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21 Private Equity Firms Fund Over a Gigaton of Annual Climate Pollution
"Private equity firms and their executives are making billions by investing public employees' retirement money into planet-destroying fossil fuel assets," said one researcher.
Oct 01, 2024
The energy portfolios of over 20 top U.S. private equity firms are responsible for an estimated combined 1.17 gigatons of annual greenhouse gas emissions—more than three times as much as from the energy used to power every home in the United States, according to a report published Tuesday.
The report, titled Private Equity Risks Scorecard 2024, was published by Researchers for the Americans for Financial Reform Education Fund, Global Energy Monitor, and the Private Equity Stakeholder Project. The scorecard examines the energy portfolios of 21 leading U.S. private equity firms, which manage a combined total of over $6 trillion worth of companies.
"At the end of the day, the price we pay for private equity's greed is our health and livelihoods, for ourselves and generations to come."
"Private equity firms and their executives are making billions by investing public employees' retirement money into planet-destroying fossil fuel assets," Amanda Mendoza, senior climate research and campaign coordinator of the Private Equity Stakeholder Project, said in a statement.
"These billion-dollar companies make their profits while largely avoiding liability for the damages their fossil fuel investing causes frontline communities," Mendoza added. "At the end of the day, the price we pay for private equity's greed is our health and livelihoods, for ourselves and generations to come."
According to the report, the five biggest investors in annual climate polluters are EIG Global Energy Partners, the Carlyle Group/NGP Energy Capital, Brookfield/Oakfield Capital Management, Quantum Capital Group, and BlackRock Private Equity Partners. These five firms each funded at least 100 million metric tons of CO2 equivalent (CO2e) annually.
Some of these companies, most notably BlackRock, rank among the
world's biggest investors in fossil fuels.
"Private equity continues to transform the financial markets and the daily lives of communities around the globe," the report states. "With over a trillion dollars in energy investments generating high greenhouse gas emissions and minimal public visibility, private equity firms play an outsized role in accelerating the climate crisis."
"The private equity energy portfolios covered in this report are responsible for an estimated combined total of 1.17 gigatons of annual emissions," the publication continues. "This figure equals 1.17 billion metric tons CO2 equivalent (CO2e) and is limited to the three categories covered in the scope of this research: upstream, liquefied natural gas terminals, and coal plants, and do not represent the firms' entire emissions footprint from energy investments."
"In the U.S. alone, there were 28 weather and climate disasters in 2023, resulting in at least $92.9 billion in disaster damages, according to the National Centers for Environmental Information," the report notes. "The need for transparency, accountability, and a just transition to a clean energy economy has never been more urgent."
The scorecard's authors and 22 supporting organizations—including Food & Water Watch, Friends of the Earth U.S., Greenpeace USA, LittleSis, Public Citizen, Rainforest Action Network, and Sierra Club—urge sources of capital, such as public pension funds and institutional investors, to commit to a series of climate-friendly policies and practices.
These include:
- Aligning with science-based climate targets to limit global warming to 1.5°C;
- Disclosing fossil fuel exposure, emissions, and impacts;
- Reporting a portfolio-wide energy transition plan;
- Integrating climate and environmental justice; and
- Providing transparency on political spending and climate lobbying.
"While companies like banks and oil majors face pressure over their climate risks and fossil fuel emissions, private equity firms continue to dodge the spotlight, pouring billions into fossil fuels and pushing us further from a sustainable future," said Global Emergy Monitor's Alex Hurley.
"These firms may operate in the shadows, but the public has a right to know how private equity's debt-fueled extraction of both resources and wealth threatens our climate, communities, and financial stability," Hurley added. "We call on private equity firms to adopt climate standards... and retire any fossil fuel assets in their portfolios in short order."
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Report Names Institutions Behind $4.3 Trillion in Climate-Wrecking Investments
"Investors need to draw a red line on fossil fuel expansion and they need to do it now," said an author of the report, which cites Vanguard and BlackRock as the largest institutional investors in fossil fuel companies.
Jul 09, 2024
Institutional investors including the Vanguard Group and BlackRock collectively own $4.3 trillion in the stocks and bonds of fossil fuel companies, according to a report released Tuesday by Urgewald, a nonprofit based in Germany.
Urgewald and partner nonprofits tracked investments into nearly 3,000 companies in the coal, oil, and gas sectors for Investing in Climate Chaos 2024, a report that follows on similar research they published last year.
The $4.3 trillion in financing jeopardizes the quick phaseout of fossil fuels that's necessary to avoid unmanageable climate breakdown, the report says.
"If institutional investors continue backing companies that are still expanding their coal, oil, and gas operations, it will be impossible to phase out fossil fuels in time," Katrin Ganswindt, Urgewald's head of financial research, said in the report. "Investors need to draw a red line on fossil fuel expansion and they need to do it now."
🆕 Investing In Climate Chaos reveals top investors in coal, oil and gas.
👉 Discover who they are & the full report:https://t.co/ix94o84YtT
📢 Calling on all investors to stop all forms of financial support (bonds, loans...) to companies developing new fossil fuel projects. pic.twitter.com/VsRmXD41tl
— Reclaim Finance (@ReclaimFinance) July 9, 2024
Urgewald looked at the holdings of more than 7,500 institutional investors worldwide including "pension funds, insurance companies, asset managers, hedge funds, sovereign wealth funds, endowment funds, and asset management arms of commercial banks" as of May 2024.
