43 additional asset managers are making new, enhanced commitments to support the goal of net zero greenhouse gas emissions by 2050 or sooner, in line with global efforts to limit warming to 1.5°C.

The Net Zero Asset Managers initiative founded by the AIGCC, CDP, Ceres, IGCC, IIGCC and PRI, now has a total 73 global asset manager signatories, representing $32 trillion in assets under management, that is to say,  more than a third (36%) of the total assets under management across the globe. 

“As we approach COP26, the urgent need to transition to a low-carbon economy, and to have the right framework to finance that transition, is incredibly clear. (…) Asset managers play a critical role in this transition, both in the mandates they execute from asset owners, and in their own investment focus.”

Fiona Reynolds, CEO, Principles for Responsible Investment

The breadth of signatories signals the determination of investors to play their part in achieving a net zero and resilient future and the global significance of the Net Zero Asset Managers initiative. Gettting involved in the decarbonization does not necessarily means to do this transiton just by excluding the polluting sectors, but rather by accompaning the compagnies to innovate, transform their process and supply chain, in line with clear low carbon emissions’ targets.

“It is important to differentiate between achieving carbon neutrality in the real world versus a portfolio. Decarbonization in the real world is essential. A portfolio can easily be decarbonized by reducing or eliminating exposure to companies in carbon-intensive sectors such as steel, cement and power generation. In this case, a portfolio’s thermal alignment score would be very good. But we will still need these sectors in 2050, and they themselves need the capital of investors to be able to innovate, to decarbonize, to ensure the transition – and to play an important role in the decarbonization of economies. Therefore, we believe that investing in companies with ambitious and credible decarbonization goals rather than divesting has a greater impact on achieving Net Zero in the real world.

Eva Cairns – Senior analyst ESG Standard Life Aberdeen

To ensure real world progress ahead of 2050, the asset manager signatories have committed to set interim targets for 2030, consistent with a fair share of the 50 % global reduction in greenhouse gases identified by the Intergovernmental  Panel On Climate Change (IPCC) to halt global warming at 1.5°C. Supporting the acceleration of action, signatories will submit an interim target, within a year of joining the initiative, for the proportion of assets to be managed in line with reaching net zero emissions by 2050 or sooner.

Asset managers joining the initiative commit to transparent and rigorous accountability. Signatories will annually report progress against the Task Force for Climate-related Financial Disclosures (TCFD) recommendations, including setting out a climate action plan and submitting this to The Investor Agenda via its partner organisations for review to ensure the approach applied is based on a robust methodology, consistent with the Race to Zero criteria, and action is being taken in line with the commitments.

The Net Zero Asset Managers Commitment

The company specifically commits to :

  1. Work in partnership with asset owner clients on decarbonisation goals, consistent with an ambition to reach net zero emissions by 2050 or sooner across all assets under management
  2. Set an interim target for the proportion of assets to be managed in line with the attainment of net zero emissions by 2050 or sooner
  3. Review interim target at least every five years, with a view to ratcheting up the proportion of AUM covered until 100% of assets are included

Set interim targets for 2030, consistent with a fair share of the 50% global reduction in CO2 identified as a requirement in the IPCC special report on global warming of 1.5°C

  1. Take account of portfolio Scope 1 & 2 emissions and, to the extent possible, material portfolio Scope 3 emissions
  2. Prioritise the achievement of real economy emissions reductions within the sectors and companies in which we invest
  3. If using offsets, invest in long-term carbon removal, where there are no technologically and/or financially viable alternatives to eliminate emissions
  4. As required, create investment products aligned with net zero emissions by 2050 and facilitate increased investment in climate solutions

Across all assets under management

  • Provide asset owner clients with information and analytics on net zero investing and climate risk and opportunity
  • Implement a stewardship and engagement strategy, with a clear escalation and voting policy, that is consistent with the ambition for all assets under management to achieve net zero emissions by 2050 or sooner
  • Engage with actors key to the investment system including credit rating agencies, auditors, stock exchanges, proxy advisers, investment consultants, and data and service providers to ensure that products and services available to investors are consistent with the aim of achieving global net zero emissions by 2050 or sooner
  • Ensure any relevant direct and indirect policy advocacy the signatory undertakes is supportive of achieving global net zero emissions by 2050 or sooner

Accountability

  • Publish TCFD disclosures, including a climate action plan, annually, and submit them to the Investor Agenda via its partner organisations for review to ensure the approach applied is based on a robust methodology, consistent with the UN Race to Zero criteria, and action is being taken in line with the commitments made here

New comers & new achievments

From the new signatories drawn from across the world : Allianz Global Investors, Aviva Investors, BlackRock, Danske Bank Asset Management, Invesco Limited, J Safra Sarasin Sustainable Asset Management, Jupiter Asset Management, La Banque Postale Asset Management, La Financière de l’Echiquier , Lazard Asset Management, Lombard Odier Investment Managers (LOIM), Mirova, NN Investment Partners, Royal London Asset Management, Standard Life Aberdeen, Tikehau Capital, and The Vanguard Group.

The Net Zero Asset Managers initiative is now accredited by the United Nations Framework Convention on Climate Change (UNFCC) Race to Zero campaign, which mobilises a coalition of leading net zero initiatives, joining 120 countries in the largest ever alliance committed to achieving net zero carbon emissions by 2050 at the latest.

Article: Joana Foglia – Source: Net Zero Asset Managers, TCFD, Standard Life Aberdeen