The Big Three asset managers - BlackRock, Vanguard and State Street - have vowed to tackle climate change and support sustainable finance. In a new @cityperc working paper, Joseph Baines and I take a closer look at their climate agenda bit.ly/3gskpeA [1/10]
We do this by examining the Big Three's relationships with the publicly-owned companies Carbon Majors - a small group of fossil fuels, cement and mining companies responsible for the bulk of industrial greenhouse gas emissions [2/10]
theguardian.com/sustainable-bu…
Our research reveals the centrality of the Big Three in the Carbon Major ownership network. BlackRock and Vanguard are the most prominent owners of these companies, State Street is the fourth largest [3/10]
Crucially, we find that although the Big Three are a growing source of equity financing for the Carbon Majors, the Carbon Majors are a shrinking component of investment portfolios of the Big Three. This amplifies the Big Three's power (you need us, we don't need you) [4/10]
We then examine the proxy voting record of the Big Three at Carbon Major AGMs. We find that the Big Three tend to oppose environmental resolutions but overwhelmingly support management when it comes to dividend payments & stock buybacks, CEO pay, director elections [5/10]
A fine-gained analysis shows that the combined voting decisions of the Big Three are more likely to lead to the failure of environmental resolutions and that, whether they succeed or fail, these resolutions tend to be narrow in scope and piecemeal in nature [6/10]
Our most shocking findings have to do with the Big Three's ESG funds. Not only do the ESG funds invest in many of the same Carbon Majors as their non-ESG funds, they tend to vote the same way at Carbon Major AGMs [7/10]
So what are we to make of the Big Three's recent embrace of climate advocacy? The term "greenwashing" is too benign. Instead, we side Tariq Fancy, BlackRock's former sustainable investing head, who described it as a "deadly distraction" [8/10]
cnbc.com/2021/08/24/bla…
At best, we argue that the climate advocacy of shareholders needs to be seen as a minor component of a wider state-led strategy to swiftly dismantle carbon-intensive energy systems and rapidly expand renewable energy infrastructures [9/10]
With the looming threat of climate breakdown we simply cannot afford any more distractions [10/10]
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