The number of net-zero announcements from companies across all sectors has crept higher in recent months, and this type of news flow is expected to only surge further as we move closer to COP26 in Glasgow this November.
If you take a look at ESG Clarity’s