Can Climate Action 100+ bring back its defectors?

Financial companies pulling away from collaborative climate alliances, amid political backlash in the US, is by now a familiar story. But exits continue, with a fresh departure from the investor group Climate Action 100+ emerging this week.

Despite those high-profile withdrawals, plenty of major groups, such as Goldman Sachs Asset Management, remain loyal. For today’s newsletter, I spoke to the recently appointed chair of CA100+’s steering committee, who’s also an executive at the biggest US pension fund manager, about why he is convinced the group offers members a competitive advantage.

Investor engagement

Climate Action 100+ chair: membership is still valuable despite departures

Recent months have been brutal for Climate Action 100+, an international investor coalition that pushes big companies to address their climate-related risks.

JPMorgan Asset Management, State Street Global Advisors, Pimco and Invesco have all quit the group since February, while BlackRock withdrew its US business, shifting involvement to a smaller international arm. And news broke this week that reinsurer Swiss Re decided in March to withdraw from its role as a “supporter” of CA100+.

But in an interview with Moral Money, CA100+ steering committee chair Michael Cohen made the case that “there’s still a value proposition today” for members. He also disputed the suggestion that the coalition shifted the goalposts last year when it urged companies to adopt climate transition plans, beyond just disclosing risks.

“What we heard from some of the departing organisations was, we can do this on our own — continue to advocate for climate disclosures,” Cohen told me.

“We’ll follow up with them over the coming years to make sure they’re following through,” he added. “Otherwise, it does beg the question: OK, are they doing their fiduciary duty? If at one point they identified climate change as a major financial risk, and then they stopped doing that, how are they meeting their obligations to their own customers?”

Cohen assumed the role of chair last month, taking over from François Humbert of Italian insurer and asset manager Generali. He is chief of staff to the chief investment officer at Calpers, which manages $463bn on behalf of California public employees, and is the biggest pension plan in the US.

The departures from Climate Action 100+ have come amid a political backlash to the environmental, social and governance investment agenda, even as major pension managers have remained committed to engaging companies on their climate risks.

Explaining their exit, State Street Global Advisors and BlackRock pointed to the group’s launch of “phase 2”, which expanded the focus from disclosing emissions to prodding companies to enact climate transition plans. SSGA said the requirements fell foul of its independent approach to portfolio company engagement, while BlackRock said it could violate US requirements to act solely in clients’ long-term economic interest.

“I see where they got it, because the organisation was calling it phase 2,” Cohen acknowledged. “But simply identifying risks without a plan to address them — that’s not the way anyone thinks about risks, right? All of risk management is, you first identify the risks, and then figure out ways to mitigate them.”

Indeed, as far back as 2020, CA100+ was urging companies to cut emissions by 45 per cent by 2030, compared with 2010 levels, in order to meet net zero targets.

Major US money managers remain in the coalition, including Goldman Sachs Asset Management, Wellington Management, and Nuveen.

Among the perks of membership, Cohen said, were substantial opportunities for climate-related research and engagement. That could ultimately bring back defectors, he said.

“Hopefully there’ll be a time where they realise, hey, we’re missing out as asset managers because we’re not a part of this group,” he said. “We’re actually losing money because we don’t have the shared information, the shared back-and-forth collaboration, and actually, it was a bad business decision to leave.”

Right to reply

In Monday’s newsletter, we explored the argument that bitcoin miners could be helpful for the energy transition — including by rapidly reducing their operations at times of high demand, giving grid operators more flexibility.

Jean Boissinot in Paris wrote this in response:

It’s too clever by half — a magic trick that makes the bigger problem disappear.

It works well only until you realise that a clever way to marginally limit an overconsumption of energy or to take off a marginal overcapacity remains fundamentally an overconsumption of energy.

Or maybe bitcoin speculation can be managed so that you only need to mine when the sun is shining, when the wind is blowing and when nobody else needs an extra MWh for a more socially valuable purpose?

To have your say on this or any other topic we cover, drop us a line at moralmoneyreply@ft.com.

Correction: Monday’s newsletter stated that Sustainable Bitcoin Protocol certifies bitcoin generation by “miners” using green energy sources. In fact, SBP issues tradeable tokens to such miners.

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