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While giving no reason for the decision to remove its U.S. arm from the Net Zero Asset Managers initiative, a State Street spokesperson said the units serving its European clients would remain part of the group. Sign up here. "We determined to redefine our membership in NZAM to our European entities in order to support those clients who have net zero investment goals and objectives," the State Street spokesperson said. The move by State Street Investment Management, which runs $5.4 trillion in assets, comes as other top U.S. fund firms also assess their membership in light of the rule changes, amid U.S. political pressure and ahead of global climate talks in Brazil. NZAM CHANGED ITS MEMBERSHIP COMMITMENT STATEMENT Launched five years ago to address the financial risks of climate change and provide a platform for collective action, NZAM has faced pressure from critics accusing it of potential breaches of antitrust law. Going forward NZAM will no longer require members to reach net-zero portfolio emissions by mid-century nor to set interim targets. Instead members face easier asks like providing clients with information to act on climate risks. State Street declined to specify the percentage of its assets that would remain covered by the NZAM membership or discuss the group's new rules. OTHER FIRMS ASSESSING MEMBERSHIP State Street said its EU and UK entities remain "subject to our fiduciary duties to our clients" and noted its business "remains independent at all times in making investment decisions". The wording could counter claims in ongoing litigation in Texas where the U.S. state's Republican attorney general has sued State Street, BlackRock and Vanguard over their climate records and cited their NZAM membership among other things as evidence of improper collective behaviour. In August a judge allowed most of the claims to continue. "Whether we do so or not, we remain committed to making investment and stewardship decisions with an understanding of all material risks and opportunities, including those relating to climate and the environment," she said. A representative for Wellington Management said via e-mail that it was currently reviewing the new NZAM commitment. "We maintain the belief that material ESG issues, including climate considerations, can affect the long-term value of assets we invest in; therefore, it is in our clients' best financial interests for us to analyze them." Editing by Kirsten Donovan Our Standards: The Thomson Reuters Trust Principles., opens new tab Simon leads a team tracking how the financial system and companies more broadly are responding to the challenges posed by climate change, nature loss and other environmental, social and governance (ESG) issues including diversity and inclusion. Ross Kerber is U.S. Sustainable Business Correspondent for Reuters News, a beat he created to cover investors’ growing concern for environmental, social and governance (ESG) issues, and the response from executives and policymakers. Ross joined Reuters in 2009 after a decade at The Boston Globe and has written on topics including proxy voting by the largest asset managers, the corporate response to social movements like Black Lives Matter, and the backlash to ESG efforts by conservatives. He writes the weekly Reuters Sustainable Finance Newsletter.
