Update (Jan. 14). Under growing pressure from Republican politicians in the US, BlackRock quit the Net Zero Asset Managers Alliance, while Dutch pension fund Pensioenfonds Detailhandel exited the Net Zero Asset Owners Alliance.
They are the latest defectors from the global financial climate alliances (see, “Public companies respond to the backlash against climate and diversity initiatives with surrender and defiance”).
NZAM announced it was launching a review of the initiative “to ensure NZAM remains fit for purpose in the new global context.”
Now, it’s large, publicly traded companies with thousands of investors and millions of customers that are in the bullseye of attacks on proactive investing in climate and diversity.
Major corporations are jockeying to avoid growing reputational and legal risks; some are defending the business case for investing in inclusion and managing climate risks.
With an incoming Trump administration hostile to such initiatives, and continued legal attacks from conservative activists, it’s no longer just small organizations like Fearless Fund that are on the defensive. McDonald’s on Monday became the latest corporation to backtrack on diversity commitments, including its pledge to diversify its supply chain. At the same time, the fast food giant made the case for inclusion. “Our system leverages inclusion to operate successfully and grow our businesses.”
Elsewhere:
Costco is bucking the anti-DEI movement
The retailer’s board of directors offered a “stern rebuke” of a shareholder proposal brought by the National Center for Public Policy Research that challenged the company’s diversity efforts. In its proxy proposal taking aim at Costco’s diversity practices, the conservative think tank warned, “It’s clear that DEI holds litigation, reputational and financial risks to the Company, and therefore financial risks to shareholders.”
In a proxy statement to investors, Costco countered that diversity brings “originality and creativity to our merchandise offerings, promoting the ‘treasure hunt’ that our customers value.” A shareholder vote on the proposal is set for January 23.
Venture fund founder sues PayPal over diversity investing
Andav Capital’s Nisha Desai is suing PayPal, alleging that the payment giant’s 2020 commitment of $530 million to support more Black and minority-led businesses, including a $100 million effort to invest in Black and Latino fund managers, discriminates against other races and ethnicities, including Asian Americans, reports TechCrunch.
The suit claims funds like Andav “suffered from the adverse and inaccurate perception that PayPal had made a decision based on the merits of their business, rather than the race of the fund’s ownership.” Bill Spruill of the Global Data Consortium responded, “Meritocracy is great but it must first start from a place of equal access.”
Last year, Fearless Fund and Founders First both settled similar lawsuits to protect against broader court battles that could have led to legal precedents.
Wall Street is quitting the Net-Zero Banking Alliance
Major banks including Morgan Stanley, Citigroup, Bank of America, Goldman Sachs and Wells Fargo in recent weeks have all exited the Net-Zero Banking Alliance, a UN-backed alliance that aims to reduce to zero the carbon emissions from the lending and investment portfolios of its members. JPMorgan Chase is the only big American bank that remains, for now.
The Glasgow Finance Alliance for Net Zero, or GFANZ, an umbrella group for the banking and other financial sector alliances, said it will transition to an independent group focused on mobilizing capital to help countries transition to low-carbon economies.
