Investor firms’ flee from climate coalition shows anti-ESG efforts are succeeding, critics say

The world’s largest coalition of investors pressuring corporations to turn their back on investments in fossil fuels was slammed with bad news Thursday.

The asset management businesses of JPMorgan Chase and State Street Global Advisors are withdrawing from Climate Action 100+, and Blackrock is scaling back its participation in the coalition. JPMorgan Chase manages $2.5 trillion in assets, State Street oversees $3.5 trillion, and Blackrock manages $9 trillion in investors' funds.

Opponents of environmental, social and governance (ESG) celebrated the announcements, attributing it to state and federal political pressure pushing back on the movement over the past couple of years.

Sometimes called stakeholder capitalism, ESG rates companies and investment funds on their commitments to progressive causes, including addressing climate change and diversity initiatives. Other initiatives, such as Climate Action 100+, pressure companies to adhere to these principles.

Critics of ESG contend that it diverts financial responsibility into political causes, which is especially problematic when it comes to public funds, as some studies have found that ESG and similar initiatives tend to underperform compared to business practices focused solely on fiduciary responsibility.

Net Zero

Climate Action 100+, also referred to as CA100+, encourages investors to get companies to pursue emission reductions efforts in order to limit global warming to 2.7 degrees Fahrenheit over a pre-industrial baseline, a target set by the Paris Agreement in 2015.

Approximately 700 asset managers, asset owners, and engagement service providers have signed onto CA100+, representing $68 trillion in assets under management. Another 170 companies are engaged in driving the coalitions net zero emission goals.

In statements about their decisions, the firms leaving CA100+ didn’t say anything about a reconsideration of ESG or net-zero goals.

JP Morgan, the Financial Times reported, said it has made a “significant investment” in its own corporate engagement and stewardship efforts, and so it no longer needed to participate in CA100+ engagements.

State Street said that the “phase 2” priorities that CA100+ adopted in June, weren’t consistent with the company’s independent approach to proxy voting and portfolio company engagement.

Blackrock was also concerned with the phase 2 strategy, because, the company says it believes that it conflicts with U.S. laws requiring investment managers to act entirely in their clients’ financial interests. Blackrock clients, according to the Financial Times, can set decarbonization as their investment objections, but the company will prioritize financial results for those who don’t opt in to the program.

The phase 2 priorities are aimed at getting companies to cut their emissions and not just talk about it, Reuters reported, with more accountability and transparency.

Bearing fruit

Opponents of these initiatives said the firms’ departure from CA100+ is a positive development in their efforts and shows they’re producing results.

“JP Morgan and State Street’s departure is a necessary step in the right direction, but consumers should wait to trust these companies again. By leaving the Climate Action 100+ climate cartel, they are signaling that the actions of millions of consumers and dozens of elected officials are having an effect,” Will Hild, executive director of Consumers Research, said in a statement.

Alex Stevens, manager of policy and communications for the Institute for Energy Research, a free-market energy research nonprofit, told Just The News that the withdrawal of these large banks is part of a trend of companies distancing themselves from ESG priorities.

“Big asset management companies, for the past five or six months, have been slowly walking this stuff back,” he said, and it’s likely due to the pressure they’ve been receiving.

In June, House Judiciary Committee Chairman Rep. Jim Jordan, R-Ohio, had subpoenaed the climate advocacy firm Ceres, which co-founded CA100+, and in December, Jordan subpoenaed Blackrock and State Street, as part of an investigation to see if Ceres’ and the companies’ efforts to decarbonize the assets they manage are violating U.S. antitrust laws against collusion.

“Today’s decisions by JPMorgan and State Street are big wins for freedom and the American economy, and we hope more financial institutions follow suit in abandoning collusive ESG actions,” Jordan wrote in a post on X.

Legal scrutiny also came from the states. In March, a coalition of 18 state attorneys general wrote a letter to the 50 largest asset managers, warning of “potential unlawful coordination appears throughout Climate Action 100+’s documents.”

“This is a step in the right direction and significant victory in our states’ fight against the international corporate collusion targeting the coal, oil and natural gas industries,” West Virginia State Treasurer Riley Moore, who signed onto the coalition, said in a statement.

In December, Wyoming adopted proposed ESG disclosure rules, which still needs Gov. Mark Gordon’s signature to become final. The rules, which were championed by Wyoming Secretary of State Chuck Gray, require agents, advisors and brokers to disclose to their customers or clients if they’re incorporating ESG considerations into their business dealings.

Gray told Just The News all this pressure from multiple levels and directions was succeeding.  

“Their withdrawal signifies that the pressure conservative elected officials are putting on these woke financial institutions to return to their basic fiduciary duty is working. As the state’s chief securities officer, I have fought back against the woke clown show ESG ideology,” Gray said.
 
Stevens said all this pressure may trickle down to the assets these banks manage. With the expense and technological feasibility challenges of decarbonization, mining companies and airlines, for example, might reconsider their participation in CA100+’s agenda.

“It'll be interesting to see going forward if the individual companies start pulling out too,” Stevens said.

Holding the line

A spokesperson for CA100+, in an emailed statement to Just The News, says the group wouldn’t comment on the firms’ decisions, but 700 investors who have signed onto the coalition remain committed to “managing climate risk and preserving shareholder value through their participation in the initiative.”

The coalition, he continued, has experienced “remarkable growth,” which continues, including the addition of 60 new signatories last fall.

“We expect strong interest to continue. Importantly, the initiative continues as intended with hundreds of global investors still committed to engaging 170 companies – in this respect, Climate Action 100+ remains the largest investor-led engagement initiative on climate change,” the spokesperson said.

Derek Kreifels, CEO of the State Financial Officers Foundation, said in a statement that the news from JP Morgan and State Street was welcome, but he expressed doubt that it represents a complete retreat from the net-zero agenda.

“These firms have taken an important step in leaving Climate Action 100+, but still have a lot of work to do to regain people's trust as a fiduciary focused on financial return. Their continued membership in other groups, like the Net Zero Banking Alliance and Net Zero Asset Managers Initiative, calls into question whether today's announcement reflects a real shift,” Kreifels said.