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JPMorgan Asset Management (NYSE:JPM) and State Street Global Advisors (STT) recently announced their departure from Climate Action 100+, a $68 trillion investor group formed to exert pressure on major greenhouse gas producers to reduce emissions. This move has sent shockwaves through the investor activism landscape.
Shifting Allegiances in Climate Action
The decision by JPM (JPM) and STT to leave this influential group comes as a blow to the movement, with BlackRock (BLK) also scaling back its participation. As a result, none of the world’s five largest asset managers will fully support the activist effort. This shift in allegiances is a significant setback for Climate Action 100+.
A Clash of Interests
JPM cited its “significant investment” in developing a climate risk engagement framework as the reason for the departure. On the other hand, STT and BLK objected to the climate group’s “Phase 2” corporate engagement strategy, asserting that it conflicts with U.S. laws mandating money managers to act solely in the long-term economic interest of their clients.
Evolution of Climate Action 100+
Originating with a focus on pressuring companies concerning climate disclosures, Climate Action 100+ shifted gears last year to actively advocating for emission reductions. This change in focus has prompted a reevaluation of its membership.
Divided Loyalties and Lingering Scrutiny
The departure of key players from the investor group comes amidst mounting scrutiny from Republican state attorneys general and politicians in Congress who oppose ESG (environmental, social, and governance) investing. The group’s decisions have engendered divided loyalties among other major asset managers, with some exiting while others remain committed.
Divergent Paths
While Vanguard and Fidelity Investments have refrained from joining Climate Action 100+, prominent firms such as Goldman Sachs, Invesco, and Pimco continue to uphold their membership, leading to a divergence in approaches within the American asset management landscape.
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