In this week’s edition of Economy and Society:
- Canadian banks leave Net-Zero Banking Alliance
- Texas sends letter opposing bank DEI policies
- Northern Trust leaves climate alliances
- J.P. Morgan, Goldman Sachs commit to DEI
- Target ends DEI programs
Around the world
Canadian banks leave Net-Zero Banking Alliance
What’s the story?
Four of Canada’s largest banks—BMO, National Bank, TD Bank Group, and CIBC—announced Jan. 17 they had left the Net-Zero Banking Alliance.
Why does it matter?
The move followed the departure of six of America’s largest banks from the same alliance in recent weeks and marked the first noteworthy set of exits by financial institutions from another country. It also follows the Net-Zero Asset Managers Initiative’s decision to suspend operations earlier this year. The announcement indicates a continued trend away from global climate commitments.
Read more
According to the CBC:
Banks including BMO, National Bank, TD Bank Group and CIBC confirmed Friday they were no longer members.
The withdrawals from the alliance follow departures by the six largest banks in the U.S. in recent weeks, ahead of the presidential inauguration of Donald Trump. …
Canadian banks did not cite issues in the U.S. for why they were leaving the alliance, but in statements said they are able to continue with their climate work without the help of the group.
In the states
Texas sends letter opposing financial firm DEI policies
What’s the story?
Ten states, led by Texas, have requested information from BlackRock, Goldman Sachs, and others regarding their diversity, equity, and inclusion (DEI) policies. The Jan. 23 letter argued business and investment decisions based on race, sex, and other diversity criteria could violate financial firms’ fiduciary duty to focus on maximizing shareholder value.
Why does it matter?
Texas and other states have previously focused their opposition against environmental investing considerations. This letter shifts to opposing the social aspects of ESG.
Read more
According to Pensions & Investments:
Texas Attorney General Ken Paxton wrote on Jan. 23 to the firms saying they appear “to unlawfully advance discriminatory” diversity, equity and inclusion efforts, and demanded they respond to a series of questions about their programs. He said the firms may have breached their fiduciary duties by pursuing an “ulterior political motive or agenda.”
The letter was sent to Goldman Sachs Group Inc., Morgan Stanley, J.P. Morgan Chase & Co., Bank of America, Citigroup and money manager BlackRock.
“You appear to have embraced race- and sex-based quotas and to have made business and investment decisions based not on maximizing shareholder and asset value, but in the furtherance of political agendas,” Paxton said in a letter obtained by Bloomberg.
On Wall Street and in the private sector
Northern Trust leaves climate alliances
What’s the story?
Northern Trust Asset Management became the latest trillion-dollar-plus firm to exit the Net-Zero Asset Managers Initiative. The company left Climate Action 100+ at the same time.
Why does it matter?
Northern Trust manages about $1.6 trillion in investments. The move is part of the trend of significant departures from global climate initiatives.
Read more
According to Pensions & Investments:
The $1.6 trillion money manager confirmed in a statement that it had decided to withdraw from Climate Action 100+ and from the Net Zero Asset Managers initiative.
“This decision reflects our confidence that we can independently and effectively manage material risks and engage with portfolio companies to safeguard and grow our clients’ capital,” the statement said. “We have made and continue to make investments that support our independent stewardship and sustainable investing capabilities.” …
The initiative has lost a number of money management signatories over recent years.
J.P. Morgan, Goldman Sachs commit to DEI
What’s the story?
Two groups—the National Center for Public Policy’s Free Enterprise Project and the National Legal Policy Center—have filed shareholder proposals opposing DEI projects and executive pay incentives at large banks. The CEOs of J.P. Morgan and Goldman Sachs said Jan. 22 they opposed the proposals and would continue to promote DEI efforts.
Why does it matter?
The decision by J.P. Morgan and Goldman Sachs to maintain their DEI initiatives breaks from the choices of other companies (including Target in the next section) that have scaled back such programs.
Read more
According to Bloomberg:
In television appearances Wednesday, the chief executive officers of the two New York-based firms said they’re going to continue to focus on programs to promote diversity, equity and inclusion in their workforces and customer bases even as shareholder activists push them to change course.
“Bring them on,” JPMorgan CEO Jamie Dimon said in a CNBC interview at the World Economic Forum in Davos, Switzerland.
Dimon said that working to include marginalized groups in JPMorgan’s business is good for its bottom line and that he regularly receives praise for the bank’s DEI efforts from community leaders and local government officials across the country. “We’re going to continue to reach out to the Black community, the Hispanic community, the LGBT community, the veterans community,” he said.
Target ends DEI programs
What’s the story?
Target announced Jan. 24 that it is scaling back its DEI programs and withdrawing from the Human Rights Campaign’s (HRC) Corporate Equality Index, which scores companies on their social policies.
Why does it matter?
Target’s move is part of a broader trend of corporations—including Walmart, John Deere, and Tractor Supply—announcing moves away from DEI efforts in the last year.
What’s the background?
Target has actively promoted DEI initiatives in recent years, including themed merchandise for Pride Month and Black History Month. The retailer scaled back its Pride Month displays in 2023 following pressure and boycotts from conservative groups. HRC opposed Target’s 2023 decision to reduce Pride Month merchandise displays.
Read more
According to The Wall Street Journal:
Target, one of the most full-throated corporate supporters of Black and LGBTQ rights, changed its tune Friday.
Its stores once featured prominent displays of themed merchandise for Pride Month and Black History Month. And after the May 2020 murder of George Floyd a few miles from the company’s Minneapolis headquarters, the retailer committed to increase the representation of Black employees across the company and spend more than $2 billion with Black-owned businesses by 2025.
The retail giant said Friday it was ending those workforce and supplier diversity programs, after paring back its Black- and LGBT-themed merchandise in 2023.