil, gas and coal-mining companies. We had no idea.
In this short video, Andrew Behar, head of As You Sow, explains how to use the portal.
Thanks to fossilfreefunds.org – created together with South Pole group and Your SRI, drawing on the rating tools of Morningstar – As You Sow is able to produce periodic reports to call out the funds that diverge most from their promises. In the October edition, for example, the financial management multinational BlackRock finds itself in the dock: on the one hand it publishes a weighty report on the importance of taking climate risks into account, and on the other it markets a fund, the BlackRock Basic Value Fund's (MABAX), whose involvement in financing fossil fuels turns out to be 170 per cent higher than its benchmark. Also embarrassing is the case of the State Street S&P 500 Fossil Fuel Free (SPYX) index: it is "fossil free" in name only, since it contains investments in forty fossil fuel companies, including the well-known oil infrastructure company Halliburton. Fortunately, the search engine has also made it possible to highlight 25 virtuous American funds accounting for nearly $9 billion in investments, of which $2.3 billion is in the Calvert Equity Portfolio alone, the largest.
In the USA, 91 million people invest in a pension plan, meaning more than a third of the total population. Defined-contribution pension funds alone (known as 401k) hold $4,400 billion. Being able to influence the composition of these funds in order to push them to abandon the financing of fossil fuels once and for all therefore represents a major opportunity for those who still hope to be able to save the planet. "Moving one's savings into funds with a lower footprint is one way to avoid climate risks," says Andrew Montes, director of digital strategy at As You Sow. "It is also a way to reward companies that have made positive decisions to reduce the climate impact of their activities. Investor demand will lead fund managers to exclude companies with a high carbon footprint and to include those that are transitioning to clean energy."