Net Zero Asset Owner Alliance Raises Ambition for Portfolio Emission Reductions
The Net Zero Asset Owner Alliance (NZAOA), a UN-convened, international alliance of institutional asset owners representing over $10 trillion in assets under management, announced today a series of climate targets for its members, including recommendations to cut portfolio emissions in half by 2030.
The new ambitions form part of the NZAOA’s second edition of its Target Setting Protocol, which aims to guide alliance members in setting science-based targets on their financed emissions in order to enable alignment with IPCC pathways to keep global warming below 1.5°C.
Adding to the initial NZAOA protocol’s goal, launched in October 2020, to reduce portfolio emissions by 25-30% by 2025 on a 2020 basis, the updated guidance introduces a 2030 goal to an absolute portfolio emissions reduction of 49%-65% by 2030.
Guenther Thallinger, Board Member Allianz SE and NZAOA Chair said:
“This advanced guidance will help investors already committed to net-zero to take the urgent shorter-term action that climate science demands.
“Where the first edition of this Protocol focused on 2020 to 2025, today’s ambition towards 2030 stresses the need for powerful, credible and rapid action to achieve a net-zero emissions world. Action is needed now, and every company is challenged to follow the lead of Alliance members and adjust business models, develop plans for the transition to a low-carbon, climate-resilient future, and then implement those plans.”
In addition to the stepped-up emissions reduction ambition, the new protocol expands the list of asset classes covered by the targets, asking members to set targets on infrastructure assets in carbon intensive sectors or over which they have significant influence. The prior protocol covered only equity, publicly traded corporate bonds and real estate assets. The alliance said that it is also working to incorporate sovereign debt into the protocol.
The new protocol sets out a series of expectations for asset managers, including public commitments to align their portfolios to 1.5°C degrees and net-zero by 2050 goals, in addition to guidelines for casting proxy votes.
Additional guidance under the protocols include setting targets for company engagement, and emissions reductions in high-emitting sectors, as well as targets for financing economic activities and climate solutions that contribute substantially to climate mitigation and adaptation.
“This is not the time for complacency. It is certainly not the time to discuss whether 1.5 degrees must be achieved, and interim steps need to be defined. We—every company—needs to act powerfully, credibly and quickly and, not least, together to support governments to achieve a net-zero emissions world.”