Research: ESG-labeled investment funds invest money in fossil assets

According to a report by British think tank Common Wealth, some of the world’s largest investment funds, which are described as environmentally friendly or socially responsible, invest hundreds of millions of EUR in companies that use fossil fuels. The research focused on US fund managers BlackRock and State Street, and the UK’s Legal & General.

The left-leaning think tank said that despite claims that ESG funds offer investors an environmentally friendly and socially responsible option, “research shows that these funds have significant exposure to companies that use fossil fuels”. The finding conflicts with the main goal of ESG investing, which is to reduce exposure to fossil assets.

According to the report, BlackRock, State Street and Legal & General held bonds issued by companies that use fossil fuels, worth one billion dollars (900 million EUR), in their ESG funds between February and April this year. The research’s main findings showed that ESG funds had invested more than 1.5 billion dollars in bonds issued by leading coal, oil and gas companies, raising questions about asset managers’ sustainability claims.