By Simon Jessop and Ross Kerber
LONDON/BOSTON (Reuters) – A leading coalition aimed at aligning the asset management industry with global climate goals said it was suspending its activities on Monday, days after BlackRock (NYSE: ), the world’s largest investor, pulled out amid a political backlash in the U.S. States.
BlackRock, which manages about $11.5 trillion in assets, left the Net-Zero Asset Managers (NZAM) initiative on January 9, citing confusion over its climate efforts and legal inquiries from public officials. The move follows months of escalating pressure from some Republican politicians over their stance on investing in fossil fuel companies, with concerns that such pressure could increase further as President-elect Donald Trump prepares to take office.
The group counted more than 325 signatories managing more than $57.5 trillion in assets as members, according to its website as of last week, before BlackRock’s departure.
In a letter to its members seen by Reuters, the partner groups that help govern NZAM said they had decided to conduct a review of its activities.
“Recent developments in the US and differing regulatory and client expectations in the respective investor jurisdictions have led NZAM to launch a review of the initiative to ensure NZAM remains fit for purpose in the new global context.
“While the initiative undergoes this review, it is suspending implementation monitoring and signatory reporting activities. NZAM will also remove the statement of commitment and list of NZAM signatories from its website, as well as their objectives and associated case studies, pending the outcome of the review.”
CONTAGIOUS EFFECT
Changes to the NZAM initiative could prevent a flight of asset managers that has undermined the influence of another climate investor group, Climate Action (WA:) 100+, last year.
At the time, major fund companies cited concerns about independence, not politics, as the reason for their withdrawal. Since then, there has been increased pressure from US Republican officials on CEOs to back away from reflecting environmental, social and governance (ESG) assessments in their investment decisions.
These include an inquiry by the Republican-led House Judiciary Committee and a lawsuit by Texas and 10 other Republican-led states that claimed the funds’ activism reduced coal production and increased energy prices.
For its part, the NZAM initiative asked members to support the goal, agreed by countries, of limiting global warming and the goal of achieving net zero greenhouse gas emissions by 2050.
