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Union Investment, one of Germany’s largest asset managers, has sold all of its holdings in the US Petroleum ExxonMobil, accusing it of an “inadequate commitment” to climate targets.
Henrik Ponzen, head of sustainability for Union Investment, said the 500 million euro asset manager sold its holdings on ExxonMobil and smaller US peer EOG resources following reviews of the most carbon-intensive investments in the portfolio.
Union’s move highlights differences between European fund managers and US asset managers. Many latter reasses or draws back from climate-related initiatives in response to US political pressure.
At its peak last year, Union held a similar amount of exon and EOG shares of approximately 500 million euros across its aggressively managed funds. Exxon has a market capitalization of approximately $440 billion and an EOG of approximately $600 billion.
“As part of our climate strategy, we are calling for all companies to commit to long-term, comprehensive climate goals,” Ponzen said. “We believe that if a company cannot set such targets, there is no basis to assume that it will achieve them.”
Following “intensive and sometimes difficult dialogue,” Union added Exxon and EOG’s shares “didn’t identify enough commitment to the required climate targets,” he added.
Exxon has net zero targets for operational “Scope 1 and Scope 2” emissions, but does not target scope 3 emissions that come from oil and gas end use. According to the Union, Scope 3 targets are important as they account for around 90% of total emissions.
Exxon said on its website that the metric is flawed and counterproductive, with Scope 3 reporting saying “will ignore the growing energy demand” and “doesn’t allow for comparison of alternative methods to meet that demand.”
In response to a request for comment, ExxonMobil mentioned a group presentation on the company’s climate goals, highlighting its commitment to “meeting society’s energy needs and reducing emissions.”
The company has invested up to $30 billion in the “Emissions Lowering Initiative” through the end of 2030, and is “on track” to meet its 2030 emissions reduction plan, the spokesman added.
EOG, which has no target for Scope 3, did not respond to requests for comment.
Since the election of US President Donald Trump, asset managers have been under more pressure than climate action. Several, including BlackRock, the world’s largest money manager, have withdrawn from the Net Zero Asset Manager Initiative, a coalition pledged to support net Zero Greenhouse gas emissions targets within 2050.
However, union investment is relatively insulated from these political obstacles, with Ponzen saying “it has American clients and subsidiaries and is not dependent on US government contracts.”
“Climate change remains a central factor in your investment strategy, regardless of who has political power,” he added.
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Ponzen also said that Union maintains approximately 1 billion euros of stocks in total and shells, each “meets the minimum requirements” of a reliable strategy to reduce greenhouse gas emissions. Both have scope 3 reduction targets.
He suggested that more sales could continue based on group guidelines published last year. “We have come to the conclusion that oil and gas demand will begin to decline by 2030,” he said. “From that point on, we only support a portion of the industry that is committed to trustworthy transformation.”
For traditional funding, this meant the initial exclusion of tar sand operators. With its sustainable funding, Union had left its oil and gas sector entirely by April this year. “This shows that the conversion is progressing at two different rates,” Ponzen said.
Still, exclusion is not a preference option for Union. “They don’t cut their emissions, they just reassign them to someone else,” he said. Nevertheless, he argued that by 2050 exposure to most contaminants would need to be reduced to meet the targets of the climate-neutral portfolio group.
The exclusion is not permanent, he added. “Our evaluation evolves with business models,” says a change in climate policy revealing the possibility of reinvestment of Exxon or EOG.
Additional Reports by Malcolm Moore and Christina Shevory
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