(Corrects headline and first paragraph of June 21 story to clarify that report said the asset managers have not outlined any plans to phase out fossil fuel investments, not that they have no such plans)
By Colleen Howe
BEIJING (Reuters) -Major Chinese asset managers have billions of dollars invested in fossil fuels with no publicly disclosed plans for a phase out, a new Greenpeace report said.
The environmental organisation’s analysis of 16 major Chinese asset managers released on Thursday said that they have invested a combined 267.2 billion yuan ($36.79 billion) in high-carbon sectors and 74 billion yuan in fossil-fuel related areas.
Five of the firms – E Fund, Fullgoal, GF, Southern, and China Universal – accounted for over half of the investment in high-carbon.
E Fund, China’s largest asset manager, alone invested 40.6 billion yuan in high-carbon sectors and 18.9 billion in fossil fuels.
The firms could not be reached by phone and did not respond to faxed requests for comment on Friday.
E Fund said in its Responsible Investment Statement on its website that it is “one of the first asset managers in China to embrace responsible investing”.
All the fund managers have said in corporate reports that they take climate risks into account in their investment decisions, in line with the recommendations of the G20’s Task-force for Climate-Related Financial Disclosures.
High-carbon sectors included ferrous and non-ferrous metals, chemicals, and high-carbon heat and electricity production, in addition to fossil fuel investments.
By comparison, European banks such as Barclays, HSBC and BNP Paribas have vowed to curb fossil fuel financing.
“Benchmarking against international standards will also become more necessary as international investors become more important for China’s asset managers,” Greenpeace East Asia’s climate and energy campaigner Yuan Yuan said.
Greenpeace also raised an alarm over “greenwashing” in the asset managers’ investment products.
The report said 16 out of 40 ESG-branded investment products offered by the firms invested in fossil fuel-related industries.
Harvest Fund Management’s so-called carbon neutral portfolio had an 80% investment ratio in industries deemed high-carbon, and some 60% of its investments were directed toward companies primarily involved in thermal power generation.
However, the report said all the asset managers had been “notable progress” in their climate risk governance.
Following the 2020 release of green finance regulations in Shenzhen, six asset managers in the southern city released environmental disclosures for the first time in 2023.
Another seven managers also disclosed their carbon emissions for the first time in 2023.
More improvements in disclosures could be on the way.
On May 1, guidelines on sustainable development reporting took effect for China’s major stock exchanges, requiring companies to disclose information including climate targets and risk management.
Chinese asset managers’ poor grades in ESG investing were despite China’s push to brand itself as a global leader in the energy transition, particularly in manufacturing.
Over 80% of the world’s solar manufacturing supply chains are based in China, which is also home to the world’s largest renewable generation capacity.
However, energy consumption is still dominated by fossil fuels, with close to 60% of China’s electricity coming from coal last year.
(Reporting by Colleen Howe; Editing by Kim Coghill)
