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12.11.2020
From The Markets

Asset Managers Launch Net Zero Initiative

12.11.2020
Asset Managers Launch Net Zero Initiative

Asset managers representing over $9 trillion of assets under management (AUM) today announced the launch of the Net Zero Asset Managers initiative. This is a leading group of global asset managers that commit to support the goal of net zero greenhouse gas emissions by 2050 or sooner, in line with global efforts to limit warming to 1.5°C. They also commit to support investing aligned with net zero emissions by 2050 or sooner. Delivery of the commitment also includes prioritising the achievement of real economy emissions reductions within the sectors and companies in which the asset managers invest.

As part of the initiative, asset manager signatories have committed to:

  • Work in partnership with asset owner clients on decarbonisation goals, consistent with an ambition to reach net zero emissions by 2050 or sooner across all assets under management;
  • Set 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
  • Review their interim target at least every five years, with a view to ratcheting up the proportion of AUM covered until 100% of assets are included.

The commitment in turn recognises “an urgent need to accelerate the transition towards global net zero emissions and for asset managers to play our part to help deliver the goals of the Paris Agreement and ensure a just transition.”

Drawn from across the world, the initial 30 Net Zero Asset Managers signatories are: a.s.r. Asset Management, Anaxis Asset Management, Arisaig Partners, Asset Management One, ATLAS Infrastructure Partners, AXA Investment Managers, BMO Global Asset Management2, Calvert Research and Management, CCLA Investment Management, Clean Energy Ventures, DWS, FAMA Investimentos, Fidelity International, Generation Investment Management LLP, Gulf International Bank Asset Management, Handelsbanken Fonder AB, IFM Investors, Inherent Group LP, Kempen Capital Management, Legal & General Investment Management, M&G plc, New Forests Pty Ltc, Nordea Asset Management, Robeco, Sarasin & Partners LLP, Schroders, Swedbank Robur, UBS Asset Management, Wellington Management and WHEB.

Further commitments from other leading names in the sector are expected over coming months.

David Blood, Senior Partner, Generation Investment Management:“The Net Zero Asset Managers initiative represents a significant moment on the road to addressing the climate crisis. The transition to net zero will be the biggest transformation in economic history and we want to send a clear signal that there is simply no more time to waste. The opportunities to allocate capital to this transition over the coming years cannot be underestimated. Without the asset management industry on board, the goals set out in the Paris Agreement will be difficult to meet.”

Anne Richards, CEO, Fidelity International: “At Fidelity International, we recognise that climate change poses one of, if not the most, significant risks to the long-term profitability and sustainability of companies, including our own. Following our commitment earlier this year to reduce our operational carbon emissions to net zero by 2040 and the publication of our first TCFD report this week, we are pleased to join the Net Zero Asset Managers initiative, working together with our peers to support and accelerate the transition towards global net zero emissions.”

Michelle Scrimgeour, Chief Executive Officer, Legal & General Investment Management and member of UK Government’s COP26 Business Leaders Group: “By signing up to the Net Zero Asset Managers initiative LGIM is committing – in partnership and on behalf of our clients – to invest in alignment with the net zero emissions framework by 2050 or sooner. Our responsible investment strategies are already channelling capital towards low carbon solutions, we are accelerating our efforts to help our clients set and meet decarbonisation goals for their portfolios and investing in many of the world’s largest companies we continue to hold them to account. Delivering on this ambition requires substantial change across the global economy and LGIM will be at the heart of these efforts.”

Asoka Woehrmann, CEO, DWS: “These times call for leaders. The asset management industry plays a fundamental role in leading the way towards a net zero carbon economy and society. While DWS was an early mover in responsible investments, now is the time to take another bold step. We are committed to transparency and targets to progress the era of sustainability.”

Gilbert Van Hassel, CEO, Robeco: “It is clear from scientific reports about climate change and carbon emissions that society has to act now. We cannot solve big problems such as climate change and the rapid decline of biodiversity on our own. But what we can do is set a clear example for the broader industry, work together and encourage other financial institutions such as asset managers to follow suit. We have set this ambition with the conviction that investing is not only about creating wealth but also about contributing to well-being.”

The launch of the Net Zero Asset Managers initiative comes ahead of the five-year anniversary of the Paris Agreement Saturday 12th December. A key ‘Climate Ambition Summit 2020’ event, co-hosted by the UK COP26 Presidency, the UN and France will mark the occasion and contribute to further climate action on the run up to next year’s COP26 climate conference3.

