Tell Asset Managers: Keep Fossil Fuels in the Ground!

CEOs of BlackRock, Vanguard, and State Street

The climate crisis isn’t being financed by a rogue group of unknown actors. It’s being funded in part by some of the largest institutions on Wall Street — asset managers. These institutions are responsible for handling the investments and retirement savings for individual investors, corporate 401(k)s, foundations, public pension funds, and more.  

These asset managers are using our savings to fund fossil fuel expansion. This needs to end.

Fossil fuel companies sell bonds to raise new funds, which can be used to support general operations or new expansion projects. Fossil fuel expansion, like the Willow Project or the Rio Grande LNG terminal, can’t happen without the help of the money that is raised through the sale of bonds. And bond sales can’t be successful without investors, including the world’s largest asset managers, agreeing to buy them.

Asset managers, like BlackRock, Vanguard, and State Street, are some of the biggest buyers of these bonds. They pour billions of dollars into fossil fuel companies every year, helping to finance the buildout of new pipelines, LNG terminals, and fracking sites. As the climate crisis worsens, the need for asset managers to adopt serious climate policies is more important than ever.

The investment decisions of asset managers have huge implications for the world. Just five of the biggest control more than the entire GDP of the US economy; where they choose to invest will help decide whether we transition to a just, low-carbon economy or get locked into a fossil fueled future. In order for fossil fuel expansion to stop, investors must stop buying bonds from companies expanding fossil fuel production and building new fossil fuel infrastructure.

In order to protect their clients’s savings and our (financial) future, they need to stop providing new funding for climate-wrecking fossil fuel expansion projects. Tell asset managers to stop buying fossil fuel bonds!

To: CEOs of BlackRock, Vanguard, and State Street
From: [Your Name]

Climate science is very clear on two points: that the climate crisis is driven primarily by the production and combustion of fossil fuels and that fossil fuel expansion is fundamentally incompatible with the Paris Agreement’s goal of limiting warming to 1.5°C. This expansion is enabled by investors like you that provide capital to companies that are continuing to expand fossil fuel assets and infrastructure.

Fossil fuel companies, for example, are increasingly relying on bond sales to raise new debt; in 2020, over half of financing for coal, oil, and gas companies came from bonds. The purchase of these bonds, even unrestricted corporate bonds, is instrumental in enabling the expansion of fossil fuel assets and, consequently, climate disaster and carbon lock in.

In short, continuing to purchase newly issued fossil fuel bonds not only undermines global climate goals, but creates systemic risks for the market as a whole and dramatically increases risk to your clients’ portfolios. In the face of emerging risks, like climate change, a critical part of risk management must be working to mitigate issues that pose systemic risk to the long-term value of entire portfolios. This is especially true for long-term and diversified investors, like you.

As one of the world’s biggest asset managers, and one of the biggest purveyors of capital globally, your decisions have real-world consequences. Your investment decisions have outsized influence in determining whether we will hit global climate goals, whether we will have a fossil fueled future or one powered by clean, renewable energy, and whether we preserve biological richness for generations to come.

In order to fulfill your fiduciary duties of care and loyalty, you must use the resources at your disposal to mitigate both idiosyncratic and systemic climate risks. Central to that is stopping the flow of new capital to companies that are expanding fossil fuels and have no credible Paris-aligned transition plan. As the Science Based Targets Initiative made clear in its 2023 Fossil Fuel Finance position paper, this means immediately ceasing “new financial support to companies and projects that add to the unabated capacity of fossil fuel assets” and setting clear goals to “phase out financial support to any projects and/or companies that are unable or unwilling to follow a 1.5°C transition within a pre-defined timeframe.”

I am calling on you to fulfill your fiduciary duty by changing your investment practices in order to help mitigate the growing systemic risks that climate change poses. Specifically, I am calling on you to stop the flow of capital to the biggest polluters by committing not to buy newly issued bonds or shares from companies expanding fossil fuel production, assets, or infrastructure.