There have been growing concerns for Climate Action 100+ (CA100+), an organisation dedicated to stimulating the most polluting companies into reducing their greenhouse gas emissions, with Invesco being the latest large asset manager to leave the group. The move comes as Republicans mount increasing criticism on firms who are associated with ESG, and as CA100+ moves to take a more direct approach in forcing companies to limit their emissions. As the top-5 money funds vanish, CA100+ has seen the pressure, it can place on carbon-polluting giants diminish, but does this mean that the group has completely lost its bite?
CA100+ used to host numerous big names, including JPMorgan, State Street Global Advisors (SSGA), BlackRock and Invesco. However, February and March have seen the exodus of these asset-management titans as CA100+ moved away from simply requiring companies to disclose their response to a range of climate risks to asking companies to begin addressing these risks directly using a transition plan. JPMorgan argued that it had developed a sufficient internal stewardship arm to the point where it didn’t need CA100+ assistance, BlackRock withdrew its corporate arm and replaced it with its international arm as it believed its participation would violate US law which stated that it must act in the interest of shareholders, and SSGA stated that the demands of CA100+ had gone too far. Furthermore, Invesco left the group on the 1st of March, arguing that it would rather its clients make decisions on the companies they invest in, rather than an external organisation. In counter to these complaints, CA100+ noted that “the initiative has always been action-oriented and about more than disclosure”.
These exits come as politics becomes increasingly intertwined with ESG investing. Many Republicans in the USA, particularly those with a vested interest in oil and gas, have been ramping up their criticism of ESG, which they believe to be collusive. This is particularly evident in fossil-fuel-dependent states, like Texas, Oklahoma, and West Virginia, which have banned some of these asset managers from doing business with them.
Despite these pressures, CA100+ remains positive that they will still be able to complete their mission, with over 700 investors still participating and 60 new ones (with $3 trillion under management) joining since phase 2 of the operation began. Many investors clearly still support the message broadcast by Larry Fink (chief executive of BlackRock) that “climate risk is investment risk” and will continue conducting ESG investing in order to sustain long-term economic and investor value.
Overall, CA100+ still retains a large amount of influence despite the hurdles it has faced since the start of 2024. Nevertheless, the nonchalant attitude of leading asset managers who prioritise investor returns over the environment is a concerning development. There is a clear need for these powerful global asset managers to leverage their influence over companies to limit the growth of carbon emissions and prevent record highs in emissions from being reached again in the coming years.
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