CA100+ exits: asset owners double down on stewardship alignment
While some of the world’s largest managers have publicly retreated from CA100+, asset owners reiterate their commitment to tackling climate change and stress the importance of stewardship alignment with managers
Stewardship efforts have faced some significant setbacks in recent weeks with State Street and JP Morgan withdrawing their membership from CA100+, BlackRock limiting its membership status of the coalition and activist shareholders being challenged in court.
But many asset owners see collaborative action on climate as more important than ever. It is also a key indicator of asset owner - asset manger alignment, Faith Ward, chief responsible investment officer at Brunel Pension Partnership told Net Zero Investor at the sidelines of the PLSA Investment Conference in Edinburgh. She urged fellow asset owners to communicate their view with managers.
Brunel Pension Partnership, an LGPS pool managing some £35bn in assets for local authority funds is invested with BlackRock and JP Morgan. Ward acknowledged that BlackRock had made “not inconsequential efforts” to respond to European asset owner pressures to find a solution to respond climate alignment but expressed disappointment with other managers who left the coalition.
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BlackRock remains a member of ClimateAction100+ though it has limited its membership to BlackRock international, excluding the US business.
The issue of asset managers leaving climate stewardship coalitions was raised by Leandros Kalisperas, CIO of West Yorkshire Pension fund, who highlighted the risks that stewardship efforts could become more fragmented.
JP Morgan’s reasoning for leaving CA100+ had been that they have now built up significant in-house capacities to conduct climate stewardship. But David Russell, chair of the Transition Pathway Initiative said that was missing the point. Speaking at the PLSA conference, he said: “It is disappointing that large asset managers couldn’t find a way to work with managers around the world to tackle systemic risks.”
Asset owner’s ability to influence managers can go beyond the funds they invest with, Russell told Net Zero Investor. For example, JP Morgan is acting as a custodian for many pension funds which could offer an opportunity to raise the question of climate stewardship alignment he said.
Doubling down
Another indication that asset owners are in no mind of backing down are Border to Coast’s updated responsible investment policies where the LGPS Pool doubles down on its climate ambitions.
The pool, which manages £58bn in assets made a new commitment to “generally to vote in favour of shareholder resolutions that are aligned with the Paris climate agreement”.
Jane Firth, head of Responsible Investment at Border to Coast, said: “We believe that voting is essential to managing climate risk and an important means of influencing company targets and policies. However, not every climate resolution will be supportable, so it is important to explain our rationale on those occasions we vote against.”
Renewing its commitment to ClimateAction100+ targets, the pool said it will also vote against the chair of the Board, if the company in question fails to meet the emission reduction targets set out by CA100+’s Net Zero Benchmark.
