A group of UK universities and charitable foundations has called on asset managers to halt their support for projects that expand the use of fossil fuels.
The institutions, which include Cambridge’s Jesus College, the University of Sussex and the Joseph Rowntree Charitable Trust, say investment firms must take more urgent action to help meet the goals of the Paris Climate Agreement.
In a letter, the group says asset managers should take three steps: stop financing fossil fuel expansion projects, vote for pro-climate shareholder resolutions and up direct engagement with companies, including through voting against directors.
The expectations were originally released two years ago in the run up to the COP26 Climate Conference, held in Glasgow, UK.
‘We are writing to you this AGM season to reaffirm our support for these expectations, which we believe represent a vital minimum standard for ensuring the asset management industry aligns with the 1.5 degree ambition laid out in the Paris Agreement,’ says the letter.
A report last week from the World Meteorological Organization says there is a 66 percent chance that global temperatures will rise by more than 1.5C compared to pre-industrial levels at some point in the next five years.
Specific action
To end support for new fossil fuel projects, asset managers should ‘commit to no longer purchasing new bonds associated with fossil fuel expansion projects, or issued by companies involved in constructing new fossil fuel infrastructure and/or exploring for new oil, coal or gas reserves,’ say the letter signatories.
‘Divestment from existing bond holdings associated with fossil fuel expansion should also be initiated in a phased but timely manner,’ they add.
During this year’s proxy season, the letter urges asset managers to back the initiatives mentioned in ShareAction’s 2023 Resolutions to Watch list, along with ‘any other’ resolutions focused on new fossil fuel projects.
‘We believe that these actions must be adopted as standard practice by the asset management industry in order to ensure the global economy meets critical international climate targets,’ say the institutions. ‘We expect our asset managers to lead the way in initiating this kind of robust engagement during the 2023 AGM season and beyond.’
