UN-backed Net Zero Asset Owner Alliance argues 'capitalism needs to become more sustainable' as group sets out plans to slash emissions from investment portfolios and step up engagement with carbon intensive sectors
More than 30 of the world's largest investors have committed to setting and reporting on short-term emissions targets for 2025 designed to put them on track to deliver net zero emissions portfolios by mid-century, it was announced today.
The Net Zero Asset Owner Alliance, a UN-convened group launched in 2019 bringing together asset owners boasting $5.1tr of assets worldwide, today published a set of membership guidelines for setting, measuring, and reporting on near-term decarbonisation goals, following a two month consultation.
Members of the Alliance include some of the world's largest institutional investors, such as Allianz, Aviva, AXA, SwissRe, CalPERS, Zurich, the Church of England, and Generali Group, all of which are aiming to deliver net zero emission investment portfolios by 2050 and have agreed to set interim climate science-based emissions goals for 2025.
Today, individual members of the Alliance have begun to publish their own 2025 targets in line with the newly-agreed guidelines, all of which fall within a range of a 16 to 29 per cent reduction in emissions from a 2019 baseline.
They also include goals to increase engagement with high carbon companies, reduce the overall emissions intensity of 'priority sectors' in their portfolios, and ramp up financing for climate-positive investments such as renewables, green buildings, sustainable finance, and green hydrogen infrastructure, among other areas.
Günther Thallinger, Alliance chair and member of the board of management at Allianz SE, said the publication of the guidelines and 2025 goals from members had now "set the net zero implementation ball rolling", and he called on other investors and firms worldwide to follow suit with their own "rigorous, science-based and accountable targets."
"We, the Alliance members, start out by truly changing ourselves today and then work with other companies to achieve change," he said. "Business needs to become sustainable, actually capitalism needs to become sustainable. By changing investment decision-making and including climate neutrality as a shorter-term objective, asset owners are making a big contribution."
The target-setting guidelines - dubbed the Inaugural 2025 Target Setting Protocol - have been developed by Alliance members in partnership with the UN Environment Programme, the Principles for Responsible Investment (PRI), and environmental groups WWF and Global Optimism.
The Protocol covers multiple asset classes, including those in hard-to-abate sectors of the economy, with targets structured across four 'pillars': engagement, portfolio decarbonisation targets, sectoral targets, and climate positive investments.
It follows calls from Alliance members in November for a cancellation of all new thermal coal projects and unabated coal-fired electricity generation worldwide, as well as a cessation of the financing and development of new thermal coal power plants.
Writing in the foreword of the Protocol, former UNFCCC Executive Secretary and founding partner of Global Optimism Christiana Figueres hailed the move from major investors to strengthen their short term targets and accountability.
"Issuing transparent, rigorous and realistic targets, and then committing to report against them in the next four years, is at once an extraordinary - and also essential - demonstration of ambition by private sector leaders who exist at the pinnacle of our financial systems," she said.