An overwhelming number of fund managers believe that oil companies will not remain attractive investments unless they adopt business models that support the Paris climate targets.

A report that surveyed fund managers responsible for $10tr of assets, published today by the UK Sustainable Investment and Finance Association (UKSIF) and the Climate Change Collaboration found that 86 per cent are calling on them to align their businesses with the Paris goals.

Two thirds (67 per cent) want oil companies to switch their investment to support a low-carbon transition consistent with these targets, but a quarter (24 per cent) want them to wind down their businesses and return cash to shareholders.

Only 18 per cent of fund managers believe oil companies will be good investments if their business is still focused on fossil fuels in five years’ time.

The report also warns that many fund managers are putting investors at risk by failing to align their portfolios with the Paris targets – only 21 per cent have a policy to do this across all their funds.

Simon Howard, Chief Executive, UKSIF, said: “Most fund managers need to do much more to protect asset owners, and asset owners more to protect savers, by driving oil companies to change. Both should publicly commit to aligning investment portfolios with the Paris targets and managers should make more fossil free investment products available. They should also coordinate their engagement policies and give them real teeth by setting oil companies deadlines and spelling out the consequences if they fail to take action.”

UKSIF and Climate Change Collaboration surveyed 39 fund managers with $10.2tr of assets under management for their second annual report on fund managers’ attitudes to investment in integrated oil companies (IOCs). UK companies made up around three quarters, with the rest from France, Germany, Italy and Spain.

Full report here.

Share Story: