Welcome back to the Climate Nexus finance newsletter – a regular update that looks at the big stories and players at the intersection of climate change, finance, regulation, and energy, with tips for the week ahead.
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Net-zero nonsense
A report released today by Reclaim Finance shows that banks and investor members of the Glasgow Financial Alliance for Net Zero (GFANZ) continued to support fossil fuel expansion after committing to achieve net zero by 2050. Top-line takeaways:
Since joining the alliance, 56 of the biggest banks in the Net-Zero Banking Alliance (NZBA) have provided US$270 billion to 102 major fossil fuel expanders, via 134 loans and 215 underwriting transactions;
58 of the largest members of the Net Zero Asset Managers initiative (NZAM) held at least US$847 billion of stocks and bonds in 201 major fossil fuel developers as of September 2022;
Only a handful of the financial institutions have adopted policies that meaningfully restrict finance to new fossil fuel projects and companies developing new fossil supply projects since joining GFANZ. Please reach out for press materials.
Asset managers fail annual assessment
Meanwhile, a new assessment of the 2022 proxy season from ShareAction finds that the four largest asset managers, BlackRock, State Street, Vanguard, and Fidelity, have drastically reduced their support for environmental resolutions at energy companies – and have voted even more conservatively than proxy advisers ISS and Glass Lewis. If you’re planning anything around 2023 proxy season, let us know!
Larry Fink’s hurt feelings
BlackRock’s Larry Fink, speaking at Davos, says the fight over ESG is getting personal and wants to change the narrative. The assent manager lost $4 billion in business over ESG bans in 2022 but noted the firm took in $230 billion in new business from U.S. clients over the same time-period.
ESG boycotts cost a billion
Who’s really losing money because of boycotts? The states doing them. A new study by Econsult Solutions, Inc. (ESI), released by As You Sow and Ceres, shows taxpayers in Kentucky, Florida, Louisiana, Oklahoma, West Virginia, and Missouri could be on the hook for upwards of $708 million in additional interest charges on municipal bonds as a result of proposed anti-ESG legislation and initiatives. Add these new costs to the previous study by Wharton – which found Texas taxpayers will pay upwards of an additional $532 million in bond interest – and the price tag of these ideologically-driven boycotts is now as high as $1.24 billion. This could just be just the tip of the ESG boycott costs iceberg. An internal email from the executive director of Kansas’ Public Employee Retirement System about a state boycott bill found the legislation would’ve cost the pension as much as $82 million per year.
But red states keep doing them
Despite the exorbitant costs, anti-ESG astroturf model legislation has been introduced in dozens of states across the country, pushed by ALEC and a network of fossil fuel-funded dark money groups. Legislation in Montana would empower the state’s attorney general to pursue legal action for ESG investing, and similar legislation in Arkansas would allow person(s) ‘harmed’ to pursue civil action. Additionally, kitchen sink copycat legislation was introduced in South Carolina and Missouri. Critics are calling the latest Republican culture war “anti-capitalist.”
Jan 31:Federal Reserve Board invites public comment on proposed principles providing a high-level framework for the safe and sound management of exposures to climate-related financial risks for large banking organizations with more than $100 million in assets.
Feb 13: The new deadline to comment on the White House’s Federal Supplier Climate Risks and Resilience Proposal. For an overview of the rule and a free template comment letter, check out Ceres’ discussion with Administration leadership and other key stakeholders.
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– Tan Copsey, Katharine Poole, Steve Hargreaves & Shravya Jain-Conti
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