A group of Wall Street giants has decided to sit out one of the industry’s biggest coalitions: the Glasgow Financial Alliance for Net Zero.
GFANZ, whose members oversee $130 trillion, is finding it can’t attract some of the top names in money management. Among them, Pacific Investment Management Co., Fidelity Investments, Capital Group, T. Rowe Price Group Inc., PGIM, Northern Trust Asset Management and the fund management units of Goldman Sachs Group Inc. and Morgan Stanley.
In total, the eight holdout firms Bloomberg News contacted represent over $17 trillion in assets, which is more than the combined gross domestic product of the European Union. Asked why they opted out, they pointed to their fiduciary duty and to a reluctance to be bound by external rules.
Mark Carney, the co-chair of GFANZ, has spent much of 2021 trying to appeal to the financial behemoths steering capital flows to commit to decarbonization. He’s sought to cater his arguments to a community that’s laser-focused on making money. In a recent interview, the 56-year-old assured skeptics that a commitment to net-zero carbon emissions needn’t hurt their bottom lines. “Certainly not on a risk-adjusted basis,” Carney said.
But his efforts have fallen flat in some key circles. And even though Carney occupies a seat on Pimco’s advisory board, the $2.2 trillion asset manager insists that joining would be a dereliction of its fiduciary duty. (Pimco’s owner, Allianz SE, is a member of three GFANZ sub-alliances.)
Ryan Korinke, managing director and global head of sustainability at Pimco, said the firm “strongly supports climate and sustainability-related initiatives.” It also offers a “full range of strategies and products” that allow it to manage client money in a manner that’s consistent with net-zero goals, he said, describing Pimco as “a leader” in incorporating environmental, social and governance considerations into its investment process.
“However, as a fiduciary, we don’t believe it’s appropriate to make specific commitments on our clients’ behalf, especially given the complexity of the long-term challenges ahead,” Korinke said. For that reason, Pimco hasn’t joined GFANZ, he said.
A spokeswoman for Fidelity Investments, which manages $4.2 trillion, said “we very much agree with what zero emission pledges like GFANZ are doing.” Fidelity has “approached these issues with a thoughtful and strategic investor mindset,” and after careful consideration, the company has opted to “make independent commitments rather than sign on to shared pledges,” she said.
Capital Group, which manages $2.6 trillion, is “making progress” on the same issues being targeted by GFANZ, according to Jessica Ground, its global head of ESG. The firm is “aligned with the underlying objectives” of GFANZ, and is “committing significant resources to assessing the progression and impacts of this structural challenge,” she said. But it too has so far avoided the alliance.
The banking arms of Goldman Sachs and Morgan Stanley have both joined the GFANZ sub-group for banks, but the asset management units have remained outside the alliance. A spokesman for Goldman Sachs said the unit is now “actively evaluating” signing up for the sub-alliance for asset managers, and “is supportive” of its goals. Morgan Stanley declined to comment.
Julie Moret, global head of sustainable investing and stewardship at Northern Trust Asset Management, said the $1.2 trillion firm hopes “to progress towards signing onto the net zero asset managers initiative.”