February 5, 2019 / Product launch

KBI excludes fossil fuels in new strategies

By Joe McGrath, ESG Clarity

The Irish investment group said it was responding to growing investor demand for fossil-fuel-free strategies

KBI excludes fossil fuels in new strategies

Irish fund house KBI Global Investors has expanded its range of responsible investment strategies with three fossil-fuel-free versions of its equity funds.

The company said the decision to launch the fossil-fuel-free versions of the Global, Eurozone and Emerging Markets equity funds followed a study by global campaign organisation Fossil Free, which found that institutional investors were increasingly committed to divesting from fossil fuels.

The study identified that more than 1,000 institutions with investments exceeding $8 trn had already committed to moving out of fossil fuel investments.

“In adding fossil fuel stocks to that list of exclusions, we are enabling investors to declare their investments to be ‘fossil fuel reserves free’,” KBI’s head of responsible investing, Eoin Fahy, said in a media statement.

“This affords them the flexibility to make their own decision on this important topic and to implement their investment strategy accordingly.”

Investors are continuing to pressure large cap oil and gas corporations to plot the impact that climate change may have on future operations. Last week, BP became the latest organisation to respond to investor pressures to draw up corporate plans for a future beyond fossil fuel operations.

In the media statement published on Monday, KBI said that investors are concerned that regulatory changes may make it uneconomical to burn coal, oil or gas, or lead to stranded assets. The firm added that a second group of investors preferred not to invest in the sector for ethical or environmental reasons.

In July, ESG Clarity reported that one of the UK’s major pension investors, the Church of England, would divest from fossil fuels by 2023, but was refusing to do so any earlier, claiming it would leave its strategy “in tatters.”

The Church of England investment committee felt that doing so any earlier would not accelerate the global transition to renewables and could lessen its influence with investee companies.