ETFs are financing fossil fuel companies at large scale
14 June 2021
Financial institutions with trillions of dollars in assets have pledged to achieve net zero portfolios and loanbooks by 2050, including meeting ambitious interim 2030 targets.
However, new research by Ben Caldecott and Christian Wilson reveals that passive funds not only hold fossil fuel assets, but directly finance them by buying large quantities of new bonds issued by fossil fuel companies.
Ben Caldecott said, 'Climate conscious financial institutions need to be much better at tracking primary market transactions that directly support fossil fuel companies. It is when new bonds or shares are issued in primary markets and bought that capital actually flows from the financial system to the real economy. Financial institutions need to know how they are contributing to capital flows that could help or hinder tackling climate change.'
Photo by Csaba Nagy from Pixabay