The true investment total may be higher than $4.3 trillion, given the lack of transparency in bond markets; the report authors estimated that they only included 20-30% of actual bond holding in fossil fuel companies.
Of the $4.3 trillion, more than half was invested by U.S.-based companies. In fact, $1.1 trillion was held by just four companies: Vanguard, BlackRock, State Street, and Capital Group—dubbed "the filthy four" by Urgewald—each of which had more than $160 billion in fossil fuel investment holdings.
Alec Connon, co-director of Stop the Money Pipeline, said the outsized role of the U.S. was the result of poor governance.
"This mirrors the complete lack of action by U.S. regulators to effectively monitor and address the climate and transition risks of large institutional investors," Connon said in the report. "This inaction lays the ground for the next economic crisis and puts the world on a fast track towards climate chaos."
Nearly $4 trillion of the $4.3 trillion in holdings went to companies that are actively developing new fossil fuel projects, not just tapping existing projects, though the report doesn't specify how much actually went toward new development; many companies do both.
In any case, it's clear that new development abounds: Companies have increased capital expenditure on oil and gas exploration by more than 30% since 2021. ExxonMobil, among the biggest beneficiaries of the institutional investing documented in the report, alone spends $1.4 billion annually searching for new reserves in 37 countries, the publication says.
All of this is in spite of pledges to "transition away" from fossil fuels, as countries agreed to do at the United Nations climate summit in Dubai in December. Environmental campaigners are trying to use those pledges, loophole-ridden as they may be, to pressure institutional investors and regulators to take action.
"The question is, will institutional investors continue snapping up bonds of companies like Saudi Aramco, ExxonMobil, or TotalEnergies whose business model relies on heating up the planet?" the report's authors asked. "Or will pension funds, insurers, and asset managers realize that these investments will produce more heatwaves, more catastrophic floods, more climate disasters?"
Urgewald is one of the NGOs that produces the annual Banking on Climate Chaos report, the latest publication of which found that big banks shoveled nearly $7 trillion into fossil fuel companies in the eight years after the Paris agreement was signed in 2015. That report, released in May, showed that major banks including JPMorgan Chase and Citigroup together financed fossil fuel companies to the tune of $705 billion in 2023, the hottest year on record.
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'Out-of-Touch Billionaire' Larry Fink Blasted for Calling 65 a 'Crazy' Retirement Age
"I love how rich people are treated as sources of great wisdom when they obviously don't know their ass from their elbow," said one economist.
Mar 26, 2024
Larry Fink, the billionaire CEO of the world's largest asset management firm, wrote in his annual letter to investors on Tuesday that it is "a bit crazy" that 65 is viewed as a sensible retirement age in the United States, drawing swift backlash from Social Security defenders and policy analysts.
Dean Baker, senior economist at the Center for Economic and Policy Research, replied that the CEO of BlackRock apparently doesn't know the U.S. already raised the full retirement age for Social Security to 67 under a law passed during the Reagan administration—a change that inflicted benefit cuts across the board.
"I love how rich people are treated as sources of great wisdom when they obviously don't know their ass from their elbow," Baker wrote on social media.
While Fink, who is 71, wrote that "no one should have to work longer than they want to," he argued that "our conception of retirement" must change, pointing specifically to the Netherlands' decision to gradually raise its retirement age and tie it to life expectancy. (Fink does not mention that life expectancy in the U.S. has been trending downward in recent years.)
"When people are regularly living past 90, what should the average retirement age be?" Fink wrote. "How do we encourage more people who wish to work longer, with carrots rather than sticks?"
Alex Lawson, executive director of the progressive advocacy group Social Security Works, told Common Dreams in response to the BlackRock CEO's letter that "Larry Fink is the definition of an out-of-touch billionaire."
"He is welcome to work as long as he wants to, but that doesn't mean that everyone else—including people who do demanding physical labor—should work until they die," said Lawson.
"Half of Americans age 65 and older are living on less than $30,000 per year. This is absurd. Congress must expand Social Security."
Roughly half of older Americans have no retirement savings, a fact that Fink acknowledged in his letter.
While progressive lawmakers such as Sen. Bernie Sanders (I-Vt.) have called on policymakers to expand Social Security benefits by forcing rich people like Fink to contribute more to the program, the BlackRock CEO argued that the private sector and federal government should team up to "ensure that future generations can live out their final years with dignity."
"What should that national effort do? I don't have all the answers," Fink added. "But what I do have is some data and the beginnings of a few ideas from BlackRock’s work. Because our core business is retirement."
Fink's letter comes days after the Republican Study Committee—a panel comprised of around 80% of the House GOP caucus—released a budget proposal calling for "modest adjustments to the retirement age for future retirees to account for increases in life expectancy" in a purported bid to "secure Social Security solvency for decades to come."
But progressives argue that rather than slashing benefits for new retirees to shore up the program, Congress should lift the payroll tax cap that allows the ultra-rich to pay the same amount into Social Security as someone who makes $168,600 a year.
Fink, for example, has a base salary of around $1.5 million. With the current payroll tax cap in place, Fink stopped paying into Social Security less than a month and a half into 2024.
"In the U.S. today, 12 million seniors are dealing with food insecurity," Sanders wrote on social media Tuesday. "Half of Americans age 65 and older are living on less than $30,000 per year. This is absurd. Congress must expand Social Security."
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