ESG clients push back on bank climate retreat

By David Callaway  •  March 4, 2025
Financial costs of pollution and economic cost of polluted water contamination with hazardous industrial waste as a tree shaped as a dollar sign with the toxic liquid with 3D illustration elements.
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(This column first appeared in CallawayClimateInsights.com, a partner of ClimateCrisis247)

Large banks in full-scale retreat from their climate targets in fear of President Donald Trump’s wrath are finding an unexpected obstacle to their political flip-flopping — their clients still want environmental, social and governance goals.

ESG and DEI may be scrubbed from government websites, but they are still a real priority for asset managers with billions to invest, and those managers are making themselves heard.

The People’s Pension, one of the largest British pension funds, pulled £28 billion ($36 billion) from State Street STT -4.87%↓ recently and gave it to fund managers Amundi and Invesco because of concern the Boston-based bank was retreating from its record of responsible investment, according to the Financial Times.

Almost three dozen Canadian funds with more than $53 billion in assets wrote last week to that country’s largest banks saying they expect the banks to follow through on their climate commitments after most of them withdrew from the Net Zero Banking Alliance late last year.

CalPERS and CalSTRS — the two giant U.S. pensions for California public employees and teachers — said they still intend to hold companies they own to their ESG commitments after the Securities and Exchange Commission under Trump said it would drop its fight to push through a climate risk disclosure rule for public companies.

Even BP BP -0.91%↓ , the oil giant that threw in the towel last week on its renewable energy ambitions, is seeing pushback from its investors. More than four dozen large asset managers wrote it ahead of its decision saying they wanted a vote on any strategy that lessens the company’s commitment to renewable energy.

The investor pressure will test banks — such as Well Fargo WFC -4.17%↓ last week — that have decided to give up on certain climate targets because of political pressure on ESG and DEI programs.

It is always tough to take a stand on an issue, and institutions such as Wells Fargo, BlackRock $BRK, Vanguard and State Street certainly suffered blowback from red state pension funds and state treasurers a few years ago when they threw in their lot with ESG strategies. Now that they are flipping on ESG, they are paying the price from the other side.

Those institutions who stick to their climate guns will ultimately reap the benefits from adhering to net zero targets and emission-reducing priorities when the pendulum swings again. Because it certainly will.

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