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Climate change the ‘most common’ reason for portfolio exclusion

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By illuminem briefings

· 2 min read

illuminem summarizes for you the essential news of the day. Read the full piece on the Financial Times or enjoy below

🗞️ Driving the news: Climate change concerns are the top reason financial groups exclude companies from their portfolios, as highlighted by a study conducted by a coalition of environmental and sustainability non-profit organizations

🔭 The context: The research unveiled that 40% of company exclusions were due to climate change worries, 17% were attributed to concerns over involvement in weapons manufacturing, and 12% were related to tobacco
• This focus on ESG (environmental, social, and governance) factors persists despite a growing critique against “woke” capitalism, particularly from some US Republican politicians and state treasurers

🌍 Why it matters for the planet: The shift away from industries detrimental to the environment, particularly fossil fuels, underscores the increasing recognition of the financial risks tied to climate change
• Notable financial behemoths like Norway's $1.4tn oil fund have taken steps to exclude companies with high greenhouse emissions, signaling a broader, global trend towards sustainable investment

⏭️ What's next: The research, which inspected the exclusion practices of around 150 financial entities, published a list of 4,532 companies excluded by 87 institutions across 16 countries
• The organizers hope that making this list public will compel the listed companies to amend their practices

💬 One quote: “The tracker shows that fossil fuels are becoming a 'sin' industry... [it] should spur oil and gas companies to speed up their energy transition efforts," (Ward Warmerdam, Profundo)

📈 One stat: Poongsan Corporation from South Korea tops the list as the most excluded company, cited by 75 financial entities due to its production of controversial weapons

Click for more news covering the latest on environmental sustainability

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