The sustainability nonprofit Ceres and investor networks from Asia, Australia and Europe are joining forces in a new international initiative to persuade asset owners and asset managers to commit to transition their investments to achieve net-zero portfolio greenhouse gas emissions by 2050 or sooner, and help investors achieve interim portfolio emissions reduction targets by 2030 or earlier.
Through the Paris Aligned Investment Initiative, the networks are releasing a Net Zero Asset Owners Commitment for asset owners to commit to 10 specific actions to achieve Paris-aligned portfolios, including setting an interim portfolio emissions reduction target by 2030 or sooner. The groups are also publishing a Net Zero Investment Framework to assist both asset owners and managers in using rigorous methodology to align their investments with a net-zero future. As of today, the Paris Aligned Investment Initiative involves 110 investors worldwide representing $33 trillion in assets in management. 22 of these investors representing $1.2 trillion in assets are signatories to the Net Zero Asset Owners Commitment. The Net Zero Investment Framework is being put to practical use by 33 major investors managing a combined $8.5 trillion in assets.
Signatories to the Paris Aligned Investment Initiative’s Net Zero Asset Owners Commitment must commit to 10 actions, including:
- Transitioning our investments to achieve net-zero portfolio GHG emissions by 2050, or sooner;
- Setting an interim target for 2030 or sooner for reducing Scope 1, 2 and 3 emissions associated with our portfolios and setting a target for increasing investment in climate solutions;
- Ensuring any direct and collective policy advocacy we undertake supports policy and regulation relevant for achieving global net-zero emissions by 2050 or sooner;
- Disclosing objectives and targets, and publishing a clear Investor Climate Action Plan for achieving these goals as soon as possible, no later than one year from making this commitment, and reviewing and updating targets every five years or sooner;
- Reporting annually on the strategy and actions implemented and progress towards achieving objectives and targets, and in line with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.
The New York State Common Retirement Fund –– the third largest U.S. public pension fund with assets of approximately $248 billion –– is one of the largest investors involved in the Paris Aligned Investment Initiative. Thomas P. DiNapoli, sole fiduciary of the New York State Common Retirement Fund, said, “Climate change poses significant risks and opportunities for the New York State Common Retirement Fund, the markets, and the economy as a whole. At the same time, it is becoming clear that efforts to comply with the Paris Agreement are on the rise by countries and companies alike. The actions listed in the Net Zero Asset Owners Commitment provide examples of the sort of forward-thinking ideas investors can use to protect the long-term value of their investments. We have put the Fund in a strong position for a net-zero future and strongly encourage others to do the same.”
While investors around the world are subject to a variety of different investment frameworks and regulations, the actions outlined in Net Zero Asset Owners Commitment serve as guideposts for what investors can seek to achieve within the boundaries of their fiduciary obligations. Alignment with a net-zero world can be a significant tool for investors to protect their funds from the risks posed by climate change. Investors are committing not only to address climate risks to their portfolios, but also to pursue investment opportunities in the global transition to net zero emissions.
“The global shift to net-zero emissions is one of the biggest investment opportunities of the 21st century,” said Mindy Lubber, CEO and president of Ceres. “Global emissions need to reach net zero by 2050 or sooner to limit the systemic and financial risks of the climate crisis. Asset owners and managers everywhere must align their investments with net-zero emissions by 2050 or sooner, with interim portfolio emissions reduction targets for 2030 or earlier. The Net Zero Investment Framework enables investors worldwide to implement the actions needed to transition their investments to net zero.”
The investor networks behind the scaling of the Paris Aligned Investment Initiative are: Asia Investor Group on Climate Change (AIGCC) in Asia, Ceres in North America, Institutional Investor Group on Climate Change (IIGCC) in Europe, and Investor Group on Climate Change (IGCC) in Australia and New Zealand. The launch comes just months after 30 asset managers representing $9 trillion made a similar net-zero commitment through the Net Zero Asset Managers initiative.
“This Paris Aligned Investor Initiative will help investors work together on setting targets and taking actions necessary to manage climate risks and to capture the opportunities of the global transition to a net-zero emissions economy,” said Kirsten Spalding, senior program director of the Ceres Investor Network. “We expect all investors to step up action to tackle the climate crisis, and we are providing the strong framework, peer support and methodologies they need to do so.”