Morgan Stanley has picked an interesting moment to press ahead with expanding its offering of ESG-themed funds.
The US market for ESG-related products is less than half the size previously reported, according to the main umbrella organization for sustainable investing.
Tesla has grown into a $735 billion company on the back of its breakthrough electric-vehicle engineering. Its own carbon footprint is a small fraction of its peers, and its success in the market has pushed the industry overall away from gas-powered vehicles.
Together, 30 of the biggest asset managers have at least $550 billion invested in oil, gas and coal companies that have expansion plans, and even more alarmingly, they continue to provide “fresh cash to companies that are ignoring climate science,” said Lara Cuvelier, sustainable investment campaigner at Reclaim Finance, a nonprofit which published a scorecard Wednesday grading investment firms on their environmental commitments.
Banks earned record first-quarter fees from arranging green bond deals, while oil, gas and coal companies issued the lowest amount of debt in a decade.
With the first quarter coming to a close, banks (mostly based in China) have helped coal companies raise $9.9 billion via loans and bond sales, according to data compiled by Bloomberg. For comparison, the number was closer to $4.4 billion during the first three months of 2021.
In the past year, a large number of climate-focused funds have launched. Some invest in companies seeking to lower their carbon risks, while others steer assets to companies developing innovative solutions to climate change. And, sometimes it’s a combination of both.
Last year, shareholder activists teamed up with environmental and socially-minded investors in record numbers. The most successful campaign was arguably hedge fund Engine No. 1’s push to add three climate-conscious directors to the board of fossil-fuel behemoth Exxon Mobil Corp. Other notable initiatives included investor Dan Loeb’s attempt to break up Royal Dutch Shell Plc and Bluebell Capital Partners’s push for a management shakeup at GlaxoSmithKline Plc.
The industry has been slammed by a combination of concerns about higher U.S. interest rates, a probable reduction in solar-system subsidies for California homeowners, the broader stock market rotation out of high-growth technology companies and the obstruction of President Joe Biden’s stalled “Build Back Better” agenda by 50 Republicans and two Democrats, Joe Manchin and Kyrsten Sinema.
Investing in ESG funds is like trying to navigate “the Wild West” as both regulations and enforcement fall short, according to Andrew Behar, the chief executive of As You Sow.
It’s official. For the first time since the unveiling of the Paris climate agreement in 2015, banks earned more fees arranging green-related bond sales and loans than they did helping fossil-fuel companies raise money in the debt markets.
Despite a drop in clean-energy stocks and intensifying concerns about widespread greenwashing, the market for investment products sold as being ESG-related had another record year by most yardsticks.
The market for ESG-focused exchange-traded funds has been among the world’s hottest investment areas for more than two years now.
The clock is ticking for banks, insurers and asset managers still providing support to oil, gas and coal producers. It’s not just the moral imperative—that fossil-fuel use is destroying the atmosphere and life on Earth with it. It’s that their financial health requires leaving such companies behind.
At this month’s climate talks in Scotland, a lot of time was spent condemning the shortage of money available to fight global warming.
While many banks have been condemned for contributing to the climate crisis by helping fossil fuel producers raise cash in debt markets, the banking industry as a whole is making more money from underwriting ESG-related bond sales.
There are vast inconsistencies between the stated climate objectives of money managers and “the reality of their investments.”
Asset managers and others are furious over a proposed DOL rule that they say is based on a flawed and unsupported assumption that ESG funds give up financial returns in favor of “non-pecuniary” rewards.