“Green” EU Investment Funds Full of Fossil Fuel Companies

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First of all, let me note that I’m a big fan of the ESG movement. People should be investing in companies with good environmental, social, and governance (ESG) policies, and the movement to do so has had many strongly positive effects. However, as the movement has scaled up and become mainstream, there’s been some obvious corner cutting and, dare I say, blatant cheating of the system. One problem that has been raised multiple times before is inclusion of fossil fuel companies in ESG or “green” investment funds. A new investigation from the Guardian and Voxeurop surfaces this problem again.

The investigation found that “green” investment funds in Europe hold more than $33 billion in investments in oil and gas companies. $33 billion in fossil fuel companies!

The argument, presumably, is that these companies are doing green things. We need to support that, right? Well, if I am rolling around 24/7 in a giant coal-rolling diesel truck and then I ride my bike to the park once a month, do I really deserve praise and support for that?

More than $18 billion of this “green” investment has been invested in TotalEnergies, Shell, ExxonMobil, Chevron, and BP — the five biggest polluters on the planet. Are they significantly changing what they do to protect the climate? No, they aren’t.

“Other investments by funds following EU sustainable finance disclosure regulations (SFDR) included those in US fracking company Devon Energy and Canadian tar sands company Suncor, the investigation by Voxeurop and the Guardian found,” the Guardian reports.

This is all kinds of wrong. A fracking company and a tar sands company?! You couldn’t get further off the green path.

“Investors claim that holding a stake in a company allows them to influence the firm’s pursuit of climate goals. However, no major oil and gas producer has plans consistent with international climate targets and many companies have weakened their plans in the last year, according to a report from Carbon Tracker in April.”

Well, that’s inspiring.

Naturally, it’s some of the largest finance companies on the planet that have been investing these billions in these “green” top polluters. It feels like they just found a way to justify investing in the same companies they’ve always invested in — and, particularly, some of the largest, most profitable, and most polluting companies.

Again, the argument investors are making (and sharing with the Guardian when asked) is that their investments were making a difference and creating concrete change at those companies. However, it all feels like a lot like a simple magic trick. These companies know that they need to diversify and invest in the industries that will replace them. Whether buying EV charging companies or developing solar farms, this is common sense business. “But, hey, if we can convince people we’re making green investments to be better, we can gobble up some of that ESG money.” I imagine that’s more or less how it goes.

You can find more details on the findings via the Guardian.

What do you think of these findings and the practices that have been underway?