The asset management industry is failing to properly tackle climate change, said Jonathon Porritt, co-founder of Forum for the Future and environmental campaigner.
Speaking at the Sustainable Investment Festival today (12 July), Porritt warned: "We have a massive amount of virtue signalling going on in the global asset management industry today, a massive amount of greenwashing."
He went on to add that while individuals within the asset management industry may feel as if they are working to fight climate change, "as an industry, collectively, the judgement is pretty damning".
Porritt addressed the recent controversy around Stuart Kirk, former head of responsible investing at HSBC Asset Management who resigned after denying the urgency of climate change in a speech earlier this year.
The environmental campaigner, referencing Kirk's speech, stated that "I am your resident nutjob" and while he found the speech "a little bit upsetting", Kirk was correct on his assessment of greenwashing within the industry.
He pointed to initiatives such as Climate Action 100, the Net Zero Asset Managers Initiative and the UN PRI, all of which he argued have failed to properly fulfil their promises and goals.
He said that a recent analysis of Climate Action 100, which began in 2017, was "devastating", finding that just 12% of the firms involved had adequate short-term emission reduction goals for decarbonisation strategies in place and not one had aligned to 1.5°C warming.
He continued: "Moreover, every single oil and gas company targeted by Climate Action 100… not a single one of those has actually been affected in any way.
"You can see why people are beginning to lose confidence in the capacity of the asset management industry to make a significant difference," he said.
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Porritt went on to question engaging with firms rather than divesting, stating that he thought most engagement strategies were "superficial".
"Most asset managers are not being that transparent," he said, adding that if asset managers were going to commit to engagement, they must have an "extremely strategic approach" that "you have to invest in".
"If you do engagement properly, you should be pissing off an awful lot of people," he concluded.
Regulation
Porritt also criticised central banks and governments for failing to properly regulate the industry and make large scale change.
He said that there are "so many tools and levers that these central banks have" that could be used to fight climate change, as central banks have identified it as a systemic risk.
However, "when pressed as to why they are not actually doing anything explicit to address that systemic risk, they say that is not our job," he said.
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While he said the government "will eventually get their acts together", ultimately, he believes that "they will do something far too late and of a completely inadequate nature".
"I do not actually believe the voluntary principle is capable of bringing about the scale of transformation that is required," he stated.
Porritt attacked Conservative leadership candidates with "elements of climate denial" who have said they will "sweep away all this net-zero nonsense". He warned that a majority of the candidates have engaged in soft climate denial.
