Editor’s note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our s each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro . If you thought a tepid performance in the midterms might give Republicans pause before taking on Wall Street over “woke” investment strategies , think again. Senate Banking Republicans on Tuesday released a 20–page blueprint for lawmakers eager to wage war against BlackRock, Vanguard and State Street over how financial behemoths have cajoled corporate America into adopting policies that reduce greenhouse gas emissions, identify gender and race-based pay disparities and encourage board diversity and racial equity. “Regardless of whether these changes are ultimately good or bad, these campaigns are inconsistent with a passive investment strategy,” Republican staff wrote in their report , which recommends investigations, new financial reporting standards and changes to shareholder voting practices to bring the multitrillion-dollar investment firms to heel, per our Declan Harty. Of course, now that the GOP squandered its chance at a majority in the upper house, Senate Republicans won’t have much opportunity to follow through on any of this. Any pain inflicted on BlackRock, Vanguard or State Street will have to come from House Financial Services, where likely Chair Patrick McHenry (R-N.C.) faces pressure from populist Republicans to grill financiers who’ve prioritized environmental, social and governance issues. But while Wall Street’s bound to catch flak from congressional Republicans over any hint at progressivism, there’s also very real pressure outside the Beltway to make companies cleaner, more inclusive and sustainable. “The market is clearly speaking,” Ceres managing director Steven Rothstein, whose sustainability nonprofit counts JPMorgan Chase and Bank of America as members, told MM over coffee on Tuesday morning. (Not for nothing, most voters want the GOP to lay off the harangues against ESG ). Natural disasters have caused at least $115 billion in insured damages this year, he said. Global supply chains are increasingly snarled by storms and fires. Premature deaths in Europe attributed to poor air quality are counted in the tens of thousands . There are obvious financial consequences to all of that. So while state leaders and lawmakers can fire off resolutions and send letters attacking sustainability policies, corporate America is already on its way toward reducing emissions and pivoting to renewable energy, he said. A key caveat to all this is that the path forward for those companies could also contain very real market challenges as well. The investment research firm MSCI published a report warning that geopolitical instability and persistent inflation might “limit near-term pressure to reduce global greenhouse-gas emissions … as governments prioritize energy security and affordability .” JPMorgan CEO Jamie Dimon made a similar point on CNBC. “If the lesson was learned from Ukraine, we need cheap, reliable, safe, secure energy, of which 80% comes from oil and gas. And that number’s going to be very high for 10 or 20 years,” Dimon said . While leaders should focus on renewables as well, the ready availability of natural gas and oil “has the virtue of reducing CO2, because … poorer nations and richer nations are turning back on their coal plants.” IT’S WEDNESDAY — And your music recommendations were greatly appreciated. Please send tips to ssutton@politico.com and zwarmbrodt@politico.com .
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