The Investor Agenda endorses a major new asset manager initiative

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The Investor Agenda endorses a major new asset manager initiative

Launched on December 12, for the five-year anniversary of the Paris Agreement, the Net Zero Asset Managers initiative is a group of international asset managers that are acting on the urgent need to accelerate the transition towards a global net zero emissions future.

30 founding investor signatories – managing over US$9 trillion of assets – will work in collaboration with clients to achieve target-based net zero goals by 2050 or sooner.

In line with the best available science on the impacts of climate change, the signatories commit to helping deliver the goals of the Paris Agreement and contribute to the transition to a net zero future.

The commitment requires signatories 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 (‘AUM’);
  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; and
  3. Review their interim target at least every five years, with a view to ratcheting up the proportion of AUM covered until 100% of assets are included.

Specifically aimed at asset managers getting to net zero, this new initiative is intended to mobilise action within the industry, and provide a forum to share best practice and overcome barriers to aligning investments with this goal.

The initiative is also set to join ‘Race to Zero’, the UNFCCC-led global campaign that brings together the net zero commitments from a range of leading networks and initiatives across the climate action community.

The Net Zero Asset Managers initiative will be managed globally by six Founding Partner investor networks, namely: Asia Investor Group on Climate Change (AIGCC), CDP, Ceres, Investor Group on Climate Change (IGCC), Institutional Investors Group on Climate Change (IIGCC) and Principles for Responsible Investment (PRI). In turn, the initiative is endorsed by The Investor Agenda, of which the investor networks are all founding partners, along with UNEP FI.

While many investors have recognised the urgent need to accelerate the transition towards global net zero emissions, this initiative represents a step change as signatories will also have to report on their actions and update their targets regularly bringing transparency and accountability to this action.

On the road to COP26, signatories to the Net Zero Asset Managers initiative will work with their clients (asset owners) and determine the proportion of assets to be managed in line with net zero goals. They will set 2030 targets for these assets and undertake the actions set out in the commitment, including policy advocacy and corporate engagement to support the delivery of net zero goals.

The initiative will continue to expand and additional signatories are welcomed to join over the coming months.

“The scale and significance of the asset managers joining the Net Zero Asset Managers initiative sends a clear signal to the wider sector that the financial firepower of institutional investors will be committed to making real progress towards a net zero and resilient future” said Stephanie Pfeifer, CEO, Institutional Investors Group on Climate Change and a member of the global steering committee of The Investor Agenda. “We extend an open invitation to all asset managers to join us in the commitment, collaboration and cohesion that will drive forward this initiative and the net zero transition.”

“The transition to a net-zero emissions economy will be one of the biggest investment opportunities of the 21st Century” said Mindy Lubber, CEO and President, Ceres and a member of the global steering committee of the Investor Agenda. “Asset managers around the world have a critical role to play in the transition that is already well underway, and today they have sent a powerful signal to global markets and across the broader investment community. We look forward to working with them every step of the way to becoming ‘net-zero’ asset managers, and welcoming other asset managers to our initiative in the coming months.”

“Asian asset managers are receiving increasing demands from their clients to manage the climate risks associated with their investments and will need to respond with clear commitments to remain competitive in global markets” said Rebecca Mikula-Wright, Executive Director, Asia Investor Group on Climate Change and a member of the global steering committee of the Investor Agenda. “This new initiative is a practical demonstration of a managers’ commitment to managing climate risk and it is welcome to see Asset Management One become a founding signatory, as Asian asset managers will play a critical role in supporting the transition to net-zero economies.”

“Asset managers face a specific and complicated set of issues in shifting to net zero emissions by 2050 or sooner” said Emma Herd, Chief Executive Officer, Investor Group on Climate Change and a member of the global steering committee of the Investor Agenda. “This new global commitment offers an important pathway to help managers navigate this transition, while continuing to generate benefits for their clients. We look forward to working with Australian and New Zealand managers to implement a roadmap to net zero.”

“The founding signatories of the Net Zero Asset Managers initiative are moving from ambition to commitment to align their portfolios with net zero by 2050” said Fiona Reynolds, CEO, PRI and a member of the global steering committee of the Investor Agenda. “To realise the goals of the Paris Agreement, it’s critical that we see commitments from actors across the investment chain alongside governments and other stakeholders. In addition to the mandate asset managers receive from asset owners, their clients are increasingly demanding they invest sustainably, and we look forward to increasing recognition of this demand as more asset managers join this initiative.”

“Over the past 20 years, CDP has empowered asset managers with consistent, comparable and TCFD-aligned corporate environmental data that lies at the heart of good investment decisions’’ said Paul Simpson, CDP, CEO and a member of the global steering committee of the Investor Agenda. “Today, we are proud to extend our partnership with the global asset management community by supporting the launch of the Net Zero Asset Managers initiative. Asset managers play a critical role in directing capital flows to support the transition to a net-zero carbon economy and the commitment to decarbonize their portfolios, represents another important step towards limiting global warming to 1.5°C.’’

“UNEP FI welcomes this initiative from asset managers around the world as the next piece in the ‘net-zero jigsaw puzzle’” said Eric Usher, Head, UNEP Finance Initiative and a member of the global steering committee of the Investor Agenda. “Along with the Net-Zero Asset Owner Alliance – co-convened by UNEP FI and the PRI – institutional investors along the full value chain are now taking the pole position in the Earth’s critical transition to the 1.5 °C Paris pathway.”

For further information or to become a signatory, please visit www.netzeroassetmanagers.org