Staunch financial backing for fossil fuels persists, with an astonishing $4.3 trillion still funneled into the industry.
In a recent report, the non-profit organisation Urgewald, along with 17 NGO partners, has published the 2024 edition of 'Investing in Climate Chaos.' The research unveils a staggering figure of $4.3 trillion in bonds and shares of fossil fuel companies held by institutional investors worldwide.
The report further breaks down the investments, revealing that $1.2 trillion is invested in bonds and shares of companies on Urgewald's Global Coal Exit List (GCEL), $3.8 trillion in companies on the Global Oil and Gas Exit List (GOGEL), and $0.7 trillion in companies on both databases.
Notably, the research did not provide specific information about the fossil fuel holdings of institutional investors from other European countries besides the collective holdings. However, it did highlight that Japanese institutional investors hold $168bn in fossil fuel investments, making them significant players in the market.
The Government Pension Investment Fund (GPIF) of Japan is the biggest institutional fossil fuel investor in Japan, currently holding $58bn in bonds and shares of non-renewable companies. On the other hand, the Norwegian Government Pension Fund Global (GPFG) is Europe's largest fossil fuel investor, with investments of over $70bn in companies listed on GCEL and GOGEL. The GPFG is the 16th largest coal investor worldwide and the 7th largest institutional investor in the oil and gas industry, with its single largest fossil investment of over $6bn in the oil major Shell.
The research identifies Vanguard, BlackRock, State Street, and Capital Group as the world's largest institutional investors in fossil fuels, collectively managing fossil fuel investments of $1.1 trillion. Vanguard holds the largest holdings in coal, oil, and gas of $413 billion, with BlackRock closely following at $400 billion.
The London Stock Exchange Group has identified $3.2 trillion in outstanding debt of high-carbon companies that is coming up for refinancing in the coming years. This figure underscores the financial risk associated with continued investment in the fossil fuel industry.
The research also found that investors in the US have the most holdings in the fossil fuel industry at $2.8 trillion, with Canada, Japan, and the UK following suit. Katrin Ganswindt, head of financial research at Urgewald, stated that 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.
Concerningly, almost $4 trillion of the identified institutional investments are in companies actively developing new fossil fuel assets. This could lock us into a high-carbon future, contrary to the global efforts to combat climate change.
The report also sheds light on the discrepancy between the greenwashing claims of some financial institutions and their actual investments. For instance, BlackRock, which has been promoting itself as a leader in environmental, social, and governance (ESG) investing, invested on average $2.3 billion annually from 2023 to 2025 in the fossil fuel industry through its ESG funds.
Moreover, JACSES, a Japanese NGO, stated that Japanese investment managers are lagging behind their international counterparts in terms of fossil fuel investments.
The research covers the fossil fuel holdings of over 7,500 institutional investors globally, providing a comprehensive overview of the current state of institutional investments in the fossil fuel industry. It serves as a call to action for institutional investors to reconsider their investments and align them with the goals of the Paris Agreement to combat climate change.
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