JPMorgan and State Street Exit Climate Action 100+ Coalition
In a significant development for the financial and environmental sectors, JPMorgan Chase and State Street have announced their departure from Climate Action 100+, the largest investor group committed to pushing corporations towards taking decisive actions on climate change. This move marks a setback for collective Wall Street efforts aimed at addressing global warming challenges.
Climate Action 100+, known for its influential role in guiding corporate policies on environmental issues, has been instrumental in promoting sustainability through investor activism. However, its recent shift in strategy, demanding members to transition from advocacy to direct action, has prompted JPMorgan and State Street to reassess their membership.
JPMorgan's Sustainable Investing Shift
JPMorgan's fund business stated its departure from Climate Action 100+ stemmed from a significant investment in expanding its own sustainable investing capabilities. With a dedicated team of 40 professionals focusing on sustainable investment, including stewardship specialists, JPMorgan believes in leveraging its internal resources for environmental advocacy.
State Street's Independence Concerns
On the other hand, State Street Global Advisors expressed concerns over new priorities set by Climate Action 100+ that could potentially compromise its ability to operate independently. The company underscored its commitment to an autonomous approach towards proxy voting and portfolio company engagement, a stance that seemingly conflicts with the coalition's renewed focus.
Political Pressures and Industry Trends
The backdrop to these exits includes growing political scrutiny over financial firms’ involvement in climate coalitions. Accusations of collusion among financial institutions aiming for net-zero emissions have been rampant, especially from U.S. Republican politicians. State Street, despite cooperating with legislative inquiries, emphasized its adherence to antitrust laws, denying any violations.
The trend of financial institutions stepping back from climate-focused groups is not isolated to JPMorgan and State Street. Vanguard, another major player, previously withdrew from the Net Zero Asset Managers initiative, citing similar concerns regarding operational independence.
Growing Membership Despite Setbacks
Despite these high-profile departures, Climate Action 100+'s influence remains significant. The coalition has seen its membership increase, with over 60 new joiners last autumn, bringing the total to more than 700 firms managing assets exceeding $60 trillion. This growth underscores the continuing commitment within the financial sector to address climate change, even as methods and strategies evolve.
Nonetheless, criticism from non-governmental organizations highlights a perceived gap between the coalition's ambitions and the actions of its members. With some of the largest asset managers, including State Street, showing unequal support for shareholder resolutions on environmental and social issues, the effectiveness of investor activism in combating climate change remains a subject of scrutiny.
Conclusion
The exits of JPMorgan and State Street from Climate Action 100+ represent a pivotal moment in the intersection of finance and environmental activism. As the dialogue around climate change continues to evolve, the financial industry's role in shaping a sustainable future remains critically important. With shifts in membership and strategy, the path forward for investor-led climate initiatives is likely to encounter both challenges and opportunities in driving corporate action on environmental sustainability.
Analyst comment
Negative news. JPMorgan and State Street exiting Climate Action 100+ is a setback for collective Wall Street efforts on climate change. However, despite these exits, Climate Action 100+ continues to grow its membership. The effectiveness of investor activism in combating climate change remains a subject of scrutiny. The market is likely to see challenges and opportunities in driving corporate action on environmental sustainability.
