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Departing US climate envoy John Kerry has accused asset managers of “turning away from science” just weeks after a clutch of the world’s biggest investors stepped back from an industry group set up to tackle climate change.
JPMorgan Asset Management, Pimco and State Street Global Advisors this month announced they would leave Climate Action 100+, an initiative to encourage companies to take action on climate change. BlackRock, the world’s largest asset manager, said it would play a lesser role in the group.
In an interview with the Financial Times in London this week, Kerry said the moves away by the asset managers, coupled with a decline in pace on climate action, was a “problem” and an “unnecessary reaction” to “disinformation and politics”.
“Anyone who is pulling away today is turning away from the science and responding to political and ideological pressure that is not based on facts, not based on science,” Kerry said. “They’re not in my judgment acting on the right side of history.”
US asset managers have faced a backlash against environmental, social and governance investing policies from Republican politicians, prompting some prominent investors to scale back action on climate issues.
BlackRock and Pimco declined to comment on Kerry’s remarks.
State Street said managing climate risks for its clients was key but this “was never predicated on membership in any organisation”. It relied on board oversight and disclosure of material risks and opportunities, including those that were climate-related, Karen Wong, head of sustainable investing, said.
However, in distancing from the industry group, Pimco, State Street and BlackRock had expressed concerns with its “phase 2” plan to use shareholder influence to force companies to cut carbon dioxide emissions.
JPMorgan said its decision to leave CA100+ “in no way changes our commitment to sustainable finance”. It would continue to use capital and expertise to support clients in their energy transition and managing climate risk.
“The risks and opportunities posed by a changing climate to our business and clients alike are tremendous, and we intend to stay on the leading edge,” it said.
Many asset managers stepped up their efforts on climate change after a landmark report from scientists in 2018 warned of dire consequences if the world failed to limit the long-term global temperature rise to 1.5C above pre-industrial levels, a level that was temporarily breached in the past year. Last year was also the hottest on record.
As well as joining groups such as CA100+ in an effort to prompt companies to cut greenhouse gas emissions, big investors had also supported green resolutions at annual meetings and launched new climate-focused products. BlackRock chief executive Larry Fink said in a letter to chief executives in 2020 that “climate risk is investment risk”.
But this focus caught the attention of Republicans typically aligned with the oil and gas industry. Republican states reliant on the fossil fuel industry, including West Virginia and Oklahoma, have banned some asset managers from doing business with them, based on accusations of boycotting fossil fuels.
Additionally, 21 Republican state attorneys-general are investigating asset managers for working together on climate issues.
In the face of the onslaught, large US asset managers have emphasised their legal duty to maximise shareholder returns and independently evaluate the impact of climate change on the financial prospects of the companies they invest in.
Kerry, who will soon step down from his climate role ahead of the presidential election, said that while some attorneys-general were “politicising this issue”, there was “not one scientific fact that suggests that [investors] should be pulling back at this moment in time”.
“We need these [asset management] companies to be acting on the right side of history. We need them to be helping lead the charge in the way that they were,” he said.
In response to the departures of the big US asset managers, CA100+ said this week that hundreds of other investors from around the world “remain committed” to pushing companies to cut their greenhouse gas emissions.
“The climate crisis continues to pose an ever-increasing financial risk to long-term shareholder value and the broader economy, and we cannot afford to take a step back now,” the group added.
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