Fund activism: Trump (centre) and former First Lady Melania Trump arrive at the US Capitol in Washington. Blackrock’s withdrawal follows escalating pressure from some Republican politicians, which could rise further as Trump takes office. — Bloomberg
LONDON: A flagship coalition aimed at aligning the asset management industry with global climate goals said it was suspending its activities, days after BlackRock, the world’s biggest investor, left amid a political backlash in the United States.
The pause raised concerns that companies will lower their efforts on climate change even after the hottest year on record, but could buy organisers time to review what action might still be acceptable for US fund firms.
BlackRock, which manages some US$11.5 trillion in assets, left the Net-Zero Asset Managers (NZAM) initiative last Thursday, citing confusion over its climate efforts and legal inquiries from public officials.
The step followed months of escalating pressure from some Republican politicians over its stance on investing in fossil fuel companies, with concern that such pressure could rise further as President-elect Donald Trump prepares to take office.
The group counted more than 325 signatories managing more than US$57.5 trillion in assets as members, according to its website as of last week, before the departure of BlackRock.
In a letter to its members, the partner groups that help manage the NZAM said they had decided to conduct a review of its activities.
“Recent developments in the United States and different regulatory and client expectations in investors’ respective jurisdictions have led to NZAM launching a review of the initiative to ensure NZAM remains fit for purpose in the new global context.
“As the initiative undergoes this review, it is suspending activities to track signatory implementation and reporting.
“NZAM will also remove the commitment statement and list of NZAM signatories from its website, as well as their targets and related case studies, pending the outcome of the review.”
NZAM was set up in 2020 as executives and investors grew enthusiastic about solving climate change, sentiments that have faded.
Still, changes by the NZAM initiative could prevent the sort of flight by asset managers that diminished the influence of another investor climate group, the Climate Action 100+, last year.
At the time, big fund firms cited independence concerns, not politics, as a reason for their dropping out.
Since then, pressure from US Republican officials has increased on executives to back away from reflecting environmental, social and governance assessments in their investment decisions.
These include an inquiry from the Republican-led US House of Representatives Judiciary Committee and a lawsuit by Texas and 10 other Republican-led states that claimed that fund activism had cut coal production and boosted energy prices.
For its part, the NZAM initiative has asked members to support the goal, agreed by countries, of capping global warming and aiming to reach net-zero greenhouse gas emissions by 2050.
Kathy Mulvey, a campaign director for the Union of Concerned Scientists, a Massachusetts-based advocacy organisation, said groups including NZAM “have been an important avenue to keep us on track” toward meeting emissions reduction targets.
Whatever the results of NZAM’s review, she said, “clearly the financial sector’s actions to advance emissions reductions and the clean energy transition aren’t going away.” — Reuters
