The world's top three money managers have built a $ 300 billion combined fossil fuel investment portfolio, funded by people's private savings and pension contributions.

BlackRock, Vanguard and State Street, which collectively manage assets worth more than China's total GDP, have continued to expand their billions in some of the most carbon-intensive companies, according to financial data since the Paris Agreement.

The two largest asset managers, BlackRock and Vanguard, have also routinely opposed petitions from fossil fuel companies that have forced the directors to do more to address climate change.





Stocks of fossil fuels: The Vanguard Group



Illustration: Guardian design

The increase in investment is attributable to the success of Tracker funds over the past decade, using algorithms to track key stock market indices such as the FTSE 100 and S & P 500.

The Guardian, working with InfluenceMap and ProxyInsight, the business data specialist, has analyzed the role of asset managers in funding and managing some of the world's largest fossil fuel companies.

Figures compiled by InfluenceMap show how Blackrock, Vanguard and State Street – known as the Big Three – have become key climate change players in the financial world. They are the largest money managers in the $ 74 billion industry.





Stocks of fossil fuels: BlackRock



Illustration: Guardian design

According to an analysis of the data, their effective stocks of thermal coal, oil and gas reserves by the companies they manage have increased by 34.8% since 2016.

This means that they are now the largest investors in public oil, gas and coal companies, managing funds for large pension funds, university foundations and insurance companies.

While asset managers are not the owners of the companies they invest in, they often exercise shareholder rights on behalf of their clients to vote on board members and company policy issues.





Stocks of fossil fuels: State Street Corporation



Illustration: Guardian design

According to publicly available company reports, from 2015 to 2019 Vanguard and BlackRock often voiced their opposition to efforts to improve climate-related financial information.

The investigation of the Guardian has revealed:

  • Vanguard ($ 161.1 billion), BlackRock ($ 87.3 billion) and State Street ($ 38.3 billion) together manage $ 286.7 billion in oil, coal and oil assets through 1,712 funds gas companies. The overall portfolio is likely to be higher as direct and unlisted fund investments are not included.

  • The potential CO2 Investment spending has increased from 10,593 gigatons (Gt) to 14,283 Gt since the Paris Agreement, which equates to 38% of global fossil fuel CO2 Emissions last year.

  • BlackRock and Vanguard contravened or were involved in more than 80% of the climate-related moves in FTSE 100 and S & P 500 fossil fuel companies between 2015 and 2019. This is based on data from ProxyInsight.

  • The Big Three are among a number of asset managers who offer "climate-friendly" and "sustainable" mutual funds that hold significant stakes in fossil fuel companies.

Diagram of the asset managers voting on climate change decisions.

BlackRock, Vanguard and State Street did not question the results.

They told the Guardian that they prioritized private engagements on corporate boards that regularly discussed the climate crisis. They said they had increased the number of their investment management teams and decided to use their votes as a last resort.

Vanguard said it did not manage the companies it invested in, nor did it try to influence its business strategy. "Vanguard is a lifelong savings manager for more than 20 million people around the world and virtually a permanent investor in more than 10,000 companies, and is concerned about the long-term impact of climate risk," said a spokesperson.

"While voting at general meetings is important, this is just one part of the larger corporate governance process. We regularly engage with companies on behalf of our shareholders and believe that engagement and broader advocacy, in addition to voting, can bring about significant changes that create long-term value for all shareholders. "

BlackRock said it offers investors a wide range of environmentally friendly investment opportunities. [and] is also a leading investor in renewable energy generation worldwide. Our award-winning climate research helps investors understand and mitigate the impact of climate change on their portfolios. "

State Street said, "If an investor wants to buy an ETF [exchange-traded fund] If we follow the FTSE 100, we would buy the shares (proportionate) of all companies in this FTSE 100 index to achieve the goal of this strategy. That will undoubtedly include energy companies today.

"We do not proactively decide whether to exclude a particular company or industry, as this would be incompatible with the established ETF target. If an investor wants a strategy that takes into account climate issues or other ESG [environmental, social and governance] Factors, that would be another product with a different index; We can also offer that. "

Asset managers are increasingly becoming the focus of social and environmental issues, and corporate governance experts have voiced concerns about conflicts of interest in their business models.

Activists are demanding that asset managers vote corporate executives who are believed to be insufficiently solvent.

In June, London-based Legal & General, formerly a Top 20 ExxonMobil investor, announced it would sell $ 300 million to the company and use the remaining shares to vote against CEO Darren Woods vote.

However, proposals from environmental shareholders are facing increasing challenges in managing fossil fuel companies, which are supported by the US Securities and Exchange Commission. The SEC declined to comment.

Graphics on climate movements coming to a vote.

In April, ExxonMobil shareholders were denied voting on whether the company should set targets for greenhouse gas emissions reduction by the SEC, which the proposal called an attempt to "micro-manage" the company.

The 2019 Annual General Meeting data provided by Institutional Shareholder Services indicates that only a quarter of the proposals were put to the test among US companies, with 79 of the 105 applications either withdrawn or omitted.

The Guardian has worked with leading scientists and NGOs to uncover exclusive data, research and analysis on the fossil fuel companies that continue the climate crisis. The planet and humanity have become clear.

The investigation has involved more than 20 Guardian journalists around the world over the last six months.

The project focuses on what companies have grown out of the soil since 1965 and what emissions they are subsequently responsible for. The analysis Richard Heede carried out at the Climate Accountability Institute calculates how much carbon is emitted throughout the supply chain from extraction to consumer use. Heede said, "The fact that consumers are burning fuels to produce carbon dioxide, water, heat and pollutants does not absolve fossil fuel companies of the responsibility to knowingly sustain the carbon era and accelerate the climate crisis towards the existential threat to which they are exposed has now become. "

One goal of the project is to shift the focus of the debate from individual responsibilities to power structures. That's why our reporters also looked at the financial and lobbying structures that allowed fossil fuel companies to grow and identified which elected leaders were right for change.

Another objective of the project is to urge governments and companies to bridge the gap between ambitious long-term promises and lackluster short-term action. The UN says that the coming decade is crucial to avoiding the catastrophic consequences of global warming. It has never been so urgent to strengthen our dependence on fossil fuels and dramatically accelerate the transition to renewable energy.

Despite setbacks, other proposals and commitments by asset managers have been more successful. In a sector that first took place last year, shareholders' strong pressure forced Royal Dutch Shell to set CO2 emissions targets in relation to executive compensation. The decision was backed by Climate Action 100+, a group of $ 35 billion investors pushing fossil fuel companies to respond to the crisis.

Many pension funds and asset managers support systems to improve information on how climate-critical companies respond to environmental concerns, including the Transition Pathway Initiative, which assesses fossil fuel, energy and transportation companies' boards for their answers.

BlackRock, Vanguard and State Street support the Climate Finance Task Force, a voluntary program chaired by former New York Mayor Michael Bloomberg to improve information.