“We’re not forcing a net zero pathway, but we have signed up to the net zero asset managers initiative,” said Matt Christensen, global head of sustainable and impact Investing at Allianz Global Investors (AGI), in an interview on 3 October 2024. He reminded Paperjam that Allianz Insurance Company has been the chair of the net zero asset owners initiative, a demonstration of its ongoing commitment to net-zero.
[American fund managers have] gone from pro-ESG in their voting to either neutral or anti.
Discussions with other investors to address the ESG pushback issue appears to result in soft questions to the management of companies such as: “Are they sticking to [net-zero commitments]? If they are not, why not?” In order words, the farthest that AGI appears willing to ruffle feathers is through private engagement with companies.
Christensen is unclear whether regulators will play a role on these delays. The actions played by companies will add up in terms of CO2 emissions set back at the country level. Without prompt responses, several countries may have to review their Cop commitments.
Is the ExxonMobil’s anti-ESG stance gaining traction in the US?
Christensen reported that the oil major’s CEO kept a “hard line” at the last Council of Institutional Investors held in September in Washington. In addition, he noted that American fund managers “have largely backed away on how they were voting on ESG initiatives at the annual meetings… having gone from pro-ESG in their voting to either neutral or anti.”
Escalation methods on companies deviating from ESG
Christensen claimed that AGI “has been very consistent” in expressing its vote at annual meetings. On companies having a stance like ExxonMobil communicating “no net zero pathway… or not believing in net zero,” AGI expresses a view through the vote “that we don’t agree with that as an oil business.”
Of course, the very fact that AGI can express a negative view through the voting process means that the fund manager is a shareholder of companies such as ExxonMobil. Christensen explained that the activism at AGI includes public pre-announcements of their vote to show that the fund manager is “not exactly thrilled with certain behavioural patterns… seen repeatedly by a company.”
Elsewhere, Christensen explained that AGI co-filed a resolution with PGGM and the New York State Pension Fund on water risk at McDonald’s. He added that the resolution was withdrawn and not put onto the ballot after the fast-food operator promised to measure water usage and apply a better water strategy.
AGI claims to partner with other portfolio managers sharing their ESG perspective. He noted that some of these asset managers will elects to divest. Some others, Christensen argued, appreciate the effort undergone by AGI and will decide to engage either bilaterally with companies or through a collective action such as the Climate 100 alongside with AGI.
Why does AGI still own ExxonMobil?
Given Exxon’s strong and ongoing anti-ESG stance, Paperjam questioned Christensen on why AGI was sticking to its equity holdings. Oil and gas “is still a necessary area of the energy mix, and we do not have a policy yet on doing divestment of oil and gas companies.” He thinks “there is always hope” that Exxon will change its viewpoint.
In any cases, Christensen stressed that it is not a firm practice for AGI to speak out and loudly “that we are now divesting out of Chevron or Exxon and go public with that. We don’t do that.”
At no point during the interview did Christensen specify under which circumstances AGI would sell off its holdings in Exxon or in other oil and gas companies. To be fair, it is unclear whether AGI would have more impact in its activism by not holding shares in ExxonMobil.
Are some companies from the fossil fuel industry making a significant contribution to ESG?
Christensen did not want to mention names. Through their various engagements, he commented that some of them are budgeting resources toward “future energy mix projects.”