Major players in the finance sector, previously lauded for their commitment to combatting climate change through corporate responsibility, are now reversing course on some of their environmental initiatives.
In a recent development, prominent financial institutions such as JPMorgan, State Street, and Pimco have withdrawn from Climate Action 100+, a coalition comprising hundreds of institutional investors collectively advocating for climate action among large corporations.
This shift marks a significant departure for finance firms that have long sought to bolster their public image by vocally championing the fight against the climate crisis, as reported by The New York Times.
Over the years, major banks and asset managers had allocated resources to bolster environmental, social, and governance (ESG) investing, viewing it as both a morally upright and economically viable endeavor.
However, recent months have witnessed mounting criticism from Republican quarters, characterizing climate initiatives and other ESG endeavors as manifestations of “woke capitalism,” according to Politico. Moreover, regulatory scrutiny has intensified, with authorities closely scrutinizing firms offering ESG products.
Additional concerns cited by The New York Times include potential client disapproval leading to litigation, as well as apprehensions regarding antitrust implications stemming from coordinated efforts among large companies to effect change in others.
Established in 2017, Climate Action 100+ initially embarked on a five-year mission, later extended until 2030. The coalition, boasting over 700 members with assets under management surpassing $68 trillion, aims to incentivize public companies to enhance shareholder value by enhancing climate governance, reducing emissions, and fortifying climate-related financial disclosures, as outlined on its website.
In its latest phase launched in 2022, Climate Action 100+ pivoted its focus from advocating for improved financial disclosures to pressing companies to adopt more environmentally friendly business practices and curtail net carbon emissions.
Following the exits of JPMorgan, State Street, and Pimco, other financial heavyweights like Neuberger Berman, William Blair Investment Management, and Wellington Management remain committed members of Climate Action 100+. The coalition’s target companies encompass industry titans such as American Airlines, Chevron, and Procter & Gamble.
The trend of finance giants retreating from prior environmentally conscious initiatives extends beyond Climate Action 100+, with The New York Times noting similar actions by BlackRock, which recently scaled back its involvement with the coalition, and Bank of America, which rescinded a pledge to cease financing coal.