The Net Zero Asset Managers initiative will be managed globally by six Founding Partner investor networks, namely: 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

Stephanie Pfeifer, CEO, Institutional Investors Group on Climate Change and Founding Partner of the initiative: “We talk a lot of tipping points in our sector, but 30 of the world’s leading asset managers with assets under management of over $9 trillion committing to the goal of net zero by 2050 really can help tip the balance in favour of the global economic transition to net zero. This is action – not simply words.”

“The scale and significance of the asset managers joining the Net Zero Asset Managers initiative sends a clear signal to the wider sector that the financial firepower of institutional investors will be committed to making real progress towards a net zero and resilient future. As we reach the fifth anniversary of the Paris agreement, we extend an open invitation to all asset managers to join us in the commitment, collaboration and cohesion that will drive forward this initiative and the net zero transition.”

To fulfil the requirements established by the initiative, signatories have also made a further nine commitments, including:

  • Set interim targets for 2030, for assets to be managed in line with the net zero goal, consistent with a fair share of the 50% global reduction in CO2 identified as a requirement in the Intergovernmental Panel on Climate Change (IPCC) special report on global warming of 1.5°C.
  • Take account of portfolio Scope 1 and 2 emissions and, to the extent possible, material portfolio Scope 3 emissions;
  • Implement a stewardship and engagement strategy, with a clear escalation and voting policy, that is consistent with the ambition for all assets under management to achieve net zero emissions by 2050 or sooner; and
  • As required, create investment products aligned with net zero emissions by 2050 and facilitating increased investment in climate solutions

In demonstrating delivery against the Net Zero Asset Managers initiative commitment, signatories will also submit disclosures in line with the Task Force on Climate-related Disclosures recommendations and climate action plans through The Investor Agenda investor networks for review. This process will ensure the approach applied is based on a robust methodology, consistent with the United Nations Race to Zero criteria and that action is being taken in line with the commitment statement.

Building on strong global representation at launch, the initiative will continue to expand over the coming months. The initiative is also set to join the ‘Race to Zero’, the UNFCCC-led global campaign that brings together net zero commitments from a range of leading networks and initiatives across the climate action community4.

Further supporting comment

I) Signatory CEO comment:

Akira Sugano, President and Chief Executive Officer, Asset Management One:“Tackling the climate challenges is a global effort that requires commitment and collaboration. At Asset Management One we believe that asset managers have a key role to play within the investment chain towards achieving the goals of the Paris Agreement.”

“As a responsible long-term investor, we have been actively engaging with investee companies on accelerating climate strategies and business model transformation towards a low-carbon economy. Through joining Net Zero Asset Managers and working closely with our clients and stakeholders around the world, we are committing to our net zero ambitions and a sustainable future for our planet.”

Suni Harford, President, UBS Asset Management: “Investors have the power to effect real change and we are seeing an increasingly strong appetite to direct capital towards a lower-carbon future. Joining the Net Zero Asset Managers initiative as a founding member represents a further exciting step for UBS Asset Management and reflects the commitment we made at the start of 2020 to support our clients in achieving their own decarbonization goals. This includes developing the innovative products and solutions that our clients need, such as our newly-expanded suite of Climate Aware strategies.”

Marco Morelli, Executive Chairman, AXA Investment Managers: “There is now an urgent need to accelerate the transition towards global net zero emissions and as such, the fight against climate change requires cooperation. The financial services industry must be at the forefront to drive this collective action. As long-term stewards of the investments entrusted to them, asset managers have the ability to contribute to achieving the Paris Agreement and can play a pivotal role in tackling these challenges, which we know are also key concerns for our clients.”

“We made strong commitments to the climate journey several years ago with the decision to divest from coal in 2016 and continued to progress with the work we conducted on the warming potential of our assets. Being among the first asset managers committing to reach net zero greenhouse gas emissions by 2050 across all our assets under management is another major milestone of our responsible investment approach, that complements the commitment made by the AXA Group one year ago.”

Kristi Mitchem, CEO, BMO Global Asset Management:“Asset managers have a unique and critical role to play in the transition to global net zero emissions. We look forward to building partnerships both with our asset owner clients, and with the companies we invest in, to move together on the journey to making this a long-term shared goal.”

