Climate Change

Asset Managers Oppose Trump’s Anti-Environmental Investment Rules

JM Ashby
Written by JM Ashby

Investment banks and assets managers who manage tens of trillions of dollars in assets between them are increasingly adopting investment strategies that call for considering climate change and environmental policy.

For them, the thinking is relatively simple: it's a bad idea to expose your clients and their funds to investments that could be jeopardized by climate change or poor governance. That could mean not investing in beach properties or not investing in commodities markets that are at risk of disappearing. They've conducted risk assessment and concluded that the risks in such investments are significant.

It make perfect sense, but the Trump regime is trying to stop them. The Labor Department has proposed new rules that would require firms overseeing pensions and 401(k) plans to always place financial returns above other interests like environmental policy.

The likes of Fidelity Investments and Blackrock, the latter of which manages $7.4 trillion in assets, says the new rules are nonsensical because their new strategy is best for returns.

From Bloomberg:

Fidelity Investments wrote in an 11-page letter to the U.S. Department of Labor that the proposal’s assumption that ESG investment strategies sacrifice returns, increase risks and promote goals unrelated to financial performance isn’t “well grounded or supported by much of the emerging data.” BlackRock Inc. said the recommendation is “overly prescriptive and burdensome.” State Street Global Advisors, Putnam Investments and Legal & General Investment Management are among numerous other firms that also oppose the plan. [...]

“Pressure from trade associations and the fossil-fuel industry is the most likely reason for what the Labor Department is proposing,” said Bryan McGannon, director of policy and programs at US SIF, a Washington-based group that supports the sustainable investment business. “It certainly didn’t come from the financial-services industry.”

Ahem.

A Standard & Poor’s index that tracks the performance of oil and gas exploration and production companies has dropped 44% this year, and energy stocks now account for 2.3% of the benchmark S&P 500 Index, down from 16% as recently as 12 years ago.

You could discount the existence of climate change and environmental policy entirely -- which would be crazy for anyone much less a firm managing trillions in assets -- and still conclude that fossil fuels are a bad investment in the year 2020.

The good news is the Labor Department isn't expected to finalize the new rules until the end of the year. We have a chance to replace Trump with Joe Biden and put an end to our self-destruction.

I have no significant assets myself so it's not as if this is something that will personally effect me, but climate change will. It already does. We cannot afford to waste another four years of backpedaling on environmental policy. We're running out of presidential administrations to piss away before it's too late if it's not too late already. Reelecting Trump would mean another four years, or more, of doing nothing if not actively accelerating climate change.

All the financial assets in the world won't mean shit if irreversible climate change collapses entire nations. The biggest asset managers in the world are saying this by factoring it into their investment decisions.

  • muselet

    Good on the big asset managers for opposing a truly stupid proposal. They’re not doing so out of the goodness of their black, flabby little hearts, but still, credit where it’s due.

    –alopecia

  • katanahamon

    Well, since oil and gas prices have tanked, and demand and interest and improvement in green energy production has happened, we should..open up pristine wilderness areas to drilling, fracking, and strip mining, and eliminate regulations for pollution. Makes sense, right?

  • moldilox

    pursuit of pure profit has driven our manufacturing industry from the US along with the jobs that accompany it … i’m sure applying similar strictures on the investment industry will have more unintended consequences … we have a civics exam in november ! …