By Simon Jessop and Ross Kerber
(Reuters) -JPMorgan Chase’s and State Street’s investment arms on Thursday both quit a global investor coalition pushing companies to rein in climate-damaging emissions, while BlackRock said it has transferred its membership to its international arm, limiting its involvement.
The decisions mark the latest blow to efforts to coordinate Wall Street action on tackling climate change and came after the coalition, known as Climate Action 100+, or CA100+, asked signatories to take stronger action over laggards.
Financial firms have faced growing pressure in recent years from some Republican politicians over their membership of such groups, amid accusations that committing to shared action could be a breach of antitrust law or fiduciary duty.
None of the firms cited politics among their motivations. A spokesman for State Street Global Advisors (SSGA), which manages $4.1 trillion, said the new priorities set by CA100+ threatened its ability to act independently.
The priorities, adopted last June, call for CA100+ 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.
The changes, however, were “not consistent with our independent approach to proxy voting and portfolio company engagement,” said State Street spokesman Randall Jensen. Boston-based State Street has been a member of CA100+ since 2020.
JPMorgan’s fund arm said it had decided not to renew its membership of CA100+ after “significant investment” in its investment stewardship capabilities over the last couple of years. The Financial Times first reported the news. The unit manages $3.1 trillion.
For its part, BlackRock said it is no longer a member of the CA100+ but rather has shifted its membership in CA100+ to BlackRock International.
“As BlackRock made clear when signing up as a member of CA100+ in 2020, at all times the firm maintains independence acting on behalf of clients, including in choosing which issuers to engage with, and how to vote proxies,” the company said in a press release. It also said it would add a new engagement and proxy voting option to give clients a way to prioritize climate goals.
BlackRock’s move effectively reduces the amount of total assets seen as backing CA100+’s statements, said Kirsten Spalding, vice-president of the Ceres Investor Network, which oversees the CA100+’s North American efforts. About 40% of BlackRock’s $10 trillion in assets under management are outside the U.S.
Spalding said the group had expected some signatories to leave as it adopted its new priorities, and that it would continue its efforts despite the loss of the big asset managers.
“We knew that the focus on making sure there was movement from certain companies was going to be uncomfortable for some investors,” Spalding said in an interview.
NOTABLE ABSENCE
Before Thursday, 13 firms had left CA100+ over the years, including Walter Scott & Partners and Loomis Sayles. But its overall membership has grown to more than 700 firms including 60 new ones who joined in the fall, a spokesman said.
A notable absence is the world’s second biggest manager, Vanguard, which never joined and, in late 2022, dropped out of another well-known climate grouping, the Net Zero Asset Managers (NZAM) initiative. Vanguard also cited independence concerns, as did a number of insurers who left a sibling organization.
The groups have faced criticism from Republican politicians, many from energy-producing states, who say companies should focus on financial performance.
One of the fiercest Republican critics of CA100+, U.S. Rep. Jim Jordan, chair of the House Judiciary Committee, cheered Thursday’s announcements. He called the decisions “big wins for freedom and the American economy, and we hope more financial institutions follow suit in abandoning collusive ESG actions.”
Last year, Jordan wrote to SSGA Chief Executive Yie-Hsin Hung saying that within CA100+ it looked to be part of a “collusive agreement” with other investors over the net-zero goal.
(Reporting by Simon Jessop in London and Ross Kerber in BostonEditing by Tommy Reggiori Wilkes, Kirsten Donovan, Chizu Nomiyama and David Evans)
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