An ESG Asset Manager Exodus

Three big firms—JPMorgan Asset Management, BlackRock and State Street Global Advisors—exit the Climate Action pressure group

WSJ editorial.

"Has the tide turned on environmental, social and governance (ESG) investing? It appears so. JPMorgan Asset Management, BlackRock and

State Street

Global Advisors on Thursday retreated from the Climate Action 100+ investor compact because they don’t want the political and legal liability.

Climate Action 100+ describes itself as the “largest ever global investor engagement initiative on climate change.” Its 700 or so institutional investor members manage more than $68 trillion in assets (before Thursday’s exits). Their goal is to force companies to zero out CO2 emissions by 2050.

Members are supposed to “engage” 170 “focus companies” such as

Boeing

,

Home Depot

and American Airlines—that is, threaten to vote against non-compliant corporate directors and back shareholder resolutions that pressure management. Their campaign has had great success with 75% of targeted companies committing to “net zero.”

But the climate left is never content. Last June the alliance impelled its members to publish information on their “engagements” and to explain how and why they voted on shareholder resolutions flagged by the outfit. The point was to embarrass asset managers that climate scolds accuse of being insufficiently committed to the cause.

Asset managers have been walking a fine legal line. GOP Attorneys General in 2022 warned that they might be violating their fiduciary obligations and antitrust laws. House Judiciary Committee Chairman Jim Jordan in December subpoenaed BlackRock and State Street Global Advisors for documents and communications related to their involvement in “collusive” agreements.

The climate alliance’s new rules would compound the legal and political jeopardy. In its withdrawal announcement, State Street said its rules “are not consistent with our independent approach to proxy voting and portfolio company engagement.” BlackRock said the rules “would raise legal considerations.”

All true. But perhaps their customers have also begun to realize that ESG and net-zero mandates are political crusades that accomplish little except politicizing investment. BlackRock CEO Larry Fink noted correctly last year that ESG has been “entirely weaponised.” But asset managers should have known that bowing to the left would invite pushback from the right.

New York City Comptroller Brad Lander lambasted the trio on Thursday for “caving to climate deniers.” “We are in the process of reviewing how well our managers are aligned in that approach and will consider our options for the management of our public market investments,” he warned.

What does it say when the climate left believes it can achieve its goals only by intimidation and coercion?"