Logo of Phnom Penh Post newspaper Phnom Penh Post - Analysis: Funds worth $37T failing to meet climate goals

Analysis: Funds worth $37T failing to meet climate goals

Content image - Phnom Penh Post
The funds control portfolios containing a fifth of the total value of world capital markets, yet their investments in sectors such as automobiles and coal puts them ‘significantly at odds’ with the Paris climate goals. PATRIK STOLLARZ/AFP

Analysis: Funds worth $37T failing to meet climate goals

The world’s largest investment funds – controlling a mammoth $37 trillion in assets – are failing to bring their portfolios in line with the Paris climate goals, a new analysis showed on Wednesday.

The funds control portfolios containing a fifth of the total value of world capital markets, yet their investments in sectors such as automobiles and coal puts them “significantly at odds” with the Paris aim of limiting global warming to well below two degrees Celsius, the Britain-based think tank InfluenceMap said.

Experts analysed 50,000 listed funds controlled by 150 finance giants and found $8.2 trillion of holdings in oil and gas, coal mining, car manufacturing and electric power.

InfluenceMap found that within those sectors the funds were still tending towards investing in companies deploying so-called “brown technologies”, and that they were under-investing in renewables and other green tech.

“The majority of companies in these sectors are very far from aligning their business models to meet the goals of Paris,” it said.

Recent years have seen a global movement calling on shareholders to stop their institutions investing in fossil fuel use and exploration.

According to the climate campaign group 350.org, $11 trillion has already been committed to be divested.

But the industry pushback has been hard, with pension and sovereign wealth funds seeking to draw down their fossil investments challenged by shareholders in companies belonging to their portfolios.

“There’s been this big movement in the last decade about sustainable finance being a driver for improving things in the real economy in the absence of strong government action,” said InfluenceMap executive director Dylan Tanner.

“If the finance sector is making broad statements about being in line with the Paris agreements, that would suggest their portfolios should aim for that alignment,” he said.

“It’s clear that they do not.”

This was clearest in the automotive sector, where institutional reluctance to green production lines and sophisticated lobbying techniques are holding back progress, the report said.

Last year, carmakers produced 96 million vehicles worldwide, but only 1.4 per cent of them were electric vehicles (EVs).

“The sector is not investing in EVs at anywhere near enough pace, and the fleet volumes are growing so much that the internal combustion engine will overwhelm any benefits from EVs,” Tanner said.

Last year, the Intergovernmental Panel on Climate Change (IPCC), in its assessment on the difference between 1.5C and 2C of warming, laid out a timeline for phasing out coal by 2030.

The funds analysed by InfluenceMap currently manage at least 30 per cent more coal production than would be consistent with the Paris goals.

“It should also be noted that coal industry interests continue to lobby aggressively to delay policy which may realise the IPCC’s 2030 phaseout timeline,” it said.

MOST VIEWED

  • Hong Kong firm done buying Coke Cambodia

    Swire Coca-Cola Ltd, a wholly-owned subsidiary of Hong Kong-listed Swire Pacific Ltd, on November 25 announced that it had completed the acquisition of The Coca-Cola Co’s bottling business in Cambodia, as part of its ambitions to expand into the Southeast Asian market. Swire Coca-Cola affirmed

  • Cambodia's Bokator now officially in World Heritage List

    UNESCO has officially inscribed Cambodia’s “Kun Lbokator”, commonly known as Bokator, on the World Heritage List, according to Minister of Culture and Fine Arts Phoeurng Sackona in her brief report to Prime Minister Hun Sen on the night of November 29. Her report, which was

  • NagaWorld union leader arrested at airport after Australia trip

    Chhim Sithar, head of the Labour Rights Supported Union of Khmer Employees at NagaWorld integrated casino resort, was arrested on November 26 at Phnom Penh International Airport and placed in pre-trial detention after returning from a 12-day trip to Australia. Phnom Penh Municipal Court Investigating Judge

  • Sub-Decree approves $30M for mine clearance

    The Cambodian government established the ‘Mine-Free Cambodia 2025 Foundation’, and released an initial budget of $30 million. Based on the progress of the foundation in 2023, 2024 and 2025, more funds will be added from the national budget and other sources. In a sub-decree signed by Prime Minister Hun Sen

  • Two senior GDP officials defect to CPP

    Two senior officials of the Grassroots Democratic Party (GDP) have asked to join the Cambodian People’s Party (CPP), after apparently failing to forge a political alliance in the run-up to the 2023 general election. Yang Saing Koma, chairman of the GDP board, and Lek Sothear,

  • Cambodia's poverty cut in half from 2009 to 2019: World Bank report

    A report published by the World Bank on November 28 states that Cambodia’s national poverty rate fell by almost half between 2009 and 2019, but the Covid-19 pandemic recently reversed some of the poverty reduction progress. Cambodia’s poverty rate dropped from 33.8 to 17.8 per cent over the 10