In another instance, Erlandsson called out state-owned Japan Bank for International Cooperation for financing a coal plant in Vietnam. He criticized the bank’s lenders, HSBC and Barclays, for not disclosing the obvious climate risks to bond investors. Just two months after Erlandsson suggested investors blacklist it, the Japanese bank said in March that it had no plans to finance any new coal-power projects.
Officials at HSBC and Barclays declined to comment.
In his anti-greenwashing fervor, Erlandsson risks missing the mark.
Again writing in Responsible Investor, Erlandsson said in February that Adani Ports & Special Economic Zone Ltd., part of the Adani group, had unduly profited from understating climate risks in its disclosure to environmental nonprofit CDP. A few weeks later, CDP responded with an article in the same publication calling his note “both unhelpful and misleading to anyone involved in the business of encouraging markets to use ESG data to make better investment decisions.”
Erlandsson got his first taste of how financial markets can impact climate change while working as a portfolio manager at Swedish pension fund AP4, where he was an early investor in green bonds.
Having since concluded that shorting the debt of polluters has at least as much, if not more, impact than going long climate do-gooders, he’s spent the last several years trying to launch a climate-focused credit hedge fund. He said seed investors had pledged to back him, but the fund management platform he planned to use decided at the onset of the Covid-19 pandemic that the operational and legal structures were too challenging for such a product.
With that plan on ice, Erlandsson launched a research and advocacy firm with financial backing from the Growald Family Fund, a foundation set up by Rockefeller family members focused on climate change.
Erlandsson’s Anthropocene Fixed Income Institute is like a climate activist that speaks the language of financial markets. It publishes everything from technical research on relative value climate trades using credit derivatives to opinions on how the European Central Bank should structure its bond purchases to avoid financing carbon emissions. It’s also his soapbox to expose anything that smells of greenwashing.
While he loves to expose hypocrisy, such as a company selling bonds to fund green projects while also lending to planet-destroying projects, he understands that being too confrontational could undermine his efforts to encourage fixed-income managers to support the climate transition.
“At some point you become too much of a troublemaker that people don’t even listen to you: You become some sort of a Cassandra or a Boy Who Cried Wolf,” said Erlandsson. “I don’t want to be perceived as a blue-eyed Scandinavian pointing fingers at everyone else.”
This article was provided by Bloomberg News.