Tangen also came under scrutiny for his large personal investments in tax havens and in particular, a case between HMRC and AKO Capital regarding deferred tax payments.
#4: Legal and General Investment Management (LGIM)
LGIM is another global asset manager, and Shell’s fourth-largest shareholder. It’s a subsidiary of Legal & General Group PLC, a British multinational financial services firm and one of the country’s largest insurance businesses. Founded in 1836, the Group is a major pension fund manager in itself. But it is perhaps better known for enabling other pension funds to hedge their risks – associated, for example, with market volatility, or people living longer than expected – and acting as a buffer between the market and its pension fund clients.
As part of this, LGIM has become the UK’s largest asset manager, controlling over £1.2tn in investments. The corporate group is made up of hundreds of companies. Headquartered in London, it has approximately 10,000 employees worldwide. It was headed by outgoing CEO, Sir Nigel Wilson since 2012. A Brexiteer, Wilson was part of David Cameron’s business advisory board in the lead-up to the 2016 referendum. He has recently been replaced by António Simões, a former Santander boss.
Legal and General’s top shareholders include BlackRock, Vanguard and Capital Group.
Environmental, Social and Governance (ESG): Claims vs Reality
The Group’s current mantra is “Inclusive Capitalism”: of all the asset managers listed in this series, LGIM and its parent company try the hardest to paint themselves as responsible investors. LGIM is a signatory to the Net Zero Asset Managers pledge for a “net zero asset” portfolio by 2050, and has been rated favourably by Majority Action for its climate action in the form of targeted voting and investment sanctions.
In contrast to most of Shell and BP’s other top investors, its stake in both companies has diminished steadily, while its recent voting record on climate targets more generally makes its actions more consistent with its ESG claims than many others. It has even partnered with US NGO Environmental Defense Fund to encourage businesses to “go green”, and its ESG targets became a criterion for awarding bonus shares under the Group’s management performance share plan in 2021. Executives and directors such as Nigel Wilson – who was awarded £2.6m in shares last year under the plan – now therefore stand to directly benefit from hitting ESG targets.
LGIM has reduced its shares in BP by 62% and in Shell by 43% since the Paris Agreement. Nevertheless, of the top investors in this list, only BlackRock has benefited more than LGIM from its investments in the two oil majors: LGIM has received over £2bn in returns on those investments since 2016; and in 2022, LGIM received £405m from these holdings. This is considerably more than in 2016, despite owning fewer shares.
Legal & General as a whole has at least $18bn (£14bn) invested in fossil fuels. Back in 2019, LGIM defended its choice to include Shell in the top ten holdings of its “climate-conscious” Future World fund in the face of criticism from one of its pension fund clients. Two years later, LGIM was apparently on the side of activists, voting at Shell’s AGM to reduce emissions. And yet, today, investing in LGIM’s fund “RAFI Fundamental Global Low Carbon Transition Equity Index”, means investing in companies such as Shell and Exxon Mobil – as well as top fossil fuel banker, JPMorgan Chase.
In spite of being held up by some as an almost exemplary shareholder, besides oil and gas, the company still invests heavily in coal. Latest figures indicate that the company has $6.1bn (£5.3bn) resting in firms associated with coal mining or production, such as Duke Energy and Glencore.
LGIM CEO: Michelle Scrimgeour
In the words of LGIM CEO Michelle Scrimgeour, LGIM’s climate commitments are “not principles before profit”, but “simply good business sense”. Michelle Scrimgeour joined LGIM as CEO in 2019. Her career in the sector began in the late eighties, when she held several senior positions at asset management firms, including BlackRock, one of Legal and General’s top shareholders.
Today, Scrimgeour also sits on the board of directors of the UK’s trade body for investment, the Investment Association. In 2021, she had the chance to put LGIM’s interests at the heart of climate crisis negotiations as the co-chair of the UK Government’s COP 26 Business Leaders Group, alongside COP 26 president Alok Sharma. Laughably, Scrimgeour used her platform to insist on the need for clear rules to guard against greenwashing. Scrimgeour is also a member of the Women in Finance Climate Action Group. Presented as an industry role model, Scrimgeour makes it on the Financial News’ top 100 influential women in finance year on year. Before Scrimgeour stepped down from the group’s executive board in 2020, the company disclosed that she had received a salary of £2.4m.
