Many of the world’s biggest financial firms spent the past several years burnishing their environmental images by pledging to use their financial muscle to fight climate change.
Now, Wall Street has flip-flopped.
In recent days, giants of the financial world including JPMorgan, State Street and Pimco all pulled out of a group called Climate Action 100+, an international coalition of money managers that was pushing big companies to address climate issues.
Wall Street’s retreat from earlier environmental pledges has been on a slow, steady glide path for months, particularly as Republicans began withering political attacks, saying the investment firms were engaging in “woke capitalism.”
But in the past few weeks, things accelerated significantly. BlackRock, the world’s largest asset manager, scaled back its involvement in the group. Bank of America reneged on a commitment to stop financing new coal mines, coal-burning power plants and Arctic drilling projects. And Republican politicians, sensing momentum, called on other firms to follow suit.
The reasons behind the burst of activity reveal how difficult it is proving to be for the business world to make good on its promises to become more environmentally responsible. While many companies say they are committed to combating climate change, the devil is in the details.
“This was always cosmetic,” said Shivaram Rajgopal, a professor at Columbia Business School. “If signing a piece of paper was getting these companies into trouble, it’s no surprise they’re getting the hell out.”
