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The E in Environmental, Social and Governance is fast becoming a dead letter

Wall Street giants and oil majors continue to roll back support for climate action

Climate activists, including Greta Thunberg, at a protest outside JPMorgan's London headquarters last October. Photograph: Jose Sarmento Matos/Bloomberg

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Cantillon
Tue Apr 23 2024 - 06:00

Amid a slew of bleak developments in the corporate world recently, it is worth asking whether the E in Environmental, Social and Governance is becoming something of a dead letter. It certainly looks that way.

Wall Street giants have been lining up recently to, if not quite put a pin in their environmental initiatives, then at least deflate expectations and targets.

Last week, analysts at JPMorgan Chase warned that the world needs a “reality check” on climate targets, arguing that efforts to reduce the use of fossil fuels had been set back by post-pandemic inflation, higher interest rates and geopolitical upheaval. The bank — a leading financier of fossil fuel projects globally with $101 billion (€94 billion) in deals in 2021 and 2022, according to the Financial Times and Bloomberg — said more governments are likely to pull back from their ambitious targets due to the higher cost of investment.

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It came just a couple of months after JPMorgan’s asset management arm pulled out of an investor group, aimed at challenging the world’s most carbon-intensive companies to cut emissions. State Street Global Advisors also cutting ties with the group while BlackRock, the world’s largest money manager, is paring back its involvement.

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Meanwhile, despite plenty of headline-grabbing promises, big oil is “way off track” when it comes to meeting its targets, according to a recent report from think tank Carbon Tracker. Many are expecting to increase gas and oil production over the coming years in response to rising demand from emerging economies.

Against a backdrop of political uncertainty with key elections looming on either side of the Atlantic, it is unclear from where the impetus for real change will come. But with 2024 poised to be another of the hottest years on record, the global economy is hurtling towards climate catastrophe as national governments fail to achieve buy-in from the corporate world.

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