Al Gore took some time at the Madrid climate talks to attack BlackRock and Vanguard, saying the huge financial institutions are contributing to climate change and warned that they need to mend their ways or be blamed for their part in the “destruction of human civilization.”
The two largest U.S. asset managers are coming under increasing pressure to change their investment strategies after long being accused of not living up to commitments to curb greenhouse emissions. Gore added to the criticism while attending the United Nations climate conference in Madrid, the Financial Times reported.
“I’m strongly in favor of divestment in fossil fuel stocks, and I believe that the world faces incredible economic risks from a massive bubble of subprime carbon assets,” Gore said.
Gore estimated that these vulnerable assets total about $22 trillion, and they can be compared to the subprime mortgages that sparked the global recession in 2008.
Some smaller asset managers are taking are taking an active role in the companies in their portfolio, something BlackRock and Vanguard have avoided. They have both refrained from joining the 631 investors with more than $37 trillion under management who make up the Investor Agenda and are calling for accelerated action to fight climate change.
“I think the large passive managers have a real difficult decision to make,” Gore said. “Do they want to continue to finance the destruction of human civilization, or not? Their model makes it difficult for them to execute some of the strategies that active managers have available to them, I understand that. They are trying, they are not succeeding yet,”
Some banks and investors are responding by taking steps to fight climate change. Credit Suisse said Wednesday that it would stop financing new coal-fired power plants. BNP Paribas announced in November that it would cease funding coal projects by 2040.
- BlackRock’s fossil fuel bets cost investors $90 billion in lost value and missed opportunities over the last decade, an August report from the Institute for Energy Economics and Financial Analysis estimated.
- Policies designed to fight climate change may cut the value of companies by as much as $2.3 trillion worldwide, according to a report from Principles for Responsible Investment.