More of the world’s largest asset managers announced today that they are joining the Net Zero Asset Managers initiative, a clear sign that the global movement for a net-zero emissions economy is growing stronger and more determined. The 14 new signatories, which collectively manage nearly $5 trillion in assets and include the world’s third largest asset manager State Street Global Advisors, join 73 other signatories in committing to reach net zero greenhouse gas emissions by 2050 or sooner and to set interim targets for 2030.
Launched in December 2020 with 30 signatories, the global initiative has now grown to include 87 signatories with nearly $37 trillion in assets under management, representing nearly 40 percent of the total assets under management across the globe. The number of signatories has nearly tripled and the total assets under management have quadrupled since the launch. The new signatories include: Alquity Investment Management, BankInvest, Colony Capital, Coutts & Co, EcoFin, Insight Investment, Quinbrook Infrastructure Partners, Ridgewood Infrastructure, Russell Investments, Sage Advisory, State Street Global Advisors, Trillium Asset Management, Valo Ventures, and Vert Asset Management.
With State Street Global Advisors announcing its commitment today, the three largest asset managers in the world are now signatories to the initiative. BlackRock and Vanguard announced their participation in March 2021.
Cyrus Taraporevala, President and Chief Executive Officer, State Street Global Advisors, said: “Climate change poses one of the most serious risks to long-term investors and we are pleased to join this important initiative. We are especially keen to leverage our position as one of the world’s largest asset managers to raise awareness of the systemic risks associated with climate change, and to help all stakeholders navigate the difficult choices we face as we effectively manage the transition risks. The goal of net-zero-carbon emissions by 2050 is consistent with our commitment to drive long-term value on behalf of our clients.”
John Kerry, U.S. Special Presidential Envoy for Climate, said: “The largest financial players in the world recognize energy transition represents a vast commercial opportunity as well as a planetary imperative. As countries around the world move to decarbonize, the large sums these institutions are dedicating to climate solutions reflect a growing understanding that the transition to a low-carbon global economy will be critical for their business models. To be credible and effective as market signals, these financial commitments should adhere to clear definitions, metrics, and reporting. Ultimately, the transition to this new economy will create a massive number of new jobs and increase our collective ability to tackle climate change.”
The asset managers commit to set interim targets for 2030, consistent with a fair share of the 50% global reduction in emissions identified as a requirement in the IPCC special report to limit increase in global temperatures to no more than 1.5-degrees Celsius. They will be asked to 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.
Signatories will 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 and ensuring their plans are based on a robust methodology, consistent with the Race to Zero criteria, and action is being taken in line with the commitments.
Abdallah Nauphal, Chief Executive Officer at Insight Investment, said: “Climate change is one of the greatest challenges of our time and we have been encouraged to see governments and businesses grapple with its far-reaching implications by introducing meaningful policy and initiatives ahead of COP26 later this year. We are committed to helping our clients manage the risks of climate change and to transition their portfolios in a manner that can also deliver financial and liability objectives.”
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). In turn, the initiative is endorsed by The Investor Agenda, of which the investor networks are all founding partners, along with the United Nations Environment Programme Finance Initiative (UNEP FI).
Mindy Lubber, Ceres CEO and President, said: “The accelerating growth of the Net Zero Asset Managers initiative signals a great awakening in the finance sector. The largest financial leaders in the world are increasingly embracing the inescapable reality that climate change is a systemic risk. We know investments impact climate change just as climate change impacts investments. That’s why we welcome this new wave of commitments from the largest asset managers in the world — all of whom are joining this ambitious movement of real action in the U.S. and around the globe.”
The Net Zero Asset Managers initiative is accredited by the United Nations Framework Convention on Climate Change (UNFCCC) Race to Zero campaign.
The initiative has an advisory group drawn from representatives from signatory asset managers. Members include: Takeo Omori, Asset Management One; Corinna Orbach, DWS; Edward Mason, Generation; Chris Newton, IFM Investors; Catherine Ogden, LGIM; and Wendy Cromwell, Wellington Management. The advisory group provides recommendations to the initiative’s Steering Committee with regard to governance and operations and serves as champions for its work.
Paul Robinson, Founder, Alquity Investment Management, said: “At Alquity, we have always believed that how we deploy our capital shapes our societies. Asset managers are a critical component in ensuring the reversal of climate change – nothing happens without capital, therefore the decisions we make will be determinant in the survival of the planet as we know it. We need all asset managers to ensure that our capital is aligned with reversing the impacts of climate change. It is possible for us, and the businesses we invest in, to use our skills, innovation and determination to build a sustainable future. We also believe this transition must be just and fair, creating a more equitable and sustainable economy for all.”
Peter Flavel, CEO, Coutts & Co, said: “Climate change is one of the biggest challenges we face and it represents a serious material risk for our clients, society and planet. We recognise the important role the asset management industry plays in addressing climate change and are proud to join the Net Zero Asset Managers initiative to accelerate industry action on climate. We have already incorporated climate into our Purpose, and are committed to further embed our net zero ambitions into our asset allocation decisions and stewardship activity.”
Bob Smith, President and CIO of Sage Advisory, said: “What we do in the next decade to limit emissions will be critical to the future, which is why every country, sector, industry, and each one of us must work together to find ways to cut the carbon we produce. Sage is committed to this initiative and looks forward to partnering with other like-minded organizations in our effort to achieve global net zero emissions.”
Matt Patsky, CEO, Trillium Asset Management, said: “With this commitment, we are adding our voice to an important initiative which recognizes that the world is out of time. We believe that investing in companies that are mired in outdated ways of thinking, ignoring both climate risks and the opportunities of transition, exposes portfolios to unnecessary, material risks. And, as long-term, sustainability-oriented investors, we recognize that investor capital, such as we are entrusted to invest on behalf of our clients, needs to reward companies making the transition from the old world to the new, and avoid those that aren’t. Our climate demands it, and our clients deserve it.”