Dec 12, 2018

U.S. firms face mounting risks over coal investments

The New York headquarters of the BlackRock investment management firm on Friday, Feb. 5, 2016. Photo: Richard Levine/Corbis via Getty Images

U.S. investment firm BlackRock owns more coal reserves through its investments in publicly listed companies, shares and bonds in coal plant developers than anyone else in the world, according two new pieces of analysis.

The big picture: The U.S. holds over 35% of institutional investment for the coal industry, the largest share in the world. And in recent years, U.S. investors have started to lag behind leading European institutions when it comes to climate-friendly investing: AXA, UBS and c all have policies in place to restrict investments in thermal coal and offer far less coal-intense index funds.

Details: With a collective $40 trillion in assets under management (AUM), the world's 15 largest asset managers have all increased their holdings in thermal coal by 20% since the Paris Agreement was signed. BlackRock alone holds shares and bonds totaling $11 billion in 56 coal plant developers around the world, with Vanguard in second at $6.2 billion.

InfluenceMap has also analyzed the thermal coal intensity (TCI) — measured in tons of thermal coal per million dollars in AUM — of the 60,000 largest listed funds. 

  • BlackRock was 50% more "coal heavy" than the average.
  • Allianz’s funds, on the other hand, including those of its U.S. arms, show TCI values of roughly 80% less than the global fund benchmark, likely indicating a strategic underweighting of companies with thermal coal businesses since the Paris Agreement.

What's next: Reducing exposure to thermal coal looks increasingly like the right business move for investors. Of existing coal plants around the world, 42% are losing money, and 1 in 4 tons of coal in the U.S. is sold to plants that have already committed to retiring. Meanwhile, new renewable energy is now cheaper than existing coal, which will hasten these retirements.

What to watch: In addition to the financial risks posed by a contracting market, companies may start to worry even more about the reputational risks of investing in coal. Asset managers such as BlackRock are responsible for trillions in investments, rendering their coal holdings relatively trivial. That means the coal industry needs BlackRock, but BlackRock may not need, or want, the cost of doing business with the coal industry.

Justin Guay directs global climate strategy at the Sunrise Project and advises the ClimateWorks Foundation.

Go deeper

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 1 a.m. ET: 664,695 — Total deaths: 30,847 — Total recoveries: 140,156.
  2. U.S.: Leads the world in cases. Total confirmed cases as of 1 a.m. ET: 124,464 — Total deaths: 2,191 — Total recoveries: 1,095.
  3. Federal government latest: President Trump announces new travel advisories for New York, New Jersey and Connecticut, but rules out quarantine enforcement. Per the CDC, residents of those states must now "refrain from non-essential domestic travel for 14 days," with the exception of critical infrastructure industry workers.
  4. State updates: Alaska is latest state to issue a stay-at-home order — New York is trying to nearly triple its hospital capacity in less than a month and has moved its presidential primary to June 23. Some Midwestern swing voters who backed Trump's handling of the virus less than two weeks ago are balking at his call for the U.S. to be "opened up" by Easter.
  5. World updates: In Spain, over 1,400 people were confirmed dead between Thursday to Saturday.
  6. 🚀 Space updates: OneWeb filed for bankruptcy amid the novel coronavirus pandemic.
  7. Hollywood: Tom Hanks and Rita Wilson have returned to U.S. after being treated for coronavirus.
  8. What should I do? Answers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk
  9. Other resources: CDC on how to avoid the virus, what to do if you get it.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

Coronavirus updates: Global death toll tops 30,000

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC, and China's Health Ministry. Note: China numbers are for the mainland only and U.S. numbers include repatriated citizens and confirmed plus presumptive cases from the CDC

The novel coronavirus has now killed more than 30,000 people around the world — with Italy reporting over 10,000 deaths, per Johns Hopkins data.

The big picture: The number of deaths from COVID-19 in the U.S. surpassed 2,000 on Saturday. The United States leads the world in confirmed coronavirus infections — more than 124,000 by late Saturday. The number of those recovered from the virus in the U.S. passed the 1,000-mark on Saturday evening.

Go deeperArrowUpdated 3 hours ago - Health

Trump rules out quarantine in New York, New Jersey, Connecticut after pushback

President Trump on the White House grounds on Saturdya. Photo: Sarah Silbiger/Getty Images

President Trump tweeted Saturday night that he's decided not to introduce quarantine enforcement measures fo New York, New Jersey and parts of Connecticut, but a "strong" travel advisory will be issued for those states. The CDC later announced domestic travel restrictions for the states.

Why it matters: Trump said hours earlier he was considering quarantine measures to combat the rise in novel coronavirus cases. But he received pushback, notably from New York Gov. Andrew Cuomo (D), who told CNN such a measure would cause "chaos." "This would be a federal declaration of war on states," Cuomo added.

Go deeperArrowUpdated 5 hours ago - Health