SVVK-ASIR, a responsible investment body representing Swiss institutional investors, has asked its members to refrain from lending to seven major fossil fuel companies, citing insufficient progress in climate-transition engagement.
Swiss pension funds and insurers could soon turn off the taps on new fossil fuel debt after SVVK-ASIR issued a "deny debt" recommendation covering Chevron Corp., ExxonMobil Corp., Marathon Petroleum Corp., PBF Energy Inc., Phillips 66, Saudi Arabian Oil Co. (Aramco), and Valero Energy Corp.
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This decision comes after several years in which no substantial progress has been made and where the willingness to engage in dialogue has remained limited. This recommendation will be reviewed regularly and can be reversed if progress is made,” SVVK-ASIR said.
By ceasing to purchase newly issued debt, the organisation aims to restrict the flow of fresh capital into the expansion of fossil fuel extraction, an industry that relies heavily on debt financing.
The industry group, which represents 12 major institutional investors with combined assets under management of CHF360 billion, recommends that existing debt holdings in the targeted companies be allowed to mature rather than be replaced. However, it stopped short of calling for full divestment, arguing that retaining equity positions preserves shareholders' ability to exercise voting rights and engage with companies.
“We don’t expect companies to transform overnight, but we do expect to see a credible roadmap for change. Companies that aren’t showing progress are acting contrary to agreed climate targets and increasing systemic risks, and we have to respond to that,” said Manuela Guillebeau, president of SVVK-ASIR and a representative of PUBLICA.
Because the recommendation focuses on phasing out participation in future debt issuance rather than selling existing bonds, it is unlikely to have an immediate impact on borrowing costs for the companies concerned. All seven companies maintain investment-grade credit ratings and have access to a broad global investor base. However, the move could send a signal ahead of future financing rounds and encourage other institutional investors to adopt similar policies.
Among the companies named, PBF Energy is the first to test the approach in practice. The refiner recently priced a $500 million private offering of 7.25% senior notes due in 2034, providing an early indication of whether investor appetite for fossil fuel debt may begin to shift in response to stewardship initiatives such as SVVK-ASIR's.
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