More than 290 asset managers, representing over $66 trillion in assets under management have joined the Net Zero Asset Managers (NZAM) initiative, committing to transition their investment portfolios over time to be in line with achieving net zero greenhouse gas (GHG) emissions by 2050, according to a new update report released by the group.
New signatories to the initiative announced since the most recent update in May include Northern Trust AM and AllianceBernstein.
The Net Zero Asset Managers initiative launched in December 2020 with a with 30 asset managers representing approximately $9 trillion in assets, committing to support the goal of net zero by 2050 or sooner, in line with global efforts to limit warming to 1.5°C. NZAM forms part of the Glasgow Financial Alliance for Net Zero (GFANZ), and was convened by six Founding Partner investor networks, including 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, IIGCC, said:
“In less than two years the Net Zero Asset Managers initiative has managed to significantly raise the scale of ambition towards net zero across the global asset management industry. Building on the initiative’s positive start, the focus must now be on supporting managers to increase their targets and turning commitments into action with an emphasis on supporting real world emission reductions – without this, the likelihood of limiting temperature rises to no more than 1.5 degrees becomes more distant.”
Signatories to the initiative agree to a series of commitments, including working in partnership with asset owner clients on decarbonization goals, setting 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 reviewing the interim target every five years, with a view to ratcheting up the proportion of AUM covered until 100% of assets are included.
As part of the new update, NZAM revealed that an additional 86 managers have disclosed their initial targets for the proportion of assets managed in line with achieving net zero by 2050, bringing the total to 169 managers with reported targets. Collectively, these asset managers have now committed nearly $22 trillion of their total $55 trillion in AUM to be managed in line with the net zero goal, including 63 managers with pledges covering more than 75% of their assets.
According to NZAM, the commitments announced to date primarily cover listed equity and fixed income, where methodologies for target setting are available. Over time, as methodologies are developed for asset classes such as private equity and infrastructure, these assets are expected to be incorporated into the targets as well.
In order to reach the initiative’s goal to reach 100% of assets aligned with net zero, however, NZAM noted that several factors will have to be addressed, including mandates with clients, regulatory and policy environments, and the development of target setting methodologies.
David Atkin, CEO, Principles for Responsible Investment (PRI), said:
“This latest round of targets, released by NZAM signatories, is a welcome indicator of the ongoing shift to a global net zero financial system. We know that there is still work to be done to assist NZAM signatories in overcoming the systemic barriers to net zero, and we look forward to continuing our important work to this end. But these targets should be welcomed, as a strong indicator of investor ambition, and as a baseline for future progress.”