#5: UBS Asset Management
UBS Asset Management AG is a subsidiary of the Swiss-based bank and financial services firm, UBS Group AG. UBS Asset Management handles investments for corporate and private clients, primarily through actively-managed funds. It also has a relatively small portion ($443m; £351m) invested in passive funds, a figure which is expected to grow significantly since UBS’ recent takeover of Credit Suisse – a company with large investments in passive funds.
The parent company is Switzerland’s biggest bank, and now the world’s fourth largest by asset. Since the Credit Suisse merger, the bank’s assets are in fact now twice the value of Switzerland’s GDP, sparking fears over its power and the Swiss economy’s exposure to a single company. UBS Group has been described as the world’s largest private bank – meaning that through its “wealth management” division, the company services rich individuals with advice on topics such as taxation, wills and trusts, and by managing their investments.
The company’s roots are apparently several centuries old, though its current incarnation is the product of the 1998 merger of the Union Bank of Switzerland and Swiss Bank Corporation. UBS AM has $1.1tn (£872bn) in assets under management; this is expected to grow significantly since the Credit Suisse takeover. The Group as a whole now has $5tn (nearly £4tn) in invested assets ($2.8tn prior to the takeover). Its fortunes were already growing before the merger: in a year with rising commodity prices and inflation triggered notably by the war in Ukraine, last year the Group made a net profit of $7.6bn (£6bn) – an annual increase of around £137m. With the dust of the Credit Suisse affair still settling, we have yet to see quite how much the acquisition will benefit the company.
The top shareholders of UBS Group are Dodge & Cox and Artisan Partners LP – both privately-owned US active fund managers – as well as BlackRock, Vanguard and Norges Bank Investment Management.
Environmental, Social and Governance (ESG): Claims vs Reality
The company calls itself “a leader in sustainability”, with UBS AM having been one of the founding signatories of the Net Zero Asset Managers initiative. UBS AM plans to become “net zero” across the whole business – including so-called “Scope 3 emissions” – by 2050. Scope 3 emissions, by UBS’ own definition, refer to:
“…emissions resulting from activities from assets not owned or controlled by the reporting organization, but that the organization indirectly impacts in its value chain”.
These can be interpreted as covering, for example, a bank’s investments. However, UBS’ application of this criteria is ambiguous. While its definition of Scope 3 emissions appears to include financing fossil fuel exploration and production, it does not seem to include their transportation and trade. 2021 has been called the “year of ‘net zero by 2050’ pledges”, with many banks and asset managers making bold public commitments to the goal. The 2050 target was agreed by the IPCC. However, it is now clear that the date is far too late; by that point climate change will be truly irreversible. And research shows that the top fossil fuel companies are – unsurprisingly – nowhere near on target. Net zero, along with “impact investing”, is therefore just another distraction with a catchy name, allowing companies to “burn now, pay later”.
Like other asset managers, UBS AM offers a number of “socially responsible” or “low carbon” funds for investors. But the Group has reported that its so-called “sustainable investments” – for example in energy-efficient properties – currently in fact represent just 6.8% of its overall portfolio. And by its own admission, 7.5% of the Group’s customer lending is still linked to carbon-related assets; in January 2023, it had at least $20.8bn (£16.5bn) invested in fossil fuels in the form of shares and bonds. Among the risks identified by the group in its latest annual report are “concerns about greenwashing, where UBS may be subject to reputational risk if not fully aligned with sustainability-related criteria”. It specifically cited the “new standards and rules” being developed in some countries, and the “increased risk that UBS may not comply with all relevant regulations”. In other words, the company is clearly worried about the impact on its reputation if it fails to put in place adequate sustainability measures.
UBS AM has made over £1bn in dividends and buybacks from its investments in BP and Shell since the Paris Agreement. This will have benefited top management and directors, as well as its own shareholders. Despite its bold declarations, UBS Group also has approximately $5.6bn (£4.45bn) invested in the thermal coal industry through both shares and bonds. UBS AM notably has no coal exclusion policy for its passive funds. Its holdings are unlikely to decline following the acquisition of Credit Suisse, a company which financed the fossil fuel industry to the tune of nearly $91.8bn (£73bn) from 2016-2020.
UBS CEO: Sergio Ermotti
Until April 2023, UBS Group was being steered by “Europe’s best-paid bank boss”, Dutch banker Ralph Hamers. However, he was bumped out of position after less than three years following the surprise return of Sergio Ermotti, who was brought back to oversee UBS’ takeover of Credit Suisse.
Ermotti previously served almost a decade at the helm of UBS until 2020, and is credited with turning the company’s fortunes around during the 2008 financial crisis. He apparently drafted plans to acquire Credit Suisse “three or four times” during his previous tenure, making him an obvious choice to oversee the merger.
Ermotti’s banking career began aged 15. He worked at Citibank, UniCredit Group and Merrill Lynch, before several years leading insurance firm Swiss Re.
You have to wonder whether the change in leadership might have had anything to do with the revival of a criminal investigation into former CEO Ralph Hamers for suspected money-laundering from his stint at his previous bank, ING. The case against Hamers had been already been investigated twice, with ING settling out of court in 2018 for €775m (£673m). The 50% pay rise Hamers received at ING at the time reportedly led to hundreds of ING customers shutting their accounts in protest. In spite of the ongoing investigation, Hamers received a salary of $13m (over £10m) as boss of UBS in 2022 – an annual increase of 11%.
#6: State Street Global Advisors
State Street Global Advisors (SSGA) is one of the world’s largest asset managers and the smallest of the “Big Three” index fund managers. It is the asset management division of its parent company, the finance giant, State Street Corporation. SSGA’s clients include pension schemes, corporations, investment consultants, endowments and foundations, governments, and other asset managers.
SSGA currently manages approximately $3.8tn (£3.3tn) in assets. The company has over 2000 clients in 58 countries; its largest geographical market is the US, where it is headquartered.
State Street Corporation’s largest shareholders mostly consist of investment management firms. Collectively, these top ten shareholders hold around 40% of the shares. Vanguard holds the largest, at nearly 13%; it is followed by BlackRock, Dodge & Cox, T Rowe Price Associates and Capital International Investors (owned by Capital Group).
Environmental, Social and Governance (ESG): Claims vs Reality
The last decade has seen SSGA write its history as one concerned with matters of Environmental, Social and Governance (ESG) issues. It has advertised the launch of an ESG Money Market Fund, as well as an ESG scoring tool called R-Factor. A closer look at SSGA’s policies and ties to the oil and gas industries, however, thoroughly undermines these gestures.
State Street as a whole has at least $133bn (£106bn) invested in fossil fuels. SSGA has no exclusion policy for oil and gas – including for its “passive” assets, which are worth over $3tn (£2.4tn) – and fails to exclude coal from its investments. Since 2016, SSGA has received cash earnings of over £1.1bn from BP, and over £1bn from Shell. And SSGA’s total shares and bonds in 12 major oil and gas companies with the biggest short-term expansion plans – including both BP and Shell – exceed $83bn (over £66bn).
The company’s voting record reveals that despite its feeble attempts at greenwash, SSGA has been significantly obstructing action on climate change. Data from the first six months of 2021 and 2022 shows an actual decrease in SSGA’s support for climate-related proposals – apparently on the grounds of their “prescriptive nature”. And by its own admission, in the first six months of 2022 SSGA voted against all transition to renewable energy proposals, and against “operational changes in response to climate change” in 86% of cases. SSGA explained its opposition to action on climate change with the following:
“we have not been supportive of proposals that request a specific operational change such as phasing out a product or business line within a defined timeframe, decommissioning assets, or requesting a transition to renewable energy…”.
All motions made by oil and gas company shareholders to scale back greenhouse gas emissions in line with targets agreed in the Paris Agreement were either voted against or abstained on by SSGA. It has also voted against so-called dissident CEO candidates, such as those with expertise in renewable energy.
SSGA has rejected calls for divestment, describing it as an inadequate “option for investors” that “is seldom an effective tool”. As shown by Reclaim Finance, pitting exclusion and engagement against each other can serve to paint these strategies as mutually exclusive. More problematic is the front that this framing of “engagement” can serve for investing in companies that continue to expand and profit from oil and gas production, as is the case for SSGA.
SSGA CEO: Yie-Hsin Hung
Yie-Hsin Hung has been the President & CEO of SSGA since December 2022. She was previously CEO of New York Life Investment Management (NYLIM), and worked at Bridgewater Associates and Morgan Stanley. Hung has been listed in American Banker’s “25 Most Powerful Women in Finance” for five years, and has recently been re-elected as Chair of the Executive Committee of the Investment Company Institute (ICI). The ICI is an investment association which has members that manage $37.8tn in assets (almost £30tn).
Ronald O’Hanley is Chairman and CEO of SSGA’s parent company, State Street Corporation, and previously occupied Hung’s position at SSGA. Last year, Hanley received a salary of $18m (£14m) – a 93% increase from 2020 to 2022. Putting this into perspective, the pay ratio between his annual compensation and the median compensation of all State Street Corporation’s employees for 2021 was estimated to be a staggering 230 to 1.
#7:SAFE Investment Company
SAFE Investment Company Ltd. is one of China’s sovereign wealth funds (SWFs). It is the Hong Kong subsidiary of China’s foreign exchange regulator, the catchily-named State Administration of Foreign Exchange. Its ultimate parent is the country’s central bank, the People’s Bank of China.
Established in 1997, last year SAFE controlled nearly $1tn in assets, coming in just behind the China Investment Corporation (CIC), one of the world’s largest SWFs. China’s multiple SWFs were set up in the late nineties and early noughties as the government sought to increase engagement with international markets. Seeing an opportunity, SAFE began buying into major global firms during the 2007-8 financial crisis. Among the companies it began investing in at this time was BP; by 2008 it had upped its share in the company to a potential $2bn (£1.6bn).
Its shares in Shell and BP represent the company’s most valuable holdings, currently amounting to around £1.8bn and £1.2bn respectively. Besides these British oil giants, UK companies feature prominently among SAFE’s top public investments. These include pharmaceutical companies, AstraZeneca and GSK, and mining behemoths Anglo American and Rio Tinto. It invests in Yara, among the world’s largest producer of fertiliser (see Corporate Watch’s profile on Yara and its role in climate chaos here). These holdings are followed by a host of major Western brands, from Tesco and Lloyds Bank, to Burberry, Next, Whitbread and Compass Group.
It owns 0.47% of the UK’s National Grid – a holding currently worth £198m – and even has a stake in the London Stock Exchange.
SAFE’s largest shareholdings betray a particular interest in North Sea oil and gas, China being the world’s biggest importer of oil. It holds millions worth of shares in Subsea 7, an engineering firm servicing the offshore petrochemicals industry, notably North Sea oil. Subsea 7 is in turn is being awarded contracts by Norway’s state oil firm Equinor – which SAFE also has a stake in.
Despite having such a broad array of investments in global companies, like other sovereign wealth funds there is remarkably little publicly available information on SAFE. It does not publish information, at least in English, on any environmental standards.
UK location: Unclear if any.
Governor of the People’s Bank of China: Yi Gang
The management structure of SAFE Investment Co Ltd is not transparent. However, we know that the State Administration of Foreign Exchange is led by Pan Gongsheng, currently also Deputy Governor of its parent, the People’s Bank of China (PBoC). He answers to former SAFE administrator, and current head of the PBoC, Yi Gang.
Yi Gang gained a Ph.D in Economics from the University of Illinois and later taught at Indiana University, Indianapolis, which he has referred to as his “second home”. Following his leadership at SAFE, he worked at the PBoC until he was appointed to the role of PBoC governor – the top management position – in 2018. He has just been re-appointed to the post for a second five-year term despite expectations to the contrary. Following an economic slowdown in China owing to strict COVID-19 lockdown measures, a weakening real estate market, and inflation hitting demand for Chinese goods abroad, this decision has been read as a bid by the Chinese state to maintain the appearance of stability.
But even a man described as “the most prominent Chinese figure in global finance”, is to some extent just a figurehead. He reportedly has no role in developing state monetary policy, as is the case in many other countries. Instead he implements the decisions of a “policymaking body whose membership is a secret”.
And as we can expect, any details on his interests, personal life, family connections and property remain well-hidden from public view.
abrdn plc, pronounced “Aberdeen”, is a multinational asset manager headquartered in Edinburgh. It provides investment services and financial advice to both institutions and individuals. Holding nearly £500bn of investments on behalf of its clients, it has been described as a “generalist” financial services firm, not specialising in any one form of investment.
It is one of the UK’s largest asset managers, and focuses on actively-managed investments, although it manages some passive funds as well. It employs over 5,000 people. abrdn is the rebranded name of Standard Life Aberdeen, which was created by the merger between Standard Life and Aberdeen Asset Management in 2017. The latest name change (“disemvoweling”, as it’s called) took effect in 2021 following the sale of assets and the Standard Life brand to UK-based pension fund Phoenix Group. abrdn and Phoenix have a complex strategic partnership, which includes abrdn managing around £147bn of Phoenix’s pension fund assets, making Phoenix abrdn’s largest client. abrdn and Phoenix Group have been fined over £7m and £35m respectively for investor protection and pension plan violations in the UK since 2010.
Since the merger, the company has been struggling with an identity crisis, declining share price, significant job cuts, and low staff morale which has been compounded by disquiet over the CEO’s “draconian” management style.
Environmental, Social and Governance (ESG): Claims vs Reality
abrdn’s environmental, social and governance messaging, which features prominently in company communications, has to win the prize for the most hypocritical and absurd. This is exemplified in its sustainability-themed partnership with the Financial Times, which includes content unironically offering to help spot corporate greenwashing, cautioning:
“As more consumers and investors embrace sustainability, companies are often tempted to exaggerate their social and environmental credentials.” In the same piece, abrdn suggests investors concerned about the environment could avoid selling shares in oil and gas companies, and even buy more of them.”
abrdn currently invests at least $5.7bn (£4.5bn) in oil, gas and thermal coal companies in the form of shares and bonds. Just over half of that total is invested in Shell and BP. abrdn previously rejected the call by “activist” hedge fund Third Point to break up Shell, in an apparent effort to accelerate the transition away from fossil fuels. According abrdn’s latest filings, it also manages holdings of around £3.4bn in destructive mining companies, most notably, notorious conglomerates Glencore, Rio Tinto and Anglo American.
abrdn appears to have made urgent climate commitments as a signatory of the Net Zero Asset Managers Initiative (NZAM). However, the latest annual report reveals that only 30% of assets under management are within the scope of its carbon reduction targets. Reclaim Finance’s “Asset Managers Fuelling Climate Chaos” report offers a damning indictment of abrdn’s climate targets. It found no exclusion policies for investing in coal, oil or gas developers and allotted abrdn one of the worst ratings of the 30 firms under consideration with a score of just 1.3 out of a possible 30. abrdn in fact has significant investments in companies with plans to expand their fossil fuel operations. As of 2022, it held $900m (£713m) in bonds and $4.3bn (£3.4bn) in shares in these major carbon emitters.
In particular, the company is among the biggest bond holders in scandal-hit coal producer Adani. Adani reported to have invested £2.5bn in new coal mines in the last decade, whilst its coal output increased by 58% between 2021-2022. Its appalling track record has been extensively catalogued by campaigners against Adani in efforts to oppose coal mining activities in Australia. Corporate Watch has also reported on the threat to the environment and communities posed by its expansion in Australia’s Galilee Basin with Adani’s Carmichael coal mine. Whilst abrdn has declined to comment about its Adani bonds, it touts its membership of the “Powering Past Coal Alliance” and recognises coal to be the most carbon intensive fossil fuel. Perversely, abrdn selectively cites the potential impact on communities “reliant” on coal as a counter-consideration to the need to phase out its use, declaring its support for a “just transition”.
abrdn CEO: Stephen Bird
A Scot who started his career working in the steel industry, abrdn CEO Stephen Bird went on to enjoy a 20-year stint at Citigroup, most notably his role as CEO of consumer banking between 2015 and 2019. Citigroup have paid out huge fines, £282m and $26.6bn (£223m and £21bn) respectively, for regulatory violations in the UK since 2010 and the US since 2000. This includes nine-figure sums paid during the years that Bird was responsible for global consumer and commercial banking.
Bird joined abrdn’s board in July 2020 before becoming chief executive officer in September of that year, presiding over the much-ridiculed rebranding. More recently he has been the subject of an extensive exposé, based on the testimony of insiders, regarding allegations of aggressive and intimidating behaviour in his leadership of the company. These include him reportedly shouting “Are you a group of delinquent primary school children? This is a f***ing disgrace” at his colleagues during a discussion on voluntary redundancies.
His relationship with some of his co-workers has not been helped by his decision to award himself a £1.8m bonus, while cutting radically back on other staff bonuses. Since joining abrdn, Bird has been paid a total of £5.5m in compensation as chief executive officer and executive director. This is despite a continued decline in funds under management between 2020 and 2022 and the company briefly exiting the FTSE 100.