Peter Harrison, Group Chief Executive, Schroders: “Climate change is one of the most pressing long-term issues that we face, and one that I expect to come further into focus as a Covid-19 vaccine becomes available. Given the non-linear nature of the challenge ahead of us, early action is particularly valuable. Companies have a fundamental responsibility and imperative to act quickly to reduce their impact on the planet and re-orient towards a decarbonised economy.”

“I’m incredibly optimistic about the power of finance to address the issues that we are currently faced with, and the importance of doing so amid the structural changes climate change demands. As an active asset manager who invests across the public and private markets spectrum globally, we have an important role to play in encouraging companies to plan for and execute on the transition towards net zero carbon emissions and limit climate change. This is why the Net Zero Asset Manager initiative is important to us – it supports us in partnering with our clients and the companies that we invest in to drive towards a more sustainable future for all, and encourages our peers and the wider industry to do the same.”

John Foley, Chief Executive of M&G plc: “We must act now on climate change and M&G is determined to play its part in helping to fix our planet. As stewards of the long-term savings of more than five million people, we aim to invest sustainably, including helping to finance the transition to a low carbon economy. And as an international company of scale, we can lead by example. That’s why we have pledged our support to COP26 and the Net Zero Asset Managers initiative, and we will ensure that our own operations will be carbon net zero by 2030 at the latest.”

Rebecca Lewis, Managing Partner, Arisaig Partners: “The formation of the Net Zero Asset Managers initiative is a pivotal moment in aligning the expectations and objectives of long-term investors in playing our role in the equitable transition to a low-carbon economy that our clients, their beneficiaries and the world at large desperately needs. This global shift to decarbonise will ultimately define the success of our investments over the coming decades. We are therefore delighted to be a part of this important initiative and look forward to implementing the outlined commitments across all of our emerging market portfolios.”

David Neal, Chief Executive, IFM Investors: “We believe it is in the financial interests of our investors and their members and beneficiaries that we have a plan to address the risks of climate change. Targeting net zero by 2050 is a natural step for us and a necessary one to help ensure we keep delivering on our purpose to protect and grow the retirement savings of working people.”

Magdalena Wahlqvist Alveskog, CEO, Handelsbanken Fonder: “Allow me to quote Greta Thunberg: ‘The bigger your platform, the bigger your responsibility.’ Our commitment to Net Zero Asset Manager’s initiative is not just a commercial response to our customers’ expectations. We see the partnership as a crucial aspect of our long-term endeavour to be part of the solution – and our responsibility as a leading Swedish fund manager. We can only achieve this goal together – through an even greater exchange of knowledge and experience, and an even stronger commitment.”

Nils Bolmstrand, CEO, Nordea Asset Management: “Nordea Asset Management is very happy to be a founding member of this important group, which will be natural counterpart to the Net Zero Asset Owner’s initiative, and will help support the asset management industry in its necessary move towards full Paris compliance. The targets of the NZAM align fully with NZAM’s internal climate targets, and we expect to see further development along these lines in the coming years.”

Peter Hugh Smith, Chief Executive, CCLA: “Climate change is an existential crisis facing our planet, and our role in helping our clients addressing this crisis is vital. At CCLA, we have always had a clear focus on the long-term viability of the investments we make for clients, including a strong climate investment policy and stewardship approach.”

“By signing the Net Zero Asset Managers commitment, we enhance this approach further still, with specific actions to use our role as investors to reduce CO2 emissions from within our portfolio and further integrate climate risks and opportunities into our investments. By reducing the emissions of our portfolios, it helps our clients meet current and potential future regulatory requirements and dramatically reduces the hazard posed by stranded assets in the fossil fuels sector and is an important risk control for investors.”

Katherine Garrett-Cox, CEO of GIB Asset Management: “On behalf of GIB Asset Management, I am delighted to be a founding signatory to the Net Zero Asset Managers initiative. During my time at Aviva, we were founding signatories to the Principles for Responsible Investment, and saw first-hand how positive impact could be embedded into clients’ portfolios leading to outperformance of their investments.  Nearly fifteen years have passed, and our great hope today is that a similar initiative focused on net zero will support a much-needed shift towards climate-friendly investments, for the benefit of future generations as well as the planet.”

