Much to the chagrin of net-zero proponents, opposing the Environmental, Social, and Governance (ESG) movement is a winning message.

Recently, JP Morgan Chase and State Street—one of the “Big Three” financial asset managers—exited Climate Action 100+ for allegedly disagreeing with the group’s Phase 2 Strategy unveiled last June. 

JP Morgan cited the development of their own climate disclosure framework as the reason for their departure, while State Street bemoaned Phase 2 requirements as “not be[ing] consistent with [their] independent approach to proxy voting and portfolio company engagement.”

BlackRock, a notorious ESG cheerleader, also reassessed its membership in the compact. In its recent 10-K filing with the Securities and Exchange Commission (SEC), the financial asset manager warned ESG postering might “adversely impact its reputation and business.” 

Climate Action 100+ is a $68 trillion climate action investor group geared towards holding the world’s corporations accountable for not reducing their greenhouse gas emissions. The group also argues that climate risk is financial risk by aligning with the Paris Climate Accords’s goal to “limit the temperature increase to 1.5°C above pre-industrial levels.”

The initiative dismissed these notable exits, writing in a statement, “Climate Action 100+ can confirm that JP Morgan Asset Management, State Street Global Advisors, and PIMCO have decided to withdraw from the initiative. BlackRock (‘BlackRock, Inc.’) has also transferred its participation in Climate Action 100+ to BlackRock International. While we are disappointed to see them go, hundreds of investor signatories remain committed to ensuring 170 of the largest greenhouse gas emitters reduce emissions, improve governance, and strengthen climate-related financial disclosures.”

The Phase 2 Strategy document bemoaned corporations for not hastily accelerating their net-zero pledges. 

The fallout from Phase 2 is interestingly timed. The SEC is set to unveil its final Scope 3 (upstream and downstream) emissions rule this April after a two-year delay. Axios reports that the agency will water down requirements mandating publicly traded companies track emissions across their supply chains and end users.

As I noted at IWF and RealClear Energy, the SEC’s proposed rule will invite overreach and privacy violations as it would regulate entities outside its jurisdiction—including farms and ranches:

If the agency goes down this route, registrants working with small companies won’t trust them to handle disclosures containing sensitive information going forward. And they shouldn’t.

Given constraints already placed on small agribusinesses, disclosing personal data would place an enormous financial strain on them. To meet new demands, farmers and ranches would have more time dedicated to collecting data and less time on their food products.

Wall Street, believe it or not, isn’t ignoring the pushback to ESG and diversity, equity, and inclusion (DEI). In fact, they hear opponents’ concerns and are responding by scaling back their focus on prioritizing non-financial goals in business. 

House Judiciary Chairman Jim Jordan’s subpoena threats do appear to be working to the anti-ESG movement’s advantage.

IWF has been active in the fight against ESG. Follow our work HERE.