Last week, I wrote about a rapid-fire set of US bank defections from UN’s Net-Zero Banking Alliance (NZBA). Immediately after the banks (Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase and Wells Fargo) made their announcements, Bloomberg reported
“Texas Attorney General Ken Paxton dropped his threat to cut off big US banks from municipal-bond deals… Paxton’s office said late Tuesday that its reviews of Wells Fargo, Bank of America, Morgan Stanley, and JPMorgan will be closed.”
Given that the banks all made statements that they weren’t abandoning their support of net-zero, but intend to work toward the goal in their own ways, one might think that the banks view Paxton’s action as an outcome of – rather than a catalyst for – withdrawing from NZBA. But last Thursday, BlackRock similarly pulled out of the Net Zero Asset Managers (NZAM) and were more upfront about they “why.”
Bloomberg got their hands on a copy of a letter BlackRock sent to clients, which stated that being part of NZAM “subjected us to legal inquiries from various public officials.” The shift by BlackRock is perhaps more dramatic than the other firms given Larry Fink’s very public pro-ESG/pro-climate stance a few years ago that was intended to herald a new corporate philosophy (or at least the perception of such) – leading to interesting commentary from Ken Pucker.
Back in 2023, Zach wrote “Anti-ESG doesn’t have to win in the courtroom to win in the boardroom. The perception of risk is enough to influence behaviors even if that risk is illusory.” We’re seeing a lot of that.
Sustainability leaders, staff and advisors – It would be premature to think that these actions mean the number of questionnaires/surveys you have to fill out will shrink, or that these firms won’t continue to put pressure on companies they have invested in or loaned to. Nor should your executives believe that these actions minimize your value. Institutional investors and major creditors will continue to push their own sustainability initiatives and seek sustainability information from their portfolio companies, just less publicly than in recent years.
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