The investment arms of JP Morgan and State Street have quit the global investor coalition Climate Action 100+ (CA100+), whilst BlackRock has limited its involvement.
JP Morgan Asset Management (JPMAM) and State Street Global Advisors both confirmed on Thursday (15 February) that they were leaving the climate group. Alongside both the asset managers’ exit, BlackRock stated that it was pulling out as a corporate member and transferring its participation to its smaller international arm, the Financial Times first reported.
The moves by three of the world’s largest asset managers are thought to remove nearly $14trn of total assets from efforts to coordinate action on tackling climate change and come after CA100+ asked its 700 signatories to take stronger action over laggards last year.
Last June, CA100+ detailed its plans for “phase two” which called for signatories to engage with policymakers and for some to publish details on their talks with companies towards the goal of getting them to lower emissions to zero on a net basis by 2050.
This also comes as US-based asset managers are under growing pressure from US Republican politicians over climate issues and coalitions.
A spokesperson from State Street said that the firm has quit the initiative as the “enhanced CA100+ phase two requirements for signatories are not consistent with our independent approach to proxy voting and portfolio company engagement”.
However, critics of State Street’s exit have suggested that nothing in CA100+ phase two requirements obligate the manager to vote in a specific way or pursue an engagement that’s not consistent with their convictions.
‘Collective stewardship impact’
Regarding JP Morgan’s decision, the asset manager said that it has 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 CA100+ engagements,” a statement read.
Responding to this, some industry professionals have suggested that the coalition of investors was not about accessing engagement capabilities, but about collective pressure on climate.
Per-Otto Wold, co-founder and CEO at Zerolytics, said: “While JPMorgan’s initiative to develop its own climate risk engagement framework is commendable, it also reflects a broader trend where large asset managers are seeking to individualise their approach to sustainability, which ultimately, risks fragmenting efforts and diluting the collective impact needed for meaningful environmental change.”
Similar to State Street, BlackRock’s reasoning behind dropping its corporate membership was due to it believing that the phase two strategy conflicted with US laws requiring money managers to act solely in clients’ long-term economic interest.
In response to this, Faith Ward, chief responsible investment officer at £35bn Brunel Pension Partnership, said: “We are delighted by BlackRock International’s resolve to hold firm in continuing to support CA100+. Today, more than ever, we need that resolve to work collaboratively to steward the companies we invest in through an orderly climate transition.
“This is in the best interests of our clients and their beneficiaries. It is also core to fulfilling our fiduciary duty, as climate change constitutes a fiduciary risk. Working in partnership with our asset managers, and achieving alignment in our aims, is critical to our mission: forging better futures by investing for a world worth living in.”
