JPMorgan and State Street exit UN Climate Alliance, BlackRock follows suit
OAN’s James Meyers
2:04 PM – Thursday, February 15, 2024
Two of the world’s biggest asset managers are quitting a United Nations climate alliance group as BlackRock scales back.
JPMorgan Asset Management and State Street Global Advisors announced on Thursday that they would be leaving the group called ‘Climate Action 100+.’
The move comes after BlackRock, which is the world’s largest money manager, pulled out as a corporate member and transferred its participation to its smaller international arm, limiting its involvement.
The latest decisions weaken the climate change group’s plans because now none of the world’s five largest asset managers are supporting the climate alliance group.
This comes after Republicans have been at odds with the largest U.S.-based asset managers, over their push for climate issues. However, European firms and smaller competitors have stood by the climate groups.
BlackRock said in a note that it would be dropping its corporate membership because of the groups belief in their phase 2 strategy that takes effect in June. The phase 2 strategy conflicts with U.S. laws requiring money managers to act only in clients’ long-term economic interest.
JPMorgan commented on the move saying they will not renew its membership of Climate Action 100+.
“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.”
Additionally, JPMorgan’s engagement report states that it “does not work in concert with other investors on investment matters and makes its own independent decisions concerning investee companies.”
Meanwhile, BlackRock said it’s no longer a member of the CA100+ but changed 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.
Close to 40% of BlackRock’s $10 trillion in assets under management are outside the United States.
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What factors influenced BlackRock and JPMorgan’s decisions to limit their involvement in the climate alliance group
Ajor asset managers like BlackRock, JPMorgan Asset Management, and State Street Global Advisors have recently announced their withdrawal from the United Nations climate alliance group, ’Climate Action 100+’. This move comes as BlackRock scales back its involvement and transfers its participation to its smaller international arm.
As the world’s largest money manager, BlackRock’s decision to pull out as a corporate member significantly weakens the climate change group’s plans. What makes this development even more consequential is that none of the world’s five largest asset managers are now supporting the climate alliance group.
The withdrawal of these asset managers is noteworthy given the ongoing divide between Republicans and the largest U.S.-based asset managers over climate issues. While European firms and smaller competitors have continued to support the climate groups, the largest asset managers in the U.S. have faced increased scrutiny and pushback.
BlackRock cited its phase 2 strategy, which takes effect in June, as the reason for dropping its corporate membership. The phase 2 strategy conflicts with U.S. laws that require money managers to act solely in the long-term economic interest of their clients. This conflict likely influenced the decision to limit BlackRock’s involvement in the climate alliance group.
JPMorgan also announced that it will not renew its membership in Climate Action 100+. The company stated that, based on its own stewardship capabilities and the evolution of the group, it has determined that it will no longer participate in its engagements.
Furthermore, JPMorgan’s engagement report emphasized its independence in making investment decisions and stated that it does not work in concert with other investors on investment matters.
The departure of these asset managers from the climate alliance group is a significant blow to the group’s efforts. It highlights the challenges faced by such groups in gaining support and consensus among major industry players.
The decision by these asset managers also underscores the broader debate around corporate responsibility and the role of financial institutions in addressing climate change. It is clear that differing perspectives and legal obligations influence these institutions’ actions and positions.
As discussions around climate change and sustainability intensify, it will be essential to find ways to bridge the gap between government policies, shareholder expectations, and the responsibilities of asset managers. Encouraging dialogue and collaboration among all stakeholders will be crucial in driving meaningful action and progress towards a more sustainable future.
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