Two prominent asset management firms, JPMorgan Chase’s investment division and State Street Global Advisors, have decided to withdraw from the Climate Action 100+ initiative. Republican critics have claimed that the initiative promotes “woke” ideologies and is economically harmful to their clients.
The recent turn of events has dealt a significant blow to Climate Action 100+, a coalition established in 2017 under the United Nations, comprising approximately 700 institutional investors who collectively manage a staggering $68 trillion. The initiative seeks to use shareholder power to compel companies to improve climate governance, reduce greenhouse gas emissions, and implement more rigorous climate-related financial reporting guided by equality, diversity, and inclusion principles. Critics argue that Climate Action 100+ encourages businesses to prioritize socially responsible investments at the expense of profit, economic growth, and their obligations to shareholders.
Rep. Jim Jordan (R-Ohio) celebrated JPMorgan and State Street’s withdrawal as a victory for economic freedom. He expressed hope that other financial entities will abandon what he perceives as collusive environmental, social, and governance (ESG) practices. Jordan said, “Today’s decisions by JPMorgan and State Street are big wins for freedom and the American economy.”
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
In the past, Jordan issued a subpoena against Ceres, a nonprofit organization responsible for overseeing Climate Action 100+. The accusation was that the organization was potentially violating the United States antitrust laws by helping to facilitate the adoption of ESG (Environmental, Social, and Corporate Governance) objectives.
Several state attorneys general have also lauded JPMorgan and State Street’s decision to exit the climate initiative. They had previously cautioned 53 asset managers against prioritizing ideological goals over their fiduciary responsibilities. They argue that business operations should focus on return on investment rather than pursuing ideological agendas. Alabama Attorney General Steve Marshall said, “The ESG sham is unraveling.”
Iowa Attorney General Brenna Bird also applauded JP Morgan, “Radical political agendas shouldn’t drive investment decisions.”
JPMorgan Asset Management, managing approximately $3.1 trillion, stated its departure from the initiative was due to the development of its climate risk engagement framework and significant enhancements in its engagement capabilities. Similarly, with assets under management totaling about $4.1 trillion, State Street cited disagreements with the initiative’s “phase two” commitments, which it felt compromised its autonomy in proxy voting and engagement with portfolio companies.
Climate Action 100+’s second phase aims to intensify efforts to mitigate climate change. The signatories are expected to take more decisive action and use their expertise to drive meaningful change. Through this initiative, Climate Action 100+ hopes to make significant progress towards a sustainable future for the planet. According to Francois Humbert, chair of Climate Action 100+, this phase would require ten times more effort and “lots of engagement experience and a bit more grey hair.”
According to the Financial Times, BlackRock, the world’s largest asset manager with around $9.1 trillion in assets, is planning to transfer its involvement in Climate Action 100+ to a smaller subsidiary.
In related news, a conservative think-tank, The Buckeye Institute, has criticized the Biden administration’s net-zero climate policies, suggesting they threaten U.S. food production by significantly increasing operational costs for farmers and consequently raising grocery prices for consumers.
According to the researchers, U.S. farmers will see their operational costs rise by an estimated 34 percent due to the Biden administration’s net-zero emissions policies.
Consumers also face a hit to their wallets. The researchers estimated that carbon pricing is expected to raise the average U.S. grocery bill by $110 per month, amounting to an annual increase of $1,330, or 15 percent. The report aligns with broader concerns about the administration’s aggressive carbon reduction strategies, including their potential impact on agriculture and food security.
