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"Investors need to draw a red line on fossil fuel expansion and they need to do it now," said an author of the report, which cites Vanguard and BlackRock as the largest institutional investors in fossil fuel companies.
Institutional investors including the Vanguard Group and BlackRock collectively own $4.3 trillion in the stocks and bonds of fossil fuel companies, according to a report released Tuesday by Urgewald, a nonprofit based in Germany.
Urgewald and partner nonprofits tracked investments into nearly 3,000 companies in the coal, oil, and gas sectors for Investing in Climate Chaos 2024, a report that follows on similar research they published last year.
The $4.3 trillion in financing jeopardizes the quick phaseout of fossil fuels that's necessary to avoid unmanageable climate breakdown, the report says.
"If institutional investors continue backing companies that are still expanding their coal, oil, and gas operations, it will be impossible to phase out fossil fuels in time," Katrin Ganswindt, Urgewald's head of financial research, said in the report. "Investors need to draw a red line on fossil fuel expansion and they need to do it now."
🆕 Investing In Climate Chaos reveals top investors in coal, oil and gas.
👉 Discover who they are & the full report:https://t.co/ix94o84YtT
📢 Calling on all investors to stop all forms of financial support (bonds, loans...) to companies developing new fossil fuel projects. pic.twitter.com/VsRmXD41tl
— Reclaim Finance (@ReclaimFinance) July 9, 2024
Urgewald looked at the holdings of more than 7,500 institutional investors worldwide including "pension funds, insurance companies, asset managers, hedge funds, sovereign wealth funds, endowment funds, and asset management arms of commercial banks" as of May 2024.
The true investment total may be higher than $4.3 trillion, given the lack of transparency in bond markets; the report authors estimated that they only included 20-30% of actual bond holding in fossil fuel companies.
Of the $4.3 trillion, more than half was invested by U.S.-based companies. In fact, $1.1 trillion was held by just four companies: Vanguard, BlackRock, State Street, and Capital Group—dubbed "the filthy four" by Urgewald—each of which had more than $160 billion in fossil fuel investment holdings.
Alec Connon, co-director of Stop the Money Pipeline, said the outsized role of the U.S. was the result of poor governance.
"This mirrors the complete lack of action by U.S. regulators to effectively monitor and address the climate and transition risks of large institutional investors," Connon said in the report. "This inaction lays the ground for the next economic crisis and puts the world on a fast track towards climate chaos."
Nearly $4 trillion of the $4.3 trillion in holdings went to companies that are actively developing new fossil fuel projects, not just tapping existing projects, though the report doesn't specify how much actually went toward new development; many companies do both.
In any case, it's clear that new development abounds: Companies have increased capital expenditure on oil and gas exploration by more than 30% since 2021. ExxonMobil, among the biggest beneficiaries of the institutional investing documented in the report, alone spends $1.4 billion annually searching for new reserves in 37 countries, the publication says.
All of this is in spite of pledges to "transition away" from fossil fuels, as countries agreed to do at the United Nations climate summit in Dubai in December. Environmental campaigners are trying to use those pledges, loophole-ridden as they may be, to pressure institutional investors and regulators to take action.
"The question is, will institutional investors continue snapping up bonds of companies like Saudi Aramco, ExxonMobil, or TotalEnergies whose business model relies on heating up the planet?" the report's authors asked. "Or will pension funds, insurers, and asset managers realize that these investments will produce more heatwaves, more catastrophic floods, more climate disasters?"
Urgewald is one of the NGOs that produces the annual Banking on Climate Chaos report, the latest publication of which found that big banks shoveled nearly $7 trillion into fossil fuel companies in the eight years after the Paris agreement was signed in 2015. That report, released in May, showed that major banks including JPMorgan Chase and Citigroup together financed fossil fuel companies to the tune of $705 billion in 2023, the hottest year on record.
"I love how rich people are treated as sources of great wisdom when they obviously don't know their ass from their elbow," said one economist.
Larry Fink, the billionaire CEO of the world's largest asset management firm, wrote in his annual letter to investors on Tuesday that it is "a bit crazy" that 65 is viewed as a sensible retirement age in the United States, drawing swift backlash from Social Security defenders and policy analysts.
Dean Baker, senior economist at the Center for Economic and Policy Research, replied that the CEO of BlackRock apparently doesn't know the U.S. already raised the full retirement age for Social Security to 67 under a law passed during the Reagan administration—a change that inflicted benefit cuts across the board.
"I love how rich people are treated as sources of great wisdom when they obviously don't know their ass from their elbow," Baker wrote on social media.
While Fink, who is 71, wrote that "no one should have to work longer than they want to," he argued that "our conception of retirement" must change, pointing specifically to the Netherlands' decision to gradually raise its retirement age and tie it to life expectancy. (Fink does not mention that life expectancy in the U.S. has been trending downward in recent years.)
"When people are regularly living past 90, what should the average retirement age be?" Fink wrote. "How do we encourage more people who wish to work longer, with carrots rather than sticks?"
Alex Lawson, executive director of the progressive advocacy group Social Security Works, told Common Dreams in response to the BlackRock CEO's letter that "Larry Fink is the definition of an out-of-touch billionaire."
"He is welcome to work as long as he wants to, but that doesn't mean that everyone else—including people who do demanding physical labor—should work until they die," said Lawson.
"Half of Americans age 65 and older are living on less than $30,000 per year. This is absurd. Congress must expand Social Security."
Roughly half of older Americans have no retirement savings, a fact that Fink acknowledged in his letter.
While progressive lawmakers such as Sen. Bernie Sanders (I-Vt.) have called on policymakers to expand Social Security benefits by forcing rich people like Fink to contribute more to the program, the BlackRock CEO argued that the private sector and federal government should team up to "ensure that future generations can live out their final years with dignity."
"What should that national effort do? I don't have all the answers," Fink added. "But what I do have is some data and the beginnings of a few ideas from BlackRock’s work. Because our core business is retirement."
Fink's letter comes days after the Republican Study Committee—a panel comprised of around 80% of the House GOP caucus—released a budget proposal calling for "modest adjustments to the retirement age for future retirees to account for increases in life expectancy" in a purported bid to "secure Social Security solvency for decades to come."
But progressives argue that rather than slashing benefits for new retirees to shore up the program, Congress should lift the payroll tax cap that allows the ultra-rich to pay the same amount into Social Security as someone who makes $168,600 a year.
Fink, for example, has a base salary of around $1.5 million. With the current payroll tax cap in place, Fink stopped paying into Social Security less than a month and a half into 2024.
"In the U.S. today, 12 million seniors are dealing with food insecurity," Sanders wrote on social media Tuesday. "Half of Americans age 65 and older are living on less than $30,000 per year. This is absurd. Congress must expand Social Security."
Now is the time to keep building momentum and bringing a lot more pressure to bear, because we’ve hardly won yet.
The rain was pouring down hard, but that didn’t seem to deter the big protest crowd gathered outside the Federal Reserve building. Amid the typical Monday morning bustle of Wall Street, we chanted for the Fed to stop fossil fuel financing as cops arrested row after row of protesters blocking the building’s entrances during what ultimately became the largest climate-focused civil disobedience ever in New York City.
We were coming off the 75,000-person March to End Fossil Fuels the previous day: a protest that shattered our attendance expectations as organizers, uplifted our spirits, and landed on the front page of The New York Times the next day. Earlier that week, hundreds of activists and groups like Climate Defenders, Oil & Gas Action Network, Stop the Money Pipeline, and my own, New York Communities for Change, had disrupted two of the largest fossil fuel financiers in the world, shutting down Citi’s global headquarters for a whole morning and halting traffic in front of BlackRock’s global HQ. With Planet Over Profit, a youth-led group I co-founded, we forced the Museum of Modern Art to close for an afternoon because of its ties to dirty fossil fuel investor KKR. And the morning after shutting down the Fed, another dirty financier, Bank of America, found its New York office the site of another act of civil disobedience.
Others reflecting on these protests have noted how this September felt like a potential turning point. The U.S. climate movement enjoyed the biggest revival of street protest since the pandemic. With the march, unlike previous climate mass mobilizations, we were laser focused on calling out a specific decision-maker (President Joe Biden), making it impossible for him to ignore the broad-based, diverse support for our laser-focused specific demand (ending fossil fuels). And when it came to Wall Street, with thousands of white-collar Citi employees unable to get into work for hours, for example, we made it clear that if Citi’s bottom line included profiting off fossil fuels, then that bottom line would not go undisrupted.
If we’re to have any chance of ending fossil fuels, and transitioning to a more just system, we need sustained, committed resistance against these fossil fuel-loving powers that be.
We sent a statement of intent to both Biden and Wall Street: End fossil fuels, or expect resistance. Now it’s time to keep building on that momentum, and bring a lot more pressure to bear, because we’ve hardly won yet.
Politicians continue to approve new fossil fuel permits, and financiers continue to move more fossil fuel financing. It’s not for lack of awareness: These are well-informed elites who know well the scientific consensus that we have already maxed out our carbon budget with existing projects and that our carbon accounts cannot afford any more fossil fuel expansion. Nor do the actual financials necessitate fossil fuels: Power from renewables is now cheaper to produce than power from fossil fuels in many places, and besides, we simply cannot enjoy stable, functional global economies on a planet beset by endless storms and fires, widespread drought and famine, and hundreds of millions crossing borders to flee unlivable conditions.
The simple reason the fossil fuel industry and its enablers won’t change course on their own is because the status quo is working splendidly for them right now. Oil majors have been reporting record-breaking profits, and generally speaking, elites have continued to consolidate their wealth and power within a global political economy still powered largely by fossil fuels. (For instance, in 2015, the richest 1% in the world owned as much as the remaining 99% combined; those state of affairs have only worsened during a pandemic during which those at the top gained trillions in wealth while ordinary people suffered.)
Plus, these planet-wrecking elites, as Andreas Malm writes, “do not worry at the sight of islands sinking; they do not run from the roar of the approaching hurricanes; their fingers never need to touch the stalks from withered harvests; their mouths do not become sticky and dry after a day with nothing to drink.” The climate crisis may be coming for the whole world over at some point—but those at the very top do not currently face many serious consequences, and many of them may assume that they never really will in their lifetimes. Meanwhile, there are fossil fuel lobbies to please, and fossil fuel profits to reap.
So: We’re up against immensely powerful fossil fuel executives and some of the most powerful financiers and politicians in the world. All of them are highly incentivized to maintain the status quo of enabling mass death. If we’re to have any chance of ending fossil fuels, and transitioning to a more just system, we need sustained, committed resistance against these fossil fuel-loving powers that be.
If you are a bank like Citi that continually pours billions into fossil fuels each year: You should not expect to be able to operate and greenwash without having your bottom line impacted and the lives of your business elite constantly disrupted. Your CEOs and execs should expect to be challenged at public events, your offices’ operations should be continually disturbed, your brand and client deals should be scrutinized and protested. If you are Biden, who approves climate bomb after climate bomb, you and your administration should assume there will be disruptions at your public appearances and lagging enthusiasm from your base to turn out to the polls next fall.
What hangs in the balance, after all, is everything we know and love. We want to enjoy safe, stable societies; we want to breathe clean air, drink clean water; we want to live rich, dignified lives uninterrupted by profound climate upheaval. And we won’t be able to do that for much longer on this planet if we don’t force a move away from fossil fuels with serious, sustained pressure.
We don’t live in a world yet in which fossil fuel-loving politicians and capitalists face constant, sustained pressure, direct action, and disruption of business-as-usual. So let’s keep rolling up our sleeves. Let’s keep organizing more people. And let’s keep escalating with more hard-hitting protest to force an end to fossil fuels. If they don’t at the moment have enough incentive to give up their profits to save our lives—well, then let’s create some incentive for them.