Cenovus, Suncor and Exxon among the oil giants topping institutional exclusion lists

Climate change has become they key reason for excluding companies from institutional portfolios with a handful of international oil firms dominating exclusion lists.

Rising global temperatures have become a key concern for institutional investors, with 40% of all global exclusions being motivated by concerns around climate change.

Despite the sharp rise in oil prices, a growing number of institutional investors have opted to exclude oil firms from their portfolio, according to a new exclusion tracker released by Dutch research provider Profundo in collaboration with a collective of ten campaign groups Friends of the Earth Netherlands, PAX and the Rainforest Action Network.

The Exclusion Tracker, which considers the portfolios of 86 institutional investors across 16 countries reveals that climate change is now the most commonly cited reason for excluding a company from portfolios, with 40% of investors saying they are excluding companies over climate concerns, followed arms manufacturers which account for 17% and tobacco producers accounting for 12%.

Leading the blacklist on climate change are Canadian oil form Cenovus Energy and Petroleum Refinery company Suncor who have been excluded from 52 of the 86 investors surveyed.

Norges Bank is one investor that has lost confidence in both firms, warning already back in 2020 of “omissions that on an aggregate company level lead to unacceptable greenhouse gas emissions.”

The Canadian oil firms are closely followed by energy and mining giant China Energy Investment Corporation, Shandong Energy Group and US oil firm Exxon Mobil, who made it on the blacklist of 51 investors.

Exxon Mobil has been excluded by some fund managers from their climate transition funds and also been dumped by a number of institutional investors, including Nest in the UK.

By highlighting the companies that were most frequently excluded, the campaign groups hope to exercise pressure on other investors to follow suit. “Financial institutions that continue financing companies on the exclusions lists of other financial institutions may be at reputational risk” campaigners warn.

But against a backdrop of rising oil prices, share prices in Cenovus and Suncor have risen more than 10% year to date, a trend that could deter some investors from selling their stakes.