Climate Finance Ranking: These stock portfolios from German federal and state governments are steering towards a hot climate

By admin September 24, 2020
  • 13.2 billion euros from public tax money is poured into 1,700 publicly traded companies – mostly without testing their climate impact
  • Bavaria, North Rhine-Westphalia and Baden-Württemberg are ranked the worst
  • Fossil Free Berlin demands a “cooling off” by selling shares from Total, Eni & Co

21.09.2020 / Berlin. The German government and seven federal states are investing €13.2 billion from civil servants’ pension savings into stock market transactions that are driving global warming towards a “hothouse earth” of 4.0°C – far from complying with the Paris Climate Convention.

These findings were published on a website that went online on Sept. 21st. They are based on a research project “Feverish Finances” of the civil society initiative ‘Fossil Free Berlin’. It investigated the climate impacts of all 1700 companies in which the federal government and federal states invest into as of 31 December 2018.

The guiding research question was: How much will the earth heat up by 2050, if all companies in the world of the respective sectors continued to emit the same amounts of greenhouse gases as 1700 companies in the portfolios? Conclusion: All stock portfolios were “too hot”. They exceeded the limits for a given “1.75 degree scenario” by 10% to 35% – therefor the where “not Paris-compatible”.

The poorest results in the “Climate Finance Ranking 2020” were scored by three states: North Rhine-Westphalia, Baden-Württemberg, with Bavaria bringing up the rear.

Mathias von Gemmingen of ‘Fossil Free Berlin’ comments: “The stock portfolios of Olaf Scholz and the other finance ministers are burning! They are incompatible with the Paris Climate Convention. We urgently need a debate about the fact that far too many companies are on a life-threatening heat-path – and that the state as a shareholder wants to profit from it too”.

Valerie Giesen of ‘Fossil Free Berlin’ comments:

“We call on the finance ministries to stop their climate-incompatible investments immediately in order to cool down their portfolios. The shares of fossil fuel companies are particularly overheated and must be disposed of fastest”.

The German government itself invested over 800 million euros in shares of the fossil sector. These include fracking and oil companies such as Total and Eni, which exceed the temperature limit allocated to their economic sector by 16% and 30% respectively.

RWE got even worse results in 2018. The coal company missed its sector temperature limit by more than 165% and was on an earth heating course of over 13°C. Its shareholders included the states of Bavaria and North Rhine-Westphalia.

Fossil Fuel Companies did not perform better – on the contrary

The analysis also looked at the performance of individual stock portfolios and concluded: Excluding particularly climate-damaging fossil-fuel companies did no harm. On the contrary: it kept the total return stable or provided even a slight increase.

Thus, the finance ministries in Berlin and Schleswig-Holstein that kept their stock portfolios fossil-free since 2017 where benefiting. The German Government also would have earned a slightly higher return if it had sold its fossil shares five or three years ago and reallocated the finances to the “cooler part” of its stock portfolio.

“So even from a financial point of view, climate-blind investments are pointless,” says Valerie Giesen of Fossil Free Berlin.