41 leading asset managers, representing USD$6.8 trillion in assets, have joined the Net Zero Asset Managers initiative. Among other steps, this will see the investors work with clients to reach net zero emissions alignment across their portfolios by 2050 or sooner and set interim 2030 emissions reduction targets. The additional signatories mean a total 128 investors, collectively managing $43 trillion in assets, are now part of the initiative.
The asset managers joining the initiative today include Amundi, Sumitomo Mitsui Trust Asset Management, Franklin Templeton, MFS Investment Management, HSBC Asset Management and the International Business of Federated Hermes among others1. New signatories based in North America and Europe are joined by a marked uptick in the number of Asian managers now part of the initiative.
Launched only in December 2020 in just over six months the Net Zero Asset Managers initiative has seen rapid growth. The latest signatories take the initiative close to representing almost half of the entire asset management sector globally in terms of total funds managed (standing at $100 trillion)2.
Nicolas Moreau, CEO, HSBC Asset Management said: “As the world moves to a net zero carbon future, we are committed to playing our part in addressing climate change, both as a business and as stewards of our clients’ assets. HSBC Asset Management is proud to be part of this important initiative and contribute to an industry-wide push to achieve net zero emissions by 2050.”
Saker Nusseibeh, CBE, CEO, International at Federated Hermes said: “The position that we occupy as the investment management industry is one of unique influence. By way of intelligent and considered stewardship of capital we have the potential to effect genuine and positive change. Conversely, collective inertia risks compounding the crisis we face to an irreversible extent. It is for these reasons that we have a responsibility to make the right choices, to the benefit of our clients, their end beneficiaries and indeed society at large. We are proud to join the Net Zero Asset Managers initiative as a demonstration of our commitment to accelerate the transition to global net zero emissions.”
Valérie Baudson, CEO, Amundi, said: “2021 needs to be the year of climate action for all economic actors. Governments and companies have a collective responsibility to transition to decarbonized economies by adopting ambitious emission reduction targets. We are convinced that the financial sector is a key catalyst for action in this race to Net Zero. Amundi is a pioneer in responsible investing with strong climate convictions and a deep awareness of our responsibility. Therefore, we are proud to embrace global carbon neutrality objectives.”
Jenny Johnson, CEO and President of Franklin Templeton, said: “We are excited to make the commitment to the Net Zero Asset Managers Initiative alongside the growing community of signatories. We approach our journey with the clear acknowledgement that we must commit to finding the data and solutions to help us achieve global net zero emissions by 2050. We will work toward this goal in a spirit of authentic engagement and partnership with our clients and stakeholders, in keeping with our belief that good stewardship as a global asset manager means managing and allocating capital to benefit our clients across generations.”
Yoshio Hishida, Representative Director and President, Sumitomo Mitsui Trust Asset Management, said: “We believe that important issues concerning Environmental, Social, and Governance will affect the long-term return of assets under management entrusted from our customers. In particular, the effects of climate change have certainly begun to materialise and are beginning to have an impact on the corporate value of our investee companies. As one of the largest investment managers in APAC, we believe it is important to evaluate the potential profit opportunities and risks in these investee companies. As such, we are reflecting the evaluation in investment decision processes and leveraging it in business management. The Net Zero Asset Manager’s initiative is consistent with our corporate objectives and we are pleased to announce our commitment.”
With participation more than quadrupling since launch, the initiative already includes the world’s three largest asset managers globally3. Total assets collectively managed by investors as signatories to the initiative ($43 trillion) are now equivalent to the combined GDP of the United States, China and United Kingdom ($42 trillion).
The Net Zero Asset Managers initiative is managed globally by six founding partner investor networks: 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).
Stephanie Pfeifer, CEO, Institutional Investors Group on Climate Change said: “In just six months nearly half of the global asset management sector has committed to achieving net zero emissions with their clients across the funds they manage. This marks a fundamental tipping point across the investment sector and a significant boost in efforts to tackle climate change and decarbonise the global economy. There’s a lot more to achieve, but the sector is increasingly on a path to a net zero future.”
Paul Simpson, Chief Executive Officer of CDP, said: “In a critical year for climate action, it is encouraging to see that nearly half of the global asset management sector has committed to achieving net zero emissions across its portfolios. We look forward to these commitments driving action through the setting of science-based emissions reduction targets, investment activity that is aligned with the Paris Agreement and near-term accountability and disclosure.”
The momentum secured over such a short period of time through investor participation in Net Zero Asset Managers, driven by the investor networks behind the initiative, is serving to normalise and mainstream changes required to drive progress towards net zero emissions. Without the asset management sector working to net zero emissions, the goals set out in the Paris Agreement would be more challenging if not impossible to meet.
Mindy Lubber, Ceres CEO and President, said: “Investors understand the urgency of the climate crisis and asset managers understand their role in mitigating the crisis as well as their fiduciary duty to address systemic climate risks and capture investment opportunities emerging in the economic transition to a net zero emissions future. As we see with 41 additional asset managers joining such that the Net Zero Asset Managers Initiative now represents nearly half of total assets in the global asset management sector, no investor wants to miss out on the opportunities of the global decarbonization underway.”
Fiona Reynolds, CEO, PRI, said: “We are very pleased to welcome this group of signatories to the Net Zero Asset Managers initiative. Commitment from the investment managers – alongside asset owners, banks, insurance companies and governments – to net zero is tremendously important to enable a transition to a low-carbon economy – and to ensure we have the right framework to finance that transition. As we approach COP26, it’s essential that actors across the investment chain alongside governments continue to take net-zero-related actions, and to be held accountable for those commitments through interim and longer-term targets.”
In achieving net zero alignment, the asset managers also commit to prioritise the achievement of real economy emissions reductions, take account of material portfolio Scope 3 emissions, create investment products aligned with net zero emissions and facilitate increased investment in climate solutions. Putting in place a stewardship and engagement strategy consistent with net zero emissions by 2050 and ensuring all policy advocacy supports the same objective, also help ensure the investors are driving broader change.
Signatories also commit to transparent and rigorous accountability. They will annually report progress against the Task Force for Climate-related Financial Disclosures (TCFD) recommendations, including implementing a climate action plan that is consistent with the United Nations ‘Race to Zero’ criteria. They also agree only to use offsets that involve long-term carbon removal where there are no technologically and/or financially viable alternatives to eliminating emissions.
Full details of the steps the investors commit to in joining the initiative can be found here.
Signatories are working to publish details of their individual emission reduction targets in achieving net zero alignment ahead of the COP 26 summit to be held in Glasgow in November later this year.
The initiative is accredited by the United Nations Framework Convention on Climate Change Race to Zero campaign and has an advisory group drawn from representatives from signatory asset managers.