Net-Zero Asset Managers Alliance Suspends Activities After BlackRock Exit

Trump has struck against those who oppose climate change. Net-Zero Asset Managers (NZAM), one of the largest climate alliances launched in October 2020 with the aim of supporting the asset management industry towards net zero of its portfolios, has announced that it will suspend its activities and take a review period, following the announcement of BlackRock’s exit from the coalition.

BlackRock was not the only one to leave the Net-Zero Asset Mannagers Alliance

The group focused on net-zero emissions brought together over 325 signatories with assets under management of approximately $57.5 trillion, who rigorously committed to achieving the goal of limiting the increase in temperature within 1.5°, in line with the Paris Agreement, setting a scientific path and engaging with companies and investors.

“Recent developments in the United States and differing regulatory and customer expectations in the respective investor jurisdictions have led Net-Zero-Asset-Managers to launch a review of the initiative to ensure that the Alliance remains relevant to the new global environment. Signatories will be consulted throughout the review process and informed of any updates in a timely and transparent manner,” reads the statement published on NZAM’s website last night.

Last January 9th, the main American asset manager, which manages assets for approximately $11.5 trillion, announced that it was abandoning the climate alliance, under pressure from Republican attacks, which have overwhelmed the management company with lawsuits against the use of ESG criteria in management practices.

A hostility that arises above all from those American states, such as Texas, where the thriving oil industry feels threatened by investment choices that focus on alternative energy and exclude from portfolios companies that, with their emissions, contribute to climate change, considered an investment risk. And it is no coincidence, given for example what is happening in California, where the fires not yet tamed are causing the most serious and costly, in terms of damage, environmental disaster of recent years in the United States.

For the moment, we are talking about the $250 billion that have literally gone up in smoke due to the flames triggered by a contingent cause, but which have spread more quickly due to the drought conditions created by climate change.

Net-Zero no longer a cause to fight for asset managers

But BlackRock’s was not an isolated case to leave the net-zero alliance. That even if it was the most striking given that the asset manager led by Larry Fink had announced its green turn in 2019 by stating that ESG, or attention to the environment, social issues and governance, had now become mainstream. A necessary turn for the managed savings industry as it was able to guarantee control of a series of risks, such as climate, which were increasingly relevant.

Then, little by little, the backtracking culminated with the decision to leave its clients the choice of whether to follow ESG practices in managing their portfolio, washing their hands of choices that were considered divisive in the American political climate. Hence also the decision to no longer use the term ESG.

Before BlackRock, a long list of managers had announced their exit from the Net Zero Asset Managers initiative, including Citi, BofA, Morgan Stanley, Goldman Sachs and Wells Fargo. The only US banks still present on the NZBA website were, before the suspension, Amalgamated Bank, Areti Bank and Climate First Bank, but now all the names of the participants have been removed from the site.

“While the initiative is undergoing this review, the organization has decided that it will cease monitoring the implementation and reporting of signatories. NZAM has also removed the Net Zero Asset Managers initiative commitment statement and list of signatories, as well as their targets and case studies, from its website pending the outcome of the review.

As a voluntary initiative, NZAM has successfully supported investors globally as they sought to navigate their individual energy transition journeys in line with their fiduciary duties and clients’ long-term financial objectives. Net-Zero Asset Managers Alliance looks forward to continuing to play this constructive role with investors around the world,” the statement reads.

Trump thus scores a first success in dismantling the net-zero alliance. Will the next step be a direct attack on the Paris Agreement?

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(Featured image by Tim Mossholder via Unsplash)

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