As a new administration soon takes charge, what will become of climate policy? That’s a question worth asking, since it was nearly invisible this past election.

A recent Gallup poll on the importance of various issues showed that “the economy” was first out of 22 issues; “climate change” was 21st.

Incoming President Donald Trump has declared the United States will not be a party to the Paris Climate Agreement or the United Nations’ NetZero 2050 plan, which requires countries to achieve net C02 emissions by 2050.

Yet some large fund managers, including BlackRock, State Street and Wellington, have other ideas. They are members of consortiums whose members pledge to push the firms they invest in to abide by NetZero 2050.

But fund managers are fiduciaries who are supposed to work in the best interest of their investors. This means aiming for the best possible financial return.

Pushing firms to comply with the Paris Agreement’s costly mandate is inconsistent with this.

Consider an investor who voted for Trump. She has invested her retirement savings with a fund manager who is a consortium member.

Like most people, she is unaware that the consortiums exist. Unbeknownst to her, the fund manager is using her investments to pursue a policy she probably doesn’t support and will likely leave her worse off.

How is the fund manager fulfilling its fiduciary obligation?

The consortiums are powerful. Investors increasingly own shares indirectly through investment funds, which means the fund managers do the corporate voting.

The consortiums collectively control enough shares to influence corporate policies and determine who sits on corporate boards. Climate Action 100+ has over 700 investors with $68 trillion in assets. The NetZero Assets Managers Initiative includes 325 fund managers with over $57 trillion in assets.

BlackRock, State Street and JP Morgan recently made news when they left Climate Action 100+, after it began requiring some consortium members to engage with policymakers and publish details about NetZero 2050 discussions with the companies they invest in.

Yet all three remain in the NetZero Assets Managers Initiative, which does not have these requirements.

Some asset-manager-consortium members have encouraged the Securities and Exchange Commission to take measures to further their climate-change agenda.

In March 2024, the SEC adopted its controversial climate-change rule, which requires firms to discuss climate change in their annual reports and registration statements.

Before that rule, a firm had to report any risk material to its business. If a firm saw climate change as a major cost or benefit, it was supposed to say so.

But if a firm does not see climate change as a major issue, why should it be required to discuss it in its annual report? The new rule says it must.

The SEC is not an environmental regulator. It is supposed to ensure that firms provide accurate disclosures so investors can make informed decisions.

It is not supposed to tell thousands of firms what types of risk each faces, climate or otherwise.

As for climate risks, firms typically don’t provide financial forecasts 75 years into the future.

A report by President Biden’s Council of Economic Advisers examined 12 peer-reviewed studies on the costs of climate change. The consensus estimate was less than 2% of GDP with warming 4.5 degrees Fahrenheit relative to preindustrial levels, about what the United Nations predicts by 2100 under plausible emissions scenarios.

If that is right, the economic effect of climate change will not be that large in our lifetimes and won’t even be noticeable for a long time.

Meanwhile, the cost of climate-mitigation policies could be significant.

Great Britain made NetZero 2050 its official policy. It now has the highest electricity costs in the developed world, five times higher than in the United States.

Higher energy costs lead to higher prices and slower economic growth. American voters seem uninterested in this expensive tradeoff.

Hopefully, fund managers will return to strict adherence to fiduciary duty. Such an approach would reinforce the specialization of labor, which Adam Smith explained so well.

Accountants do your taxes. Dentists clean your teeth. The SEC regulates issues concerned with finance and accounting.

And fund managers should try to get you the best possible financial return.