ESG Exodus or Shifty Shell Game?

Recently asset management giants JP Morgan Asset Management, State Street Global Advisors, and BlackRock announced their departure from a "progressive" initiative known as Climate Action 100+. Sponsored by Australian-based, Investor Group on Climate Change (IGCC), the initiative invites asset management firms like JP Morgan, State Street and BlackRock to become signatories -- committing to make the  environmental, social and governance (ESG) framework  a central consideration when voting on behalf of their pension fund clients in the U.S. A network of investor firms, IGCC describes itself as an organization as seeking to “respond to the risks and opportunities of climate change.”

But with a growing fatigue of  the "climate catastrophe" and net-zero narratives on the part of many U.S. investors, and increasing legal pressure being brought to bear against activist asset-management firms for their ESG-centric investment decisions, one must consider whether these recent departures by JP Morgan, State Street and Black Rock are a sign of reason returning to the boardroom, or a recalibration of strategy by activists investors seeking to obfuscate their continued commitment to the ESG reporting and scoring mechanisms.

The Climate Action 100+ initiative offers a good example of how the eco-system of climate activism works. It sheds light on the structure and flow of money and reveals the contradiction between corporate words and deeds. Using a network of related and layered non-profits, corporations, and governments, these advocates of the "climate catastrophe" charade collaborate, fund, and disseminate false narratives, and then turn to each other to propose (and sell) “solutions” from which they will all financially benefit. In other words, first posit a counter-factual and then act on it as if it were real.

Adrift in an eco-fantasy.

ESG is a solution to an imaginary problem they created. First, the scheme required a narrative about a problem, followed by brief, media-fueled alarmism, and then advocacy for "solutions" for the "problem" they've willed into existence Cunning in its design, and elegant in its attempted implementation. The asset-management firms hoped its victims -- unwitting U.S. investors -- wouldn’t notice that the capital markets were and continue to be manipulated by a lie.

JP Morgan Asset Management and State Street offered different reasons for their respective exits as signatories from Climate Action 100+. JPMorgan, which manages $3.1 trillion in assets, said through a spokesman that the firm chose not to renew its membership in the initiative because of investment in its [internal] "stewardship team," as well as "the development of its own climate risk engagement framework."

State Street, with $4.1 trillion under management, was more direct, even if still not entirely forthcoming. “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… as a result, we have decided to withdraw from Climate Action 100+.”

Meanwhile, BlackRock, the world’s largest asset-management firm, with more than $10 trillion in assets under management and a true believer of ESG said the quiet part out loud. It simply transferred its Climate Action 100+ membership from its U.S.-based entity to an international entity. In a company note it explained that it dropped its corporate membership because it believes the phase 2 strategy, slated to take effect in June, conflicted with the sole interest rule and its legally enshrined fiduciary obligation to act solely in clients’ long-term economic interest.

But despite statements of concern about potential legal exposure or improved efficiency from internal ESG efforts, these firms seem more plainly to be perpetrating a corporate activism sleight-of-hand.

Beginning in 2000, ESG has been a multi-decade effort initiated by the World Economic Forum (WEF). A quasi-fascist organization that advocates for a single global government that numbers captains of industry and the media in its upper elite, its founders realized that their authoritarian vision for the world would never stand up to careful scrutiny in the arena of ideas, nor be adopted through democratic processes. As such they needed a mechanism by which to forcibly reorient the capital markets toward the industries, companies, and policies from which they would financially and ideologically benefit -- all while using pension-fund investor capital, also known as OPM -- “other people’s money."

Do you believe in miracles?

To be successful the WEF needed the most morally malleable industry leaders from one of the most morally vacuous industries. By incentivizing the entire banking and financial sector to defund industries like oil and gas, the WEF leveraged one of the basest inclinations on Wall Street -- greed -- to do that which they could not accomplish in the arena of ideas or through democratic institutions. Through the sophisticated network of non-profits, corporations, and governments, the WEF has been able to codify policies and regulations, entrench boardroom activists, and redirect capital to chosen industry sectors, in defiance of U.S. law, in order to realize their dystopic vision for the world.

The Climate Action 100+ initiative purports to have 700 signatories. Until recently, State Street, JP Morgan and BlackRock were proudly among them. Then they announced their "exit." But a closer look at the five investor networks funding the Climate Action 100+ initiative reveals that these same three companies are also members of the investor groups funding the initiative they just exited. If that feels like a three-card monte game, or some kind of wacky activist investor circle jerk… it’s because it is. 

The five investors’ groups funding the Climate Action 100+ initiative include:

• Investors Group on Climate Change (IGCC): Members include BlackRock and State Street
• Asian Investors Group on Climate Change (AIGCC) an IGCC affiliate: Members include. JP Morgan Asset Management
• CERES: State Street is part of the Ceres Investor Network, and its company network
• Institutional Investor’s Group on Climate Change (IIGCC): Members include State Street and JP Morgan Asset Management
• Principles for Responsible Investing (PRI)

So rather than disengaging in climate activism, and refocusing on maximizing shareholder value, these asset-management firms continue pandering to activists, offering symbolism over substance to their investors and hoping those holding them to account won’t notice. But alas, as Texas comptroller Glenn Hegar suggests, we should all remain skeptical. Until ESG activism costs these fiduciaries more in lost lawsuits than they earn through ESG-driven market manipulation, they won’t stop trying to "save the planet" -- at your expense.