Concerns about climate change are the most common reason for financial groups to exclude companies from their portfolios, according to research that underlines how the phenomenon continues to influence investment decisions despite the backlash against ‘woke’ capitalism.
The findings from a coalition of nonprofit environmental and sustainability groupsshow that 40 percent of exclusions are motivated by concerns about climate change. About 17 percent of exclusions are caused by concerns about companies involved in weapons production, while tobacco accounts for 12 percent.
The research shows that financial groups continue to factor ESG (environmental, social and governance) issues into their decisions, even as Republican politicians and state financiers in the US mount a backlash against what they call “woke” capitalism, arguing that it is not up to the government. financial sector to police companies.
The coalition of NGOs, including Milieudefensie Nederland, Fair Finance International and Profundo, a Dutch research consultancy, examined the exclusions of approximately 150 pension funds, insurance companies and banks and compiled a list of 4,532 companies excluded by 87 companies. financial institutions in 16 countries. The final count includes separately listed subsidiaries.
The groups behind the research said they hope the publicly available list will put additional pressure on the identified companies to change their practices.
The most excluded company is South Korea’s Poongsan Corporation, which has been named by 75 investors and banks for its involvement in the production of controversial weapons such as cluster munitions. Poongsan is followed by US defense group Northrop Grumman and Indian industrial conglomerate Larsen & Toubro.
Fossil fuel companies fall under the climate category, but also under the human rights violations category. Among the companies most excluded by investors and banks for their fossil fuel investments were Cenovus Energy, Suncor and ExxonMobil.
None of the companies mentioned were immediately available for comment.
The tracker “shows that fossil fuels are becoming a ‘sin’ industry,” says Profundo’s Ward Warmerdam, adding that it should “urge oil and gas companies to accelerate their energy transition efforts with concrete and immediate actions to avoid losing investors.”
Some investors have become concerned in recent years about the financial risks of climate change, fearing that companies that fail to prepare for the transition to a greener economy could become very difficult to sell.
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