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Two of the world’s biggest asset managers are quitting an investor group set up to prod companies over global warming and a third is scaling back its participation, in a major setback to the ambitions of Climate Action 100+.
JPMorgan Asset Management and State Street Global Advisors both confirmed they were leaving Climate Action 100+. BlackRock, the world’s largest money manager, is pulling out as a corporate member and transferring its participation to its smaller international arm.
The departures weaken the climate group’s plan to use shareholder influence to step up pressure on polluting companies to decarbonise, because they mean that none of the world’s five largest asset managers are fully behind the effort.
The moves also highlight a growing split between the largest US-based asset managers, which are under intense pressure from Republicans over climate issues, and those elsewhere. Smaller competitors and European firms have largely stuck with various climate coalitions.
Launched in December 2017, Climate Action 100+ challenges airlines, oil majors and other polluting companies to reduce their carbon footprint. BlackRock, JPMAM and State Street Global Advisors all joined in 2020.
However, the group announced last year that it would be shifting from pressuring companies on climate disclosures to pushing them to actively reduce greenhouse gas emissions.
SSGA said these “phase 2” corporate engagement requirements had gone too far. “SSGA has concluded the enhanced Climate Action 100+ phase 2 requirements for signatories are not consistent with our independent approach to proxy voting and portfolio company engagement,” SSGA said in a statement.
BlackRock said in a note that it was dropping its corporate membership because it believes the phase 2 strategy, which takes effect in June, conflicted with US laws requiring money managers to act solely in clients’ long-term economic interest. The $10tn manager is setting up a new stewardship option allowing clients, particularly in Europe, to set decarbonisation as part of their investment objectives. For clients who do not opt do so, BlackRock will continue to prioritise financial results, the note said.
JPMAM said it had made a “significant investment” in its own stewardship team and corporate engagement: “Given these strengths and the evolution of its own stewardship capabilities, JPMAM has determined that it will no longer participate in Climate Action 100+ engagements.”
JPMorgan’s most recent climate change engagement report states that it “does not work in concert with other investors on investment matters and makes its own independent decisions concerning investee companies”.
With $4.1tn and $3.1tn of assets under management respectively, SSGA and JPMAM are also among the top five asset managers. Vanguard and Fidelity Investments never became members. Other large US asset managers still in Climate Action 100+ include Goldman Sachs, Invesco and Pimco.
Climate Action 100+ declined to comment on the withdrawals, but said more than 60 members have joined since the phase 2 changes were announced in June 2023, bringing its total membership to more than 700. “Since its inception, Climate Action 100+ has experienced remarkable growth — and that has only continued,” the group said.
As asset managers have benefited from a global boom in sustainable investing, they have been targeted by Republicans who are typically aligned with the oil and gas industry. In 2022, West Virginia led the way when it barred five financial firms, including JPMorgan, BlackRock and Goldman, from new state business, saying they were “boycotting” the fossil fuel industry.
The US House judiciary committee subpoenaed BlackRock, SSGA and Vanguard as part of an investigation into sustainable investing. The committee has also subpoenaed an official at Climate Action 100+.
Vanguard left the Net Zero Asset Managers initiative in December 2022, days before its representative was scheduled to testify at a Texas legislative hearing about sustainable investing alongside BlackRock and SSGA. Vanguard was ultimately excused from the hearing.
Texas, the leading US oil-producing state, has declared Climate Action 100+ to be anti-oil and blocked financial companies, including BlackRock, from doing business with the government.
Oklahoma, another oil producer, banned JPMorgan, BlackRock and others from doing business with the state in 2023.
Additionally, 21 Republican state attorneys-general are investigating asset managers for working together on climate issues. “Potential unlawful co-ordination appears throughout Climate Action 100+’s documents,” the attorneys-general said last year.
Jim Jordan, the Republican chair of the House judiciary committee, said on X the decisions by JPMorgan and State Street were “big wins for freedom and the American economy, and we hope more financial institutions follow suit in abandoning collusive ESG actions”.
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