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JP Morgan and BlackRock back out of United Nations' climate action group after ESG initiatives go too far
Photo by Mike Kemp/In Pictures via Getty Images

JPMorgan and BlackRock back out of United Nations' climate action group after ESG initiatives go too far

American investment giants JPMorgan Chase, BlackRock, and State Street Global Advisors have dropped out of a United Nations-backed climate group reportedly because the next phase of the group's sustainability goals takes things too far. The climate group claimed that companies are not reaching their goals "fast enough."

Climate Action 100+ is an initiative making a massive global push for environmental, social, and corporate governance, which is responsible for many of the progressive policies pushed in corporations. The idea is that if a company or entity does not incorporate the ESG doctrine into its business practice, it would not be preferred by investment firms.

According to Fox News, the firms leaving the climate group signaled that they would be dealing with climate plans internally and that Climate Action's new "Phase 2" plans were over the top.

JPMorgan Chase said its firm had "built a team of 40 dedicated sustainable investing professionals, including investment stewardship specialists who also leverage one of the largest buy side research teams in the industry."

"Given these strengths and the evolution of its own stewardship capabilities, JPMAM (JP Morgan Asset Management) has determined that it will no longer participate in Climate Action 100+ engagements," the firm added.

BlackRock withdrew U.S. business from the climate group and is shifting to its smaller international entity in its place.

State Street, on the other hand, made it clear that the new climate commitments conflicted with the company's investment plans.

"SSGA has concluded the enhanced Climate Action 100+ phase 2 requirements for signatories are not consistent with our independent approach to proxy voting and portfolio company engagement," State Street said in a statement.

Both groups noted that pending litigation against the climate group was also a contributing factor.

Climate Action 100+ told the Washington Free Beacon that it "does not comment on individual signatories and their specific circumstances." The group reportedly noted that it added "more than 60 new signatories" last fall and "continues as intended with hundreds of global investors."

According to the group's website, Climate Action 100+ is an investor-led initiative to "ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change."

The group's Phase 2 plans align with the coveted 2030 goal of "decarbonization" across the world. The new phase includes making "lead investors and individual engagers" disclose their voting records on particular votes of the group's interest.

Other listed benchmarks included "emissions reductions, and the key underlying factors leading to these," aligning with "pathways" dedicated to lowering the Earth's warming below 1.5°C, as well as "capital allocation, and asset-level change" regarding net-zero carbon transitioning.

Climate Action summarized its recent data with a message similar to that of other failing green-energy initiatives.

"The results showed that most focus companies are not moving fast enough to align with the goals of the Paris Agreement and reduce investors’ risk."

Pending litigation mentioned by investment groups is likely referring to a group of Republican attorneys general who have been conducting an investigation into Climate Action 100+ and its members. At least 20 attorneys general from states like Montana, Iowa, and Tennessee have investigated whether or not the asset managers have engaged in market manipulation or violated their fiduciary obligations.

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