David Brand, CEO, New Forests:“Net Zero Asset Managers is a critical step in delivering on the need for investment products, services, and disclosures that are necessary for global decarbonization. As managers in the forestry asset class, New Forests understands the world’s forests and nature have an increasing role to play in the decarbonization process. We will need to increase the capital allocated to sustainable forestry, reforestation, and conservation tenfold over the next decade if we are going to scale natural climate solutions and the transition to a circular bio-economy—two pillars of the sustainability transition. We look forward to working with our asset manager peers and clients on this shared journey to net zero.”

George Latham, Managing Partner, WHEB Asset Management: “Achieving net zero emissions by 2050 is both a major challenge but a tremendous opportunity for the global economy. WHEB is wholly focused on investing in solutions to critical sustainability issues including climate change. We are fully committed to playing our role in achieving these net zero emission goals.”

Fabio Alperowitch, CEO and Founder, FAMA Investimentos: “Asset managers are key players in achieving a future scenario of zero net emissions. Investment decisions, engagement practices and voting power must be consistent with limiting the increase in global temperature to no more than 1.5 ºC. Companies that take early action will be recognized by customers, investors, employees and other stakeholders. As a Brazilian Asset Manager we strongly believe that these efforts include the protection and preservation of the Amazon Rainforest as a fundamental resource for tackling climate change, the preservation of its biodiversity and the socioeconomic development of the nearest regions. Joining this initiative is an imperative for us and, at the same time, natural.”

Tony Davis, CEO & CIO, Inherent Group: “Inherent Group is pleased to join this critical initiative. Asset managers need to decarbonize their operations and their portfolios in order for society to meet the goals of the Paris Agreement. As a firm, we offset our carbon footprint and seek investments aligned with net zero emissions by 2050 or sooner. We encourage others to do so as well.”

Founding Partner comment:

Rebecca Mikula-Wright, Executive Director, Asia Investor Group on Climate Change:“Asian asset managers are receiving increasing demands from their clients to manage the climate risks associated with their investments and will need to respond with clear commitments to remain competitive in global markets. This new initiative is a practical demonstration of a managers’ commitment to managing climate risk and it is welcome to see Asset Management One become a founding signatory, as Asian asset managers will play a critical role in supporting the transition to net-zero economies.”

Paul Simpson, CDP, CEO: “Over the past 20 years, CDP has empowered asset managers with consistent, comparable and TCFD-aligned corporate environmental data that lies at the heart of good investment decisions.”

“Today, we are proud to extend our partnership with the global asset management community by supporting the launch of the Net Zero Asset Managers initiative. Asset managers play a critical role in directing capital flows to support the transition to a net-zero carbon economy and the commitment to decarbonize their portfolios, represents another important step towards limiting global warming to 1.5°C.”

Mindy Lubber, CEO and President, Ceres: “The transition to a net-zero emissions economy will be one of the biggest investment opportunities of the 21st Century. Asset managers around the world have a critical role to play in the transition that is already well underway, and today they have sent a powerful signal to global markets and across the broader investment community. We look forward to working with them every step of the way to becoming ‘net-zero’ asset managers, and welcoming other asset managers to our initiative in the coming months.”

Emma Herd, Chief Executive Officer, Investor Group on Climate Change: “Asset managers face a specific and complicated set of issues in shifting to net zero emissions by 2050 or sooner. This new global commitment offers an important pathway to help managers navigate this transition, while continuing to generate benefits for their clients. We look forward to working with Australian and New Zealand managers to implement a roadmap to net zero.”

Fiona Reynolds, CEO, PRI: “The founding signatories of the Net Zero Asset Managers initiative are moving from ambition to commitment to align their portfolios with net zero by 2050. To realise the goals of the Paris Agreement, it’s critical that we see commitments from actors across the investment chain alongside governments and other stakeholders. In addition to the mandate asset managers receive from asset owners, their clients are increasingly demanding they invest sustainably, and we look forward to increasing recognition of this demand as more asset managers join this initiative.”

Additional:

Eric Usher, Head, UNEP Finance Initiative: “UNEP FI welcomes this initiative from asset managers around the world as the next piece in the ‘net-zero jigsaw puzzle’. Along with the Net-Zero Asset Owner Alliance – co-convened by UNEP FI and the PRI – institutional investors along the full value chain are now taking the pole position in the Earth’s critical transition to the 1.5 °C Paris pathway.”

Source: Net Zero Asset Managers

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