Climate Action 100+ recently lost three major members, while a fourth pulled back support from its US operations. JPMorgan and State Street Global Advisors both announced that they are leaving the organization, while BlackRock will now only participate through its smaller international arm. ESG Today published an article on JPMorgan’s decision stating that:
“[Climate Action 100+] has also become a key target for anti-ESG politicians, and fueling claims that its members are ‘boycotting’ energy companies. Last year, a group of U.S. Republican state attorneys general sent a letter to large asset managers warning that participation in groups such as CA100+ raised concerns about the investors’ adherence to fiduciary duties and compliance with anti-trust rules.
Similarly, Texas cited participation in Climate Action 100+ as part of the criteria used by the state to compile a list of ‘Financial Companies that Boycott Energy Companies,’ which it cited in its placement of a series of asset managers for divestment.”
Reuters reported that bond manager Pimco also withdrew from the organization, making three in the same week.
Anti-ESG isn’t the only thing behind the exodus. CA100+ has entered a “phase 2” where it encourages asset managers to push their portfolio companies not only to disclose their emissions, but to actively reduce them. Some asset managers saw this as going beyond their comfort level, contributing to their decision to step back from the group. However, leaving CA100+ doesn’t mean these asset managers are abandoning climate issues altogether, JPMorgan lists climate change as one of its six main investment stewardship priorities, and BlackRock is actively developing individualized stewardship options, allowing clients to opt into making decarbonization an investment priority.
Even though these firms claim they continue to push for actual climate progress in spite of their departure from CA100+, the optics of their action could lead to other possible risks. The European Insurance and Occupational Pensions Authority (EIOPA) Consultation Paper on the Opinion on sustainability claims and greenwashing in the insurance and pensions sectors was made public last year to provide “guidance to competent authorities on how to identify misleading sustainability claims and monitor greenwashing throughout the insurance and pensions lifecycle.” In December, we wrote about how draft EIOPA guidelines specifically called out leaving industry alliances as a “bad practice.” It seems financial firms operating in the UK and anti-ESG states in the US are stuck in the middle (of the Atlantic, so to speak).
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Photo credit: Dragoș Asaftei – stock.adobe.com
