On January 14, the Net-Zero Alliance (AOA) group released its Target Setting Protocol, now available in its final version.
The Net-Zero Asset Owner Alliance (AOA), placed under the aegis of the United Nations, designs methodologies that underpin the objective of reducing greenhouse gas emissions.
Based on the latest international climate research, this report is among the most ambitious climate recommendations for investors.
With 33 members today, the AOA intends to continue to develop and promote the adoption of its climate protection standards in the financial sector.
Recognizing the essential role that asset owners have to play, given the wide range of asset classes and sectors in which they invest, as well as their stewardship obligations (or equivalent) towards their members and beneficiaries, requiring asset owners to act in the best interests of beneficiaries with prudence and by demonstrating competence for the pursuit of a comprehensive investment strategy, the Net-Zero Alliance aims to provide its members with access to the approaches and methods that best support and align with the definition of the Alliance’s objectives and commitment.
It also requires asset owners to invest on the basis of credible information, analysis, scenarios and models, and to retain the flexibility to adapt to changing circumstances..
« Asset owners have a unique role to play in today’s fnancial landscape. They have long-term horizons and invest across a wide range of asset classes and sectors. As such, they are acutely vulnerable to the systemic disruptions that climate change will cause in ecosystems, societies and economies.
They also have a key role to play in catalysing decarbonisation of the real economy as well as in boosting climate-resilience and accelerating the energy transition by providing the capital necessary for business transformation. »AOA
The Alliance aims to develop in-depth knowledge and practice of scenarios developed by the Intergovernmental Panel on Climate Change (IPCC), recognizing at this time that these scenarios remain largely inaccessible to non-climate expert portfolio managers seeking to adjust portfolios for the benefit of their beneficiaries.
Given the complex nature of operating property and financial strategies to drive real-world change, and monitoring the impacts of these actions, a four-part goal setting structure is recommended.
To limit global dependence on the atmosphere for carbon removal, it was found that emission reductions for the period 2020 to 2025 should be at least between -16% and -29% (after removing any overlap with 2 ° C emission reduction scenarios for the same period)
The attached report offers 2 calculation formulas for setting targets based on absolute carbon emissions or emissions intensity.
Individually, all Alliance members commit to setting concrete targets for reducing greenhouse gas emissions from their investment portfolios.
This is the case for Allianz who announced that
“by 2025, issues of certain asset classes in the policyholder investment portfolio will have to be reduced by 25% compared to 2019.
In addition to the traditional investment criteria, compatibility with the 1.5 ° C target of the Paris climate agreement will be examined in the future for all stocks and corporate bonds.
In addition, by 2025, total emissions from all real estate in which Allianz invests will follow science-backed paths of 1.5 ° C. “
Over the next five years, Allianz also committed to reducing emissions of climate-damaging gases from its operations by 30% (compared to 2019)
“When it comes to change, we start with ourselves – and then walk others towards carbon neutrality. We are convinced that taking into account the climate and sustainable development will have an impact on our investment strategy “Günther Thallinger, Member of the Board of Allianz SE in charge of Investments and ESG
Artilce: Joana Foglia – Source: UNPRI, AOA, Allianz