Financial giants withdraw $14T from climate group pushing corporate climate action
Financial Giants JPMorgan and State Street Leave Climate Action 100+
In a surprising move, financial powerhouses JPMorgan and State Street have announced their departure from the Climate Action 100+ organization. This group, which advocates for environmental, social, and governance (ESG) initiatives, manages an astounding $68 trillion in assets. The world’s largest asset manager, Black Rock, has also decided to reduce its investment in Climate Action, resulting in a total loss of around $14 trillion for the organization. These decisions have been applauded by Republicans who argue that ESG initiatives harm the economy and misuse customers’ funds for political purposes.
State Street’s Policy Misalignment
State Street has stated that the requirements set by Climate Action 100+ no longer align with its company policy. According to The Financial Times, State Street’s spokesperson explained, “SSGA has concluded the enhanced Climate Action 100+ phase 2 requirements for signatories are not consistent with our independent approach to proxy voting and portfolio company engagement.”
JPMorgan’s Self-Reliance
JPMorgan, on the other hand, has justified its departure by asserting that it no longer needs to rely on Climate Action 100+. The group stated, “Given these strengths and the evolution of its own stewardship capabilities, JPMAM has determined that it will no longer participate in Climate Action 100+ engagements.”
Climate Action 100+, established in 2017, boasts over 700 investors who actively engage with companies to improve climate change governance, reduce emissions, and enhance climate-related financial disclosure. Their mission is to urge the world’s largest corporations to take necessary action against climate change.
The news of JPMorgan and State Street’s departure has been celebrated by House Judiciary Chair Jim Jordan, who hopes that more financial institutions will follow suit. He tweeted, “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.”
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. https://t.co/PT3LlDjMSa
— Rep. Jim Jordan (@Jim_Jordan) February 15, 2024
West Virginia State Treasurer Riley Moore, a vocal critic of ESG policies, has also commended JPMorgan and State Street for their decision. Previously, Moore severed ties with Black Rock due to their stance on coal and natural gas.
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Treasurer Moore expressed, “This is a step in the right direction and a significant victory in our states’ fight against international corporate collusion targeting the coal, oil, and natural gas industries. West Virginia and our coalition of states have been battling for years against these efforts to boycott and restrict capital to our vital energy sectors, which diminishes economic activity and revenue. This decision shows that our efforts are making an impact.”
A coalition of Republican attorneys general previously wrote to financial asset managers, cautioning them about using Americans’ savings to advance political agendas through Climate Action.
What are the concerns raised by Republicans regarding ESG initiatives and how do they argue it impacts economic stability?
Free market. Finally, major financial institutions are recognizing the importance of prioritizing business interests over misleading and politically-driven ESG initiatives.”
Concerns Raised by Republicans
The departure of JPMorgan and State Street from Climate Action 100+ has highlighted the ongoing debate surrounding ESG initiatives. Republicans have long been critical of these efforts, arguing that they prioritize social and environmental goals over economic stability.
Critics claim that ESG initiatives divert funds away from essential investments, hinder economic growth, and limit job creation. They argue that the responsibility of financial institutions should be solely focused on generating profits for their clients and shareholders.
The Role of Climate Action 100+
Climate Action 100+ was established with the intention of holding corporations accountable for their contributions to climate change. By leveraging the power of institutional investors, the organization aims to influence companies to adopt sustainable practices and reduce their carbon footprint.
Their efforts have led to significant progress in the private sector. For instance, in 2020, Climate Action 100+ reported that 60% of their target companies had committed to achieving net-zero emissions by 2050 or sooner.
The Future of ESG Initiatives
The departure of JPMorgan and State Street from Climate Action 100+ raises concerns about the future of ESG initiatives and the role of financial giants in sustainable investing.
While some argue that the exit of these institutions undermines the credibility and effectiveness of Climate Action 100+, others believe it highlights the need for a more balanced approach to sustainable investing that takes into account both environmental and economic considerations.
Regardless of one’s stance on ESG initiatives, it is clear that the debate surrounding climate change and sustainable investing is far from over. The decisions made by JPMorgan and State Street will undoubtedly continue to shape the future of the financial sector’s involvement in addressing climate change.
As the world grapples with the urgency of climate action, it is crucial that all stakeholders, including financial institutions, corporations, and governments, come together to find innovative and balanced solutions that foster both economic growth and environmental sustainability.
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