“By caving into the demands of right-wing politicians funded by the fossil fuel industry and backing out of their commitment to Climate Action 100+, these enormous financial institutions are failing in their fiduciary duty and putting trillions of dollars of their clients’ assets at risk,” said New York City comptroller Brad Lander in a statement. “Climate risk is financial risk. Today BlackRock, JPMorgan, and State Street are choosing to ignore both.”

J.P. Morgan Asset Management and State Street Global Advisors pulled out of the Climate Action 100+, a spokesperson for the group confirmed to Fortune. Climate Action is a global initiative of 700 investors with more than $60 trillion in assets that engages with public companies on net-zero strategies and timelines. BlackRock withdrew as a corporate member and shifted its participation to BlackRock International a few weeks ago, the asset management firm said in a note. 

Climate Action was founded in 2017 and focuses on 170 companies that are among the heaviest emitters of greenhouse gases. The coalition, announcing the second phase of its strategy in June 2023, said it intended to see more targeted actions from companies on reducing their GHG emissions and wanted members to support the efforts. Phase 2 takes effect this June. 

According to a note from BlackRock, this new phase was part of the decision to alter its participation. When the asset management firm became a signatory in 2020, the group was focused on corporate disclosures. 

“This new strategy will require signatories to make an overarching commitment to use client assets to pursue emissions reductions in investee companies through stewardship engagement,” the note reads. “In our judgment, making this new commitment across our assets under management would raise legal considerations, particularly in the U.S.”

Fink, between 2018 and 2023, publicly championed “social-purpose” and investing with a focus on environmental, social, and governance principles in his annual letters to CEOs. But five years later in 2023 he told an audience at the Aspen Ideas Festival that he was “ashamed” that ESG had become a political issue. “When I write these letters, it was never meant to be a political statement … They were written to identify long-term issues to our long-term investors.” 

For his part, Dimon in 2019 encouraged companies to focus on “stakeholder capitalism,” which he defined as corporate leadership that considered the needs of customers, suppliers, communities, and shareholders. He chaired the influential Business Roundtable, which released a statement on stakeholder capitalism that year. In 2022 he then sought to reassure the world that this did not make him “woke.”

“I’m not woke,” he said. “And I think people are mistaking the stakeholder capitalism thing for being woke.”

Losing the support of JPMAM, SSGA, and BlackRock—with a combined $17.2 trillion in assets—significantly hampers Climate Action’s ability to pressure companies through shareholder proposals. They’ll also have less leverage in negotiations and discussions with company boards of directors, owing to their decreased voting power in director elections, which typically take place annually at the largest companies.

‘Lighting Our Investments on Fire’

Lander said the NYC funds have asset management holdings with all three firms, and he chided them for being “part of the problem and not the solution.”

“Put plainly: They are caving to climate deniers,” he said. “We can’t expect to preserve long-term value for beneficiaries when we are lighting our investments on fire. Securing strong, long-term returns requires real-world decarbonization on the timeline of the Paris Accords.”

In a statement to Fortune, SSGA, like BlackRock, said the second-phase strategy of Climate Action led to its withdrawal. 

“After careful review, State Street Global Advisors has concluded the enhanced Climate Action 100+ Phase 2 requirements for signatories will not be consistent with our independent approach to proxy voting and portfolio company engagement,” said a spokesman. 

A JPMAM spokesperson said in a statement that the asset management firm had made a “significant” investment in its stewardship team and engagement capabilities and had developed its own climate risk engagement framework. The fund firm said climate change continues to present material economic risks and opportunities to clients and analysts would factor it into engagements around the world.

“The firm has built a team of 40 dedicated sustainable investing professionals, including investment stewardship specialists who also leverage one of the largest buy side research teams in the industry—with over 300 analysts globally,” said a spokesperson. 

Focus on Fink 

Lander specifically called out BlackRock’s Fink in his statement. Fink, in his 2020 annual letter to CEOs, wrote that climate change had become a “defining factor in companies’ long-term prospects.” Fink wrote that climate-risk evidence had compelled investors to reassess their core assumptions about modern finance.

“Three years ago, Larry Fink declared that climate risk is financial risk, but today’s announcement makes a mockery of that recognition,” said Lander. “Putting clients who take climate risk seriously in their own small silo, while voting most of BlackRock’s shares against even the most minimal climate disclosures is a failure of both leadership and fiduciary duty.”

The California Public Employees’ Retirement System (CalPERS), with assets valued at about $462 billion, had a similar, albeit more moderately toned, reaction. In a statement, CEO Marcie Frost said CalPERS remains “firmly committed” to Climate Action 100+.

“The success of Climate Action 100+ depends on maintaining our collective resolve to keep doing the hard work needed in the face of an existential crisis. This work is a vital part of our fiduciary duty to the 2 million California public servants who are CalPERS members,” said Frost.

A Climate Action spokesperson declined to comment on the individual asset management firms, but said the group is still growing and that investor members are committed to getting companies to implement climate-transition plans.

“Last fall alone, more than 60 new signatories joined, and we expect strong interest to continue,” said the spokesperson. “Importantly, the initiative continues as intended with hundreds of global investors still committed to engaging 170 companies—in this respect, Climate Action 100+ remains the largest investor-led engagement initiative on climate change.”