Four years after joining the high-profile investor network Climate Action 100+, JP Morgan Asset Management and State Street Global Advisors Inc. confirmed Feb. 15 they have left the $68 trillion initiative.

In addition, the second-largest US asset manager, BlackRock Inc., has transferred its US participation to BlackRock International Ltd., a Climate Action 100+ spokesperson said. S&P Global Market Intelligence lists the company as a smaller BlackRock investment management subsidiary based in the UK.

The departures have left the world's largest investor-led network without any of the top five US asset managers, a major setback for an initiative launched in 2017 to push companies to reduce greenhouse gas emissions and climate risks.

The firms faced new expectations laid out by the network in mid-2023 to update their client engagement goals leading up to 2030. The launch of "Phase 2" of Climate Action 100+ to ramp up actions over the next several years caused several US firms to rethink their strategies after also facing growing political pressure from Republican lawmakers over their climate activities.

"After careful review, State Street Global Advisors has concluded the enhanced Climate Action 100+ Phase 2 requirements for signatories will not be consistent with our independent approach to proxy voting and portfolio company engagement," State Street spokesperson Randall Jensen said in an email. "As a result, we have decided to withdraw from Climate Action 100+."

A Climate Action 100+ spokesperson said in an email that the network has been consistent with its goals, adding that its "enhanced ask" that companies implement transition plans was a logical evolution for the initiative's next phase.

In December 2023, the Republican-led House Judiciary Committee subpoenaed BlackRock and State Street for documents related to their "collusive agreements to promote and adopt left-wing" goals through Climate Action 100+ and other climate-related initiatives.

BlackRock said in a recent press note that it moved its membership outside the US because of legal concerns over the Climate Action 100+ Phase 2 requirements.

"This new strategy will require signatories to make an overarching commitment to use client assets to pursue emissions reductions in investee companies through stewardship engagement," the note said. "In our judgment, making this new commitment across our assets under management would raise legal considerations, particularly in the US."

In a statement, JPMorgan Asset Management, a business of JPMorgan Chase & Co., said the strength and "evolution" of its in-house stewardship capabilities prompted the decision to leave the investor coalition.

"The firm has built a team of 40 dedicated sustainable investing professionals, including investment stewardship specialists who also leverage one of the largest buy-side research teams in the industry," the firm said. "Given these strengths [JP Morgan Asset Management] ... has determined that it will no longer participate in Climate Action 100+ engagements."

Vanguard Group Inc. with more assets under management than any other US firm, never joined Climate Action 100+ and in 2022 pulled out of a similar coalition, the Net-Zero Asset Manager Initiative.

Firms under GOP pressure to abandon climate engagement

Financial firms in recent years have come under intense scrutiny by Republican state and federal lawmakers critical of the industry's plans to reduce fossil fuel investments in alignment with the Paris Agreement on climate change.

Since 2021, state lawmakers introduced more than 300 bills seeking to outlaw environmental, social and governance (ESG) criteria used to evaluate long-term investment risks and opportunities, according to a tally by the consulting firm Pleiades Strategy.

"BIG WIN," the US House Judiciary Committee said in capital letters on the social media platform X when news first broke Feb. 15 that JPMorgan had left Climate Action 100+. Investor advocates were not as thrilled.

"Following the hottest year on record in 2023 ... the world's largest asset managers reneging on their commitments to Climate Action 100+ is clear backsliding on climate risk, exactly when investors need to raise their ambition," Eli Kasargod-Staub, executive director of Majority Action, a shareholder advocacy group, said in a statement. "The threat of climate change to whole portfolios has never been clearer, and these asset managers are utterly failing to uphold their responsibilities to clients to manage and mitigate these escalating risks."

To what extent other investor networks will face similar departures is uncertain. All three asset managers that quit Climate Action 100+ are still listed on the Net Zero Asset Managers' list of signatories, which lists $57 trillion in assets under management.

Meanwhile, Climate Action 100+ said its overall membership continues to grow, with more than 60 new members joining in the fall of 2023, including some based in the US. The network now counts more than 700 investors "committed to managing climate risk and preserving shareholder value through their participation in the initiative," the coalition's spokesperson said.