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The chief financial officer who oversees New York City\u2019s five public pension funds, with $242 billion in assets, has something to say to BlackRock<\/a> CEO Larry Fink\u2019s asset management firm and Jamie Dimon\u2019s J.P. Morgan Asset Management: You guys are failing.<\/p>\n \u201cBy caving into the demands of right-wing politicians funded by the fossil fuel industry and backing out of their commitment to Climate Action 100+, these enormous financial institutions are failing in their fiduciary duty and putting trillions of dollars of their clients\u2019 assets at risk,\u201d said New York City Comptroller Brad Lander in a statement. \u201cClimate risk is financial risk. Today BlackRock, JPMorgan, and State Street<\/a> are choosing to ignore both.\u201d<\/p>\n J.P. Morgan Asset Management and State Street Global Advisors pulled out<\/a> of the Climate Action 100+, a spokesperson for the group confirmed to Fortune<\/em>. Climate Action is a global initiative of 700 investors with more than $60 trillion in assets that engages with public companies on net-zero strategies and timelines. BlackRock withdrew as a corporate member and shifted its participation to BlackRock International a few weeks ago, the asset management firm said in a note.\u00a0<\/p>\n Climate Action was founded in 2017 and focuses on 170 companies that are among the heaviest emitters of greenhouse gasses. The coalition, announcing the second phase of its strategy in June 2023, said it intended to see more targeted actions from companies on reducing their GHG emissions and wanted members to support the efforts. Phase 2 takes effect this June.\u00a0<\/p>\n According to a note from BlackRock, this new phase was part of the decision to alter its participation. When the asset management firm became a signatory in 2020, the group was focused on corporate disclosures.\u00a0<\/p>\n \u201cThis new strategy will require signatories to make an overarching commitment to use client assets to pursue emissions reductions in investee companies through stewardship engagement,\u201d the note reads. \u201cIn our judgment, making this new commitment across our assets under management would raise legal considerations, particularly in the U.S.\u201d<\/p>\n Fink, between 2018 and 2023, publicly championed \u201csocial-purpose\u201d and investing with a focus on environmental, social and governance principles in his annual letters to CEOs. But five years later in 2023 he told an audience <\/a>at the Aspen Ideas Festival that he was \u201cashamed\u201d that ESG had become a political issue. \u201cWhen I write these letters, it was never meant to be a political statement\u2026They were written to identify long-term issues to our long-term investors.\u201d\u00a0<\/p>\n For his part, Dimon in 2019 encouraged companies to focus on \u201cstakeholder capitalism\u201d which he defined as corporate leadership that considered the needs of customers, suppliers, communities and shareholders. He chaired the influential Business Roundtable, which released a statement on stakeholder capitalism that year. In 2022 he then sought to reassure the world<\/a> that this did not make him \u201cwoke.\u201d<\/p>\n \u201cI\u2019m not woke,\u201d he said. \u201cAnd I think people are mistaking the stakeholder capitalism thing for being woke.\u201d<\/p>\n Losing the support of JPMAM, SSGA and BlackRock \u2014with a combined $17.2 trillion in assets\u2014significantly hampers Climate Action\u2019s ability to pressure companies through shareholder proposals. They\u2019ll also have less leverage in negotiations and discussions with company boards of directors, due to their decreased voting power in director elections, which typically take place annually at the largest companies.<\/p>\n \u201cLighting Our Investments on Fire\u201d<\/strong><\/p>\n Lander said the NYC funds have asset management holdings with all three firms and he chided them for being \u201cpart of the problem and not the solution.\u201d<\/p>\n \u201cPut plainly: they are caving to climate deniers,\u201d he said. \u201cWe can\u2019t expect to preserve long-term value for beneficiaries when we are lighting our investments on fire. Securing strong, long-term returns requires real world decarbonization on the timeline of the Paris Accords.\u201d<\/p>\n In a statement to Fortune<\/em>, SSGA, like BlackRock, said the second-phase strategy of Climate Action led to their withdrawal.\u00a0<\/p>\n \u201cAfter careful review, State Street Global Advisors has concluded the enhanced Climate Action 100+ Phase 2 requirements for signatories will not be consistent with our independent approach to proxy voting and portfolio company engagement,\u201d said a spokesman.\u00a0<\/p>\n A JPMAM spokesperson said in a statement that the asset management firm had made a \u201csignificant\u201d investment in its stewardship team and engagement capabilities and had developed its own climate risk engagement framework. The fund firm said climate change continues to present material economic risks and opportunities to clients and analysts would factor it into engagements around the world.<\/p>\n \u201cThe firm has 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\u2014with over 300 analysts globally,\u201d said a spokesperson.\u00a0<\/p>\n Focus on Fink\u00a0<\/strong><\/p>\n Lander specifically called out BlackRock\u2019s Fink in his statement. Fink, in his 2020 annual letter<\/a> to CEOs, wrote that climate change had become a \u201cdefining factor in companies\u2019 long-term prospects.\u201d Fink wrote that climate-risk evidence had compelled investors to reassess their core assumptions about modern finance.<\/p>\n \u201cThree years ago, Larry Fink declared that climate risk is financial risk, but today\u2019s announcement makes a mockery of that recognition,\u201d said Lander. \u201cPutting clients who take climate risk seriously in their own small silo, while voting most of BlackRock\u2019s shares against even the most minimal climate disclosures is a failure of both leadership and fiduciary duty.\u201d<\/p>\n The California Public Employees\u2019 Retirement System (CalPERS), with assets valued at about $462 billion, had a similar, albeit more moderately toned, reaction. In a statement, CEO Marcie Frost said CalPERS remains \u201cfirmly committed\u201d to Climate Action 100+.<\/p>\n \u201cThe success of Climate Action 100+ depends on maintaining our collective resolve to keep doing the hard work needed in the face of an existential crisis. This work is a vital part of our fiduciary duty to the 2 million California public servants who are CalPERS members,\u201d said Frost.<\/p>\n A Climate Action spokesperson declined to comment on the individual asset management firms, but said the group is still growing and that investor members are committed to getting companies to implement climate-transition plans.<\/p>\n \u201cLast fall alone, more than 60 new signatories joined, and we expect strong interest to continue,\u201d said the spokesperson. \u201cImportantly, the initiative continues as intended with hundreds of global investors still committed to engaging 170 companies\u2014in this respect, Climate Action 100+ remains the largest investor-led engagement initiative on climate change.\u201d<\/p>\n<\/div>\n\nSubscribe to Impact Report, a weekly newsletter on the trends and issues shaping corporate sustainability. Sign up<\/a> for free.<\/div>\n