Investment funds not so green!

2023-06-23 04:45:00

The vast majority of investment funds have massively invested in fossil fuels in 2022. Whether they are labeled SRI or not.

Section edited by Laurence Allard Not so green investment funds! Published on 06/23/2023 at 06:45

It is difficult to be virtuous against the market: 87% of investment funds invested massively in 2022 in fossil fuels. Whether they are labeled SRI (socially responsible investment) or not! This is the result of the third study conducted by Epsor on the composition of equity funds accessible to French savers (71% of the market). The company specializing in employee savings and pensions has analyzed the commitment to the ecological transition of more than 800 funds representing assets of 207 billion euros and their evolution during the year 2022. They do not were only 80% in 2021, and above all the average exposure of these funds has increased in one year from 4.7% to 6.1%, an increase of 29%.

The balance sheet is implacable: TotalEnergies benefited last year from their investments to the tune of 1.6 billion euros (an increase of 80%). In a quarter of these funds, the oil group is now in their top 10 of the most financed groups, and more precisely in 4th place versus 6th in 2021.

The managers wanted to take advantage of the rise in energy prices and thereby the surge in their stock market prices: + 32% for TotalEnergie in 2022, i.e. one of the best performances of the CAC40 index. “The sectoral non-exclusion of the SRI label and the weight of the 2022 context have had deleterious effects on the composition of labeled funds, blurring its understanding and reliability for savers”, concludes Julien Niquet, president of Epsor, who calls for the reform of the SRI label and the raising of its level of requirement “in order to achieve a universe of labeled funds that is more transparent and unambiguous for savers”.

Reform the SRI label. The French are far from having been the only ones to turn to fossil fuels. The British think tank Carbon Tracker estimates the amounts invested in this sector by managers worldwide at 417 billion dollars last year. BlackRock has invested 116 billion there. “None of these giants are ‘aligned’ with the goal of limiting global warming to 1.5°C,” believes the report.

To reform the SRI label, the authorities have set to work: the label committee should release a new version at the end of September which could force managers to no longer invest in companies in which more than 5% of the activity comes from coal. (as a % of revenue) or unconventional fossil fuels (as a % of total production), or developing new projects for this type of energy.

To compensate for this sprain and not be accused of failing in their commitments, the managers of SRI funds reacted on their own. In 2022, they have also invested more in ecological transition to the detriment of non-virtuous sectors (GMOs, pesticides, palm oil, etc.). The share of their investments in renewable energies, green transport, energy efficiency, etc. has increased, again according to the Epsor study, from 11.5% in 2021 to 14%. And one truth remains: labeled funds have an average carbon footprint that is 17% lower than unlabeled funds§