NZAM will remove the list of its signatories from its website as it undergoes a crucial review aimed to ensure it remains “fit for purpose” in the “new global context”.
The news that the largest global climate finance alliance – which boasts Macquarie Asset Management, Magellan, IFM Investors, Metrics Credit Partners and Maple-Brown Abbott as signatories – is being suspended comes just days after BlackRock announced it would be departing the initiative.
Namely, the alliance’s biggest member said late last week it was departing over confusion over its climate efforts and legal inquiries from public officials.
This follows the launch of a lawsuit by Texas and 10 other Republican states against some of the world’s largest asset managers for their “ESG agenda”.
Namely, Texas Attorney General Ken Paxton and 10 other public officials announced in November they were jointly suing BlackRock, State Street Corporation, and Vanguard Group “for conspiring to artificially constrict the market for coal through anti-competitive trade practices”.
A statement from the attorney-general’s office issued at the time alleged that the fund managers utilised the NZAM initiative to signal their mutual intent to reduce the output of thermal coal, which “predictably increased the cost of electricity for Americans across the United States”.
It’s understood that BlackRock is concerned this pressure will only escalate once Trump assumes the presidency.
Responding to news of BlackRock’s departure, NZAM said: “We are disappointed to see any investor withdraw, but as a voluntary initiative, we respect any individual decisions signatories take.
“Climate risk is financial risk. NZAM exists to help investors mitigate these risks and to realise the benefits of the economic transition to net zero.”
However, just days later, the initiative acknowledged in a statement that “recent developments in the US” and different regulatory and client expectations have brought on a review of the initiative.
“Signatories will be consulted throughout the review process and informed of any updates in a timely and transparent fashion,” NZAM said.
“As the initiative undergoes this review, it is suspending activities to track signatory implementation and reporting. NZAM will also remove the commitment statement and list of NZAM signatories from its website, as well as their targets and related case studies, pending the outcome of the review.”
NZAM was first set up in 2020 as a voluntary initiative to mobilise action by the asset management industry towards delivering the action and investment strategies necessary to achieve the goal of net zero emissions.
Each signatory was obliged to commit to supporting the goal of net zero greenhouse gas emissions by 2050 or sooner. As at November last year, the initiative boasted over 325 signatories.
Weaponisation of ESG
Late last year, Dugald Higgins, Zenith’s head of responsible investment and sustainability, warned that Trump 2.0 could usher in “ESG weaponisation 2.0”, forcing the concept further underground.
“You will probably see more US managers in this space shut down products, some of them might even shut down businesses because Trump 2.0 is effectively going to be leading to the ESG weaponisation 2.0,” he said.
“I think that is going to be the biggest risk that is going to drive the ESG as a term underground.”
Higgins explained at the time that many fund managers and businesses deploying capital anticipated this shift before the US election.
“A lot of that repositioning of portfolios has probably already been done,” Higgins told InvestorDaily, noting that investors have already scaled back commitments in certain areas, particularly ESG-focused projects within private markets.
“If we look at a lot of the global equity fund managers who have funds that sit somewhere in the green spectrum – a lot of those are actually already underweight US as it is, for valuation reasons as much as for philosophical reasons,” he said.
