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urgewald
Report Names Institutions Behind $4.3 Trillion in Climate-Wrecking Investments
"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.
Jul 09, 2024
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.
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Fossil Fuel Firms 'Building Bridge to Climate Chaos'
An updated database shows that more than 1,000 oil and gas companies around the world are planning to expand their planet-wrecking infrastructure.
Nov 15, 2023
More than a thousand fossil fuel companies around the world are currently planning to build new liquefied natural gas terminals, pipelines, or gas-fired power plants even as scientists warn that fossil fuel expansion is incompatible with efforts to prevent catastrophic warming.
That's according to an updated database released Wednesday by Urgewald and dozens of partner groups. Described as the most comprehensive public database on the fossil fuel industry, the Global Oil & Gas Exit List (GOGEL) covers 1,623 companies that are operating in the upstream, midstream, or gas-fired power sector and collectively account for 95% of global oil and gas production.
The updated database shows that 1,023 are plotting expansions of fossil fuel infrastructure, threatening to lock in years of planet-warming emissions as extreme weather
fueled by the climate crisis wreaks havoc worldwide. The World Meteorological Organization said Wednesday that global greenhouse gas concentrations reached a new high once again last year.
"The magnitude of the industry's expansion plans is truly frightening," said Nils Bartsch, Urgewald's head of oil and gas research. "To keep 1.5°C alive, a speedy, managed decline in both oil and gas production is vital. Instead, oil and gas companies are building a bridge to climate chaos."
According to the 2023 GOGEL, 96% of the 700 upstream oil and gas companies in the database are exploring or actively developing new oil and gas fields, projects that Urgewald said "severely jeopardize efforts to limit global temperature increase to 1.5 °C."
Nearly 540 companies in the database are collectively planning to produce 230 billion barrels of oil equivalent (bboe) over the short term, the database shows.
"The seven companies with the largest short-term expansion plans are Saudi Aramco (16.8 bboe), QatarEnergy (16.5 bboe), Gazprom (10.7 bboe), Petrobras (9.6 bboe), ADNOC (9.0 bboe), TotalEnergies (8.0 bboe) and ExxonMobil (7.9 bboe)," Urgewald noted. "These seven companies are responsible for one-third of global short-term oil and gas expansion."
The database also shows that fossil fuel companies are planning to expand global LNG capacity by 162%, a significant threat to critical climate targets. A United Nations-backed report published last week warned that fossil fuel expansion plans are "throwing humanity's future into question."
Urgewald pointed specifically to the LNG boom in the U.S., which the group said is "cementing its position as the world's largest export hub for LNG" with 21 new export facilities planned along the Gulf Coast. Those facilities account for more than 40% of worldwide LNG expansion documented in the GOGEL database.
"Most of the fossil gas that will be exported from these terminals stems from the Permian Basin, the heart of the U.S. fracking industry," Urgewald observed.
The updated database shows that nearly 80 companies—including Exxon, Chevron, and BP—are currently operating in the Permian Basin, located in the U.S. Southwest.
Climate campaigners and experts have also sounded alarm over Calcasieu Pass 2 (CP2), a planned $10 billion LNG export hub that would ship up to 24 million tons of gas annually once it is completed.
"The fossil fuel industry wants to pave undeveloped wetlands all along the coast with LNG facilities like NextDecade Corporation's Rio Grande LNG Terminal, Rebekah Hinojosa, a member of the South Texas Environmental Justice Network said Wednesday. "Besides their environmental implications, these plans violate Indigenous sacred lands, and people working in fishing, shrimping, and eco-tourism risk losing their jobs. Our communities refuse to be sacrificed for the fracking industry's dirty gas exports."
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World Bank Pumping Billions More Into Fossil Fuels Than Publicly Known: Study
Exploiting a "trade finance" loophole, the bank dumped an estimated $3.7 billion into oil and gas projects in 2022.
Sep 12, 2023
An analysis released Tuesday by the German nonprofit Urgewald estimated that the World Bank spent nearly $4 billion on fossil fuel financing last year, when it was under the leadership of a climate denier nominated by former U.S. President Donald Trump.
The World Bank pledged in 2017 to end financing for upstream oil and gas—with narrow exceptions—after 2019. But Urgewald observed in its new report that the World Bank's pledge applied only to direct finance, allowing the powerful institution to funnel cash to oil and gas projects through "trade finance" dished out by its private-sector arm, the International Finance Corporation (IFC).
"Despite trade finance's vast and still-growing share of the IFC’s budget, over 70% of it is given out in secrecy," Urgewald noted. "The types of goods and businesses it is funding are not even reported to the World Bank's shareholders, i.e., our governments. The public has a right to know where all this money is going."
Citing the IFC's "severe lack of transparency," Urgewald stressed that it was only able to "formulate an estimate" for oil and gas transactions. The group calculated that the World Bank spent roughly $3.7 billion on oil and gas trade finance in 2022.
"This would more than triple the current annual level of fossil fuel finance attributed to the World Bank and cast serious doubts on Bank claims of alignment with the Paris Climate Agreement," Urgewald's Heike Meinhardt said in a statement.
"The easiest way for a big oil company or coal operation to escape attention surrounding public assistance is to cloak it in trade finance."
The World Bank has long been accused of reneging on its climate commitments. A report released last year by Big Shift Global estimated that the World Bank has spent nearly $15 billion supporting fossil fuels since the adoption of the Paris Climate Agreement in 2015.
Late last year, former World Bank President David Malpass sparked global outrage by saying he's not sure whether he accepts the scientific consensus that climate change is caused by the burning of fossil fuels, further validating climate activists' longstanding calls for systemic reforms at the bank.
"I don't know," Malpass said in response to a reporter's question about his views on climate change. "I'm not a scientist."
The comments prompted widespread calls for Malpass to step down, which he did in June. Current World Bank President Ajay Banga, who U.S. President Joe Biden nominated to replace Malpass, is a former private equity executive who has worked for Nestlé, PepsiCo, and Citibank.
Urgewald warned in its report Tuesday that the World Bank will remain a major source of funding for the fossil fuel industry until it enacts reforms that prevent the IFC from bolstering oil and gas under the guise of "trade finance."
"The easiest way for a big oil company or coal operation to escape attention surrounding public assistance is to cloak it in trade finance," the group said. "It is a huge loophole that must be closed and evaluated through public disclosure."
Urgewald added that "there is no doubt" the World Bank and IFC "are going to deny" its findings and "claim the figures are inaccurate."
That's exactly what an IFC spokesperson did on Tuesday, telling The Guardian that "Urgewald's report contains serious factual inaccuracies and grossly overstates IFC's support for fossil fuels."
"IFC regularly reports accurate and timely project information through various channels," the spokesperson added.
Urgewald disputed that narrative in its report, asserting that the "continued secrecy surrounding trade finance makes it impossible to determine how much fossil fuel business the IFC is ultimately facilitating and whether the World Bank is actually aligned with the goals of the Paris Climate Agreement."
"An exorbitant amount of IFC money, i.e., more than half its budget, is streaming through banks without any oversight by the [World Bank Board of Directors], without any opportunity for public scrutiny, without any accountability," the group said.
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