JPMORGAN Chase’s asset management arm and State Street said on Thursday (Feb 15) they would withdraw from the largest investor coalition focused on convincing the corporate world to act on climate change, the latest exits of major financial services firms from an organisation of this kind.
The decisions are a 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 its signatories to push companies invest in to move “from words to action.”
JPMorgan’s fund business said it had decided not to renew its membership of the Climate Action 100+ investor group after “significant investment” in its investment stewardship capabilities over the last couple of years.
“The firm has built a team of 40 dedicated sustainable investing professionals, including investment stewardship specialists who also leverage one of the largest buy side research teams in the industry,” it said in a statement.
The news of JPMorgan’s exit was first reported by the Financial Times.
A spokesman for State Street Global Advisors, the company’s asset management arm with some US$4.1 trillion under management, said new priorities recently set by CA100+ threatened its ability to act independently.
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These priorities, adopted last June, call for CA100+ signatories to engage with policymakers and for some to publish details on their talks with companies they invest in, towards the goal of getting them to lower their emissions to zero on a net basis by 2050.
The changes “are not consistent with our independent approach to proxy voting and portfolio company engagement,” said State Street spokesman Randall Jensen.
Launched in 2017, CA100+ previously focused on climate-related disclosures at heavy-emitting companies held in its investors’ portfolios, rather than asking its members to take actions in the corporate world.
US Republican politicians, many from oil-producing states, have accused financial firms that belong to climate coalitions of working too closely together, bordering on collusion. State Street declined to comment on whether political considerations factored into its decision.
Last year US Rep Jim Jordan, chair of the House Judiciary Committee, told State Street Global Advisors’ CEO Yie-Hsin Hung in a letter that “through Climate Action 100+, State Street appears to have reached a collusive agreement with other institutional investors” to reach net-zero emissions goals.
Jordan’s committee subpoenaed documents from top managers including State Street. State Street says it is cooperating and that it has not violated antitrust laws.
Boston-based State Street has been a member of CA100+ since 2020. Signatories listed on the organisation’s website include BlackRock, PIMCO and Wellington. A notable absence is Vanguard, which never joined and, in late 2022, dropped out of another well-known climate grouping, the Net Zero Asset Managers (NZAM) initiative, an effort to engage asset managers in the fight against climate change. State Street remains a member of NZAM.
Like State Street, Vanguard said it was concerned about remaining independent. A related net-zero organisation for insurers also saw an exodus of members last summer, including AXA and Lloyd’s of London.
Membership growing
Prior to JPMorgan and State Street, 13 firms had left CA100+ over the years, including BlueBay Asset Management, Loomis Sayles and Lord Abbett, a spokesperson for CA100+ said.
Despite the exits, membership of CA100+ has grown. Last autumn it saw 60 join, the initiative’s spokesperson said, taking total membership to more than 700 firms running more than US$60 trillion in assets.
Some non-governmental organisations have criticised CA100+’s efforts as too weak, saying its members do not follow through on their rhetoric such as by voting against corporate directors at high-polluting companies.
A recent report by NGO ShareAction found that top asset managers have significantly cut their support for shareholder resolutions on environmental and social topics. Among large asset managers, State Street still backed the highest number of such resolutions last year, 23 per cent, compared to 8 per cent for BlackRock and Vanguard’s 3 per cent support rate. REUTERS