Edinburgh financial giant contributes 5 million tonnes of climate pollution

Wealth manager Abrdn, known as Standard Life Aberdeen until 2021, has stakes in some of the world’s biggest polluters, including oil multinationals Shell and BP, German coal firm RWE, and global mining companies Glencore and Rio Tinto.

Abrdns’ investments in the 20 most polluting companies in its portfolio resulted in the emission of 4.8 million tonnes of carbon dioxide (CO2) into the atmosphere in 2022.

By comparison, Grangemouth’s string of petrochemical plants, which together create more climate pollution than any other industrial site in Scotland, produce the equivalent of 2.7 million tonnes of CO2 per year.

Campaigners said the revelations were shocking and argued Scotland cannot claim to be a leader in climate action while this type of damage is funded by our own institutions.

One campaigner said the company’s customers should start considering whether Abrdn really has their best interests in mind.

Abrdn said she is committed to driving the change needed to meet climate goals and currently manages $37 billion in sustainable assets. A spokesperson added that the company could mitigate exposure to coal and fossil fuels if requested by specific customers.

The findings come from Ferret’s analysis of Abrdns’ sustainability report, which includes a list of its top 20 funded emitters. This shows the amount of greenhouse gas emissions facilitated by the financing of these companies in 2022.

Abrdn has not disclosed its total financed emissions for all of its investments, although this figure is likely much higher than 4.8 million tonnes.

Abrdns’ dirtiest investments in a single company in 2022 were in UltraTech Cement, a Mumbai-based cement maker. His holdings in UltraTech caused an estimated 660,000 tons of climate pollution to enter the atmosphere last year.

For context, UltraTech’s Abrdns funding has caused only slightly fewer emissions than ExxonMobils ethylene plant at Mossmorran in Fife, which produces 680,000 tonnes a year, according to the most recent data from the Scottish environmental regulator.

Investments in Shell, RWE and BP were the second, third and fourth most polluting respectively in Abdrns’ portfolio.

Shell and BP have come under fire in recent months after weakening previous climate pledges after posting huge profits in the wake of the energy crisis.

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In June, Shell announced it would abandon its commitment to cut oil production by between one and two percent each year through 2030. The company told The Ferret that its commitment to climate goals remains as strong as ever and had already achieved its oil reduction target by selling oil assets in 2021.

Earlier this year, BP watered down its pledge to reduce its climate impact by 40% by the end of the 2020s.

Senior Church of England figures cited the flips at Shell and BP as a key factor in its decision last month to abandon its investments in oil and gas companies.

RWE made global headlines in January after activists were forcibly removed from the German village of Lutzerath by police so it could be demolished to make room for the expansion of one of the company’s mines. Greta Thunberg was among the protesters stopped by police.

In 2021, RWE was the largest polluting company in Europe. But it says it is a leading player in renewable energy, has a clear goal to be climate neutral by 2040 and will stop generating power from coal by 2030.

Abrdns shares in Glencore and Rio Tinto were collectively responsible for nearly 370,000 tonnes of climate pollution last year.

Glencore is the world’s largest coal mining and trading company. She has been accused of human rights and environmental violations in recent years. London-based Rio Tinto has also faced a string of scandals over the past decade.

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In February 2022, the company released the results of an external review of its workplace culture that found instances of sexual harassment, bullying and racism across the company.

According to employee responses, 28% of women and nearly 7% of men experienced sexual harassment at work at Rio Tinto in the five years prior to the report’s release.

In 2020, the company also admitted to blowing up a 46,000-year-old Aboriginal heritage site in Western Australia as part of an effort to access iron ore reserves.

Abrdn’s commitment to sustainable investing has come under increasing scrutiny as the climate crisis intensifies.

Earlier this year The Ferret revealed that the company owns a large number of bonds issued by troubled Indian coal conglomerate, Adani Group.

Protesters from activist group Toxic Bonds targeted the company’s annual general meeting in May, with activists saying Abrdn is taking advantage of the bond market to finance coal, oil and gas expansion.

Abrdn holds $920 million worth of bonds issued by companies that are ramping up their fossil fuel operations, according to financial market research by German environmental organization Urgewald.

Urgewald’s head of financial research, Katrin Ganswindt, said Abdrns’ investment findings are worrying, but not surprising because the company has no policy to exclude investments in coal, oil and gas.

Abrdns’ core strategy appears to be customer engagement, Ganswindt told The Ferret. They claim to set clear goals [for the companies they invest in] and consider divestiture if these are not met. But what about cases like Shell and BP, which have no plans to curtail oil and gas expansion or production, yet Abrdn remains invested?

Lara Cuvelier, sustainable finance activist at Reclaim Finance, also said Abrdn doesn’t appear to have an adequate engagement policy to push fossil fuel companies to change.

Cuvelier added: I’m one of the big asset managers still investing in new bonds from companies like BP, Shell and Glencore without imposing any conditions.

Their clients should start considering whether Abrdn truly has their best interests in mind.”

Friends of the Earth Scotland divestment campaigner Ric Lander agreed the findings showed that if you care about the climate you should look elsewhere than Abrdn.

It’s shocking that a Scottish investor is backing some of the world’s biggest polluters, Lander said. Scotland cannot claim to be a leader in climate action while this type of damage is funded by our own institutions.

Our money shouldn’t be anywhere near companies like Glencore. Countless investors, such as Norway’s sovereign wealth fund, have already divested from Glencore, and there are plenty of fossil-free funds on the market.

An Abrdn spokesperson noted that the company has launched a multi-year engagement strategy with our largest funded emitters to encourage their transition to net zero.

They added: In cases where we don’t see adequate progress, we can use tools like our voting powers to drive change. Where customers dictate, we can mitigate our exposure to coal and fossil fuels.

As a responsible investor who manages assets on behalf of many clients with different mandates and investment objectives, we believe it is important for asset managers to consider whether it is appropriate to impose objectives and restrictions where they have not been requested by the client.

However, we do offer a variety of funds and investments for clients who wish to invest in line with specific sustainable criteria. We currently manage 37 billion of sustainable assets.

A Glencore spokesperson said: We aim to respect human rights and seek to learn about the traditions, cultures, perspectives and development priorities of the people we engage with, to build trusting and constructive long-term relationships and to contribute to people’s social and economic development affected and companies more widely.

We recognize our responsibility to contribute to the global effort to achieve the goals of the Paris Agreement by decarbonising our operational footprint.

UltraTech, BP and Rio Tinto were invited to comment.

This article was produced exclusively in collaboration with The Herald. Il Furetto is a media-coop, which works with its members to produce inquiries of public interest. Sign up for our newsletter to find out more or become a member at theferret.scot/subscribe