Exiting a United Nations-backed climate initiative, prominent American investment giants JPMorgan Chase, BlackRock, and State Street Global Advisors cite concerns over the group's next-phase sustainability objectives, which they perceive as overly ambitious. The climate group contends that companies are not making progress toward their objectives swiftly enough.
It's important to note that in 2023, Amazon dropped an effort to zero out emissions of half its shipments by 2030, and BP scaled back on its plan to reduce emissions by 35 percent by the end of 2030. Shell Oil also dropped an initiative to build a pipeline of carbon credits and other carbon-absorbing projects.
Hundreds of companies across the globe are backtracking on commitments toward green policies despite growing concerns that the planet is reaching a crisis point, as expressed by The Environmental Magazine.
The collective choices effectively eliminate nearly $14 trillion in total assets from endeavors aiming to coordinate Wall Street's response to combat climate change. The coalition, named Climate Action 100+ or CA100+, made the call after urging signatories to take more decisive measures against those falling behind.
According to Reuters, financial firms have faced heightening pressure from Republican politicians over their membership of such groups amid allegations that committing to shared action could be a breach of antitrust law or fiduciary duty.
None of the firms cited politics as their motivation.
A spokesperson for State Street Global Advisors (SSGA), which manages $4.1 trillion, said the new priorities set by CA100+ conflicted with the company's investment plans.
JPMorgan's fund arm revealed it had decided not to renew its membership of CA100+ after building up its investment stewardship capabilities.
The Financial Times first reported the news. The unit manages $3.1 trillion.
BlackRock confirmed it is no longer a member but has instead shifted its membership in CA100+ to BlackRock International.
BlackRock's move effectively removes $6.6 trillion, or two-thirds of its total assets, from the pool represented by CA100+, stated Reuters.
What is Climate Action 100+?
According to the group's website, Climate Action 100+ is an investor-led initiative to "ensure the world's largest corporate greenhouse gas emitters take necessary action on climate change."
The second phase of the group's plans aligns with the desired 2030 objective of worldwide "decarbonization."
Phase two introduces the requirement for "lead investors and individual engagers" to disclose their voting records on specific votes related to the group's priorities.
Other highlighted benchmarks outline "emissions reductions and the key underlying factors driving them," aligning with "pathways" committed to reducing the Earth's warming below 1.5°C.
Additionally, there is a focus on "capital allocation and asset-level change" about the transition to net-zero carbon.
Brad Lander, New York City Comptroller, who oversees public retirement assets, said his office will take account of the firms' moves in allocating its investments.
"Climate risk is financial risk. Today, BlackRock, JPMorgan, and State Street are choosing to ignore both," Lander said in a statement.
The firms, he said, "are failing in their fiduciary duty and putting trillions of dollars of their client's assets at risk."
