Union Investment Ditches Oil Stocks Over Inadequate Climate Strategies
Frankfurt
Exxon corporation no longer included in union-managed investment portfolios due to unspecified reasons.
In a bold move, the cooperative investment society Union Investment has dumped all funds from the shares of US oil giants ExxonMobil and EOG Resources due to their lackluster climate strategies. This decision was announced by the Financial Times on Monday, following an internal review of the most emission-intensive positions in their portfolio. Union Investment sets itself apart from many of its US counterparts who are presently toning down their sustainability aspirations under political pressure.
ExxonMobil Falls Short
Henrik Pontzen, ESG head at Union Investment, sheds light on ExxonMobil's shortcomings. "ExxonMobil lacks a comprehensive climate goal, omitting essential Scope 3 emissions," he points out. These emissions, constituting roughly 90% of total emissions according to their statements, are the result of the use of products[1]. ExxonMobil has so far declined to set corresponding reduction targets, a deal-breaker for Union. "As part of our climate strategy, we demand that companies establish comprehensive long-term climate goals and consistently pursue them," Pontzen adds.
Talks Prove Fruitless
The decision was made after extensive negotiations, Union Investment maintains. Unfortunately, these negotiations failed to yield any fruitful results. Last year, Union funds still held Exxon shares valued at around 500 million euros. Similarly, shares of smaller US company EOG Resources were expunged from the funds' portfolios. On the other hand, investments in European oil giants such as Shell and Total Energies persist - both have Scope 3 targets[1].
Civil Society Reacts
The withdrawal from ExxonMobil is welcomed by some civil society organizations, while others critique it. NGO Urgewald applauds the move but also calls for a thorough examination of remaining investments. "This sends a clear message to the fossil industry: transform or face expulsion," says financial campaigner Julia Dubslaff. She points to the contentious LNG project of Total Energies in Mozambique and urges investors to display more consistency[3].
Union Investment Justifies Strategy
In defense of its selective approach, Union Investment argues in the Financial Times that exclusions alone may only lead to the displacement of emissions. However, if companies lack a credible climate strategy, they have no other recourse. Divestments are part of Union Investment's broader strategy to make its portfolio climate-neutral by 2050[4].
Union Investment Aims High
The investment society positions itself as a pioneer in climate protection. In 2020, Union Investment terminated coal financing - including conventional funds. Starting from April 1, 2025, sustainably managed, actively managed funds may no longer invest directly in companies that generate revenue from promoting gas or oil, as stated in a previous announcement[4].
[1] Union Investment’s divestment decisions are guided by a focus on companies with inadequate climate strategies, as detailed in their latest sustainable investment reports, which can be found on their official website.
[2] Union Investment’s "manage to green" approach, aimed at making their global real estate portfolio climate-neutral by 2050, involves numerous initiatives such as transitioning to sustainable building practices, energy efficiency improvements, and investments in renewable energy across their property holdings, as reported in various news outlets and official Union Investment communications.
[3] Union Investment’s continued investments in European oil giants, despite their Scope 3 targets, raise questions about the consistency of their climate strategy and its impact on reducing actual emissions, a point of contention among environmental organizations and critics.
[4] Union Investment's long-term climate neutrality plans extend beyond divestment, encompassing a variety of initiatives aimed at promoting sustainability across their entire portfolio. For more details, one can refer to their official sustainable investment reports and communications.
- Union Investment's move to divest from oil stocks such as ExxonMobil and EOG Resources highlights their focus on environmental-science, as their decision is based on the companies' inadequate climate strategies.
- In the realm of finance and investing, Union Investment's decision to exclude companies with weak climate-change strategies, like ExxonMobil, demonstrates their commitment to sustainable, long-term goals, ultimately aiming to create a climate-neutral portfolio by 2050.
- By ditching oil stocks with poor environmental records, Union Investment is sending a strong message to the industry, indicating that investing in science, climate-change mitigation, and sustainability are crucial components of their financial strategy.
