Stockholm (NordSIP) – The first quarter of 2024 was marked by a number of prominent departures by US investors from Climate Action 100+, including JP Morgan Asset Management, PIMCO, State Street Global Advisors, BlackRock USA, and Invesco.
Now, 44 investors, including 14 Nordic institutional investors as well as CalPERS, CalSTRS, Church of England Pensions Board, New York State Common Retirement Fund and Nippon Life Insurance Company have published a letter of support for the sustainable finance initiative. Climate Action 100+ is made up of 700 global investors across 33 markets.
The Signatories
The Nordic signatories of the statement of support include AkademikerPension, Alecta Tjänstepension Ömsesidigt, AMF, AP3, AP7 (Sjunde AP-fonden), ATP, Church of Sweden, P+, PenSam, PensionDanmark, PFA Pension, Sampension and Folksam Group.
“As asset owners representing USD $4.6 trillion in assets, we remain deeply concerned about the investment risks posed by climate change to the economy, the markets and our portfolios. Investors encouraging companies to adopt ambitious and thoughtful plans to address climate-related risks aligns with our economic interests as long-term and diversified stewards of capital. Working collaboratively with other investors through Climate Action 100+ is an effective and efficient way to address both the specific and systemic risks to our investments posed by climate change, which is why we remain fully committed to participating in this valuable initiative,” the statement, published on CalSTRS, says.
The Statement
As the investment risks relating to climate change continue to increase, the signatories hope to emphasize three clear messages that the investment community remains committed to: (i)Further action to address systemic risk is essential, (ii) Addressing significant investment risks, including climate risk, is a fiduciary imperative and (iii)Collaborative engagement remains a vital tool.
Regarding the need to do more to address systemic risk, the statement notes that “virtually all companies—and thus investors—are affected by climate risk and the transition to a net zero emissions economy. Managing climate-related risk therefore requires action by a coalition of the world’s governments, businesses, investors and communities. All investors should be able to articulate clearly how they are addressing climate change as a systemic risk.”
Regarding the fiduciary imperative of addressing these risks, the signatories argue that “all investors, including asset owners and asset managers, have an obligation to protect the value of their assets for the beneficiaries of their investments. Different types of asset owners and managers may approach addressing climate risk differently, but all should conduct their fiduciary duties with a factual understanding of risk. It is important for all investors to provide clarity and transparency around how they are meeting their fiduciary duty to address climate-related investment risks.”
Last but not least, on the need for collaborative engagement, the institutional investors warn that “conducting climate engagements collaboratively, in keeping with all regulatory and legal requirements, enables greater efficiency and effectiveness in managing risks for investors of varying size and across different geographies.”
Why Does Climate Action 100+ Need Support?
It appears that the recent departures of the asset managers were influenced by the polarisation of ESG within US politics and the accusation that collaborative engagement initiatives like CA100+ are in breach of the country’s anti-trust laws by some US politicians. These accusations are strongly refuted by the organisation itself, including in a June 2023 disclaimer, which stated that all of its signatories act as independent fiduciaries and participation does not imply collective decision-making regarding stock selection or shareholder voting.
Despite acknowledging the complexities and nuances underlying the effort to transition towards “a climate resilient future”, the statement in support of Climate Action 100+ concludes that “these cannot preclude those committed to addressing climate-related investment risk from taking the action needed to protect the investments that provide security for our beneficiaries.”
