Robeco’s sustainability head has described the departure of five of the world’s biggest asset managers from Climate Action 100+ as “regrettable” and revealing of an “inherent contradiction” in their approach to net zero.
Carola van Lamoen said it was a shame that JP Morgan Asset Management, Invesco, PIMCO, State Street Global Advisors (SSGA) and BlackRock had ditched the shareholder engagement initiative, but noted that “despite the negative perception the departures create toward external observers, in practice most of those former members played a limited active role in the initiative”.
Last month, JP Morgan claimed it had bolstered its in-house stewardship capabilities to the extent that it no longer needed to be involved in CA100+.
Invesco also left, arguing its clients’ interests were “better served through our existing investor-led and client-centric issuer engagement approach”.
SSGA and BlackRock’s US arm both backed away shortly afterwards, blaming the initiative’s recently-strengthened ambitions.
CA100+, which coordinates climate-related engagement efforts among more than 700 investors, launched its second phase last year. It marked a move away from focusing on disclosure towards a push to see firms actually implement credible net zero transitions, including establishing more robust targets and financing plans.
At the time, SSGA said the new requirements would “not be consistent with our independent approach to proxy voting and portfolio company engagement”.
BlackRock argued it would “raise legal considerations, especially in the US” where there have been numerous attempts to litigate against institutional investors pursuing sustainability objectives in recent years.
“Some large investors recently left the CA100+ initiative,” wrote van Lamoen. “Their reasons for leaving include concerns over requirements that the new phase of the initiative has brought”.
She said that the “shift from commitments to action appears to be a key sticking point for these investors” but noted that 60 others had joined CA100+ for its second phase.
“In addition, we observe that some of the leavers are at the same time doubling down on transition finance, seemingly as an alternative to engaging on real-world emissions reductions,” van Lamoen continued.
She argued that this was an “inherent contradiction” because “transition finance is exactly what Climate Action 100+ is propagating for” by asking companies to align their capital expenditure with their net zero strategies.
“The business case for continued collaborative engagement is crystal clear, despite some investors deciding to leave the initiative,” she concluded.
Robeco oversees engagement with 12 companies through CA100+, including some of the world’s major oil companies and miners.
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