Fund Managers Drive Twice as Much Investment to Fossil Fuels as Clean Energy

AI generated summary

A recent analysis by BloombergNEF reveals that global fund managers are directing twice as much investment into fossil fuels compared to low-carbon energy sources. For every dollar invested in fossil fuels, only 48 cents is allocated to low-carbon capital expenditure. This disparity highlights a significant misalignment with the capital deployment needs for achieving a net-zero economy, as the average Energy Supply Fund-Enabled Capex Ratio (ESFR) across funds is 0.48 to 1, falling short of the 1.1 to 1 ratio needed for economy-wide energy supply investment.

The report indicates that major oil and gas companies dominate pooled funds, while smaller firms investing in low-carbon energy are less represented. Additionally, much of the low-carbon investment is sourced through infrastructure vehicles not captured in traditional securities-focused funds. The ESFR metric aims to provide a clearer picture of how funds contribute to the energy transition, encouraging investors to prioritize capital allocation towards sustainable solutions rather than merely divesting from fossil fuels.