JPMorgan Chase, in conjunction with institutional investors BlackRock and State Street Global Advisors, made headlines on Thursday as they announced their decision to withdraw or significantly reduce their involvement in the extensive United Nations climate alliance known as Climate Action 100+. This alliance was established to address global warming through corporate sustainability agreements. JPMorgan Chase attributed its exit from the investor group to the expansion of its in-house sustainability team and the recent establishment of its climate risk framework. Meanwhile, BlackRock and State Street, managing trillions of dollars in assets, expressed reservations about the alliance’s climate initiatives, citing concerns about potential legal issues.

These significant developments come at a time when major financial institutions in the United States and globally find themselves under increasing pressure from consumer advocates and Republican states over their environmental, social, and governance (ESG) priorities.

JPMorgan Chase, in a statement shared with FOX Business this week, emphasized its commitment to sustainable investing. The bank highlighted its team of 40 dedicated sustainable investing professionals, including investment stewardship specialists who leverage one of the largest buy-side research teams in the industry. JPMorgan Chase stated that, with these strengths and the evolution of its stewardship capabilities, it has decided to no longer participate in Climate Action 100+ engagements.

BlackRock, on the other hand, opted to withdraw its U.S. business from Climate Action 100+, redirecting its involvement to its smaller international entity. This strategic move aligns with the entity’s clientele, a majority of whom are actively pursuing decarbonization goals. A spokesperson for BlackRock confirmed to FOX Business that this decision had been made in recent weeks. State Street’s departure from the alliance was motivated by perceived conflicts between Climate Action 100+’s “phase 2” commitments and the firm’s internal investing policies. The company stressed its commitment to an independent approach to proxy voting and portfolio company engagement.

Climate Action 100+, formed in December 2017, boasts more than 700 financial institutions collectively responsible for a staggering $68 trillion in assets under management. Governed by a non-governmental steering committee comprised of ESG activists, the alliance calls for members to engage companies on various fronts, including improving climate change governance, curbing carbon emissions, and enhancing climate-related financial disclosure policies. Notably, the alliance has targeted investments benefiting the oil and gas industry while promoting green energy investment strategies.

The recently unveiled “phase 2” strategy of Climate Action 100+, set to be implemented later this year, encourages member investors to actively engage with companies to reduce their carbon footprint. A spokesperson for Climate Action 100+ highlighted that over 700 investors are committed to managing climate risk and preserving shareholder value through their participation in the initiative. The alliance has experienced remarkable growth since its inception, with more than 60 new signatories joining in the last autumn alone.

In addition to Climate Action 100+, other global climate alliances and investor networks have faced criticism from Republican states and lawmakers. These critics argue that the activities of these groups may infringe on government policymaking and harm domestic energy companies, which employ thousands of Americans and contribute to ensuring low consumer prices. In June, House Judiciary Chairman Jim Jordan, R-Ohio, issued a subpoena to Ceres, a nonprofit advocacy organization overseeing Climate Action 100+, alleging potential collusion through its climate-focused initiatives in violation of U.S. antitrust law.

Moreover, state attorneys general, financial officers, and agriculture commissioners have united in recent months to threaten legal action related to banks’ involvement in climate alliances. Consumers Research Executive Director Will Hild cautiously welcomed the decisions by JPMorgan, State Street, and BlackRock, viewing them as a step in the right direction. However, Hild urged consumers to remain vigilant, suggesting that these financial institutions may be responding to the influence of public opinion and legal actions rather than a genuine shift in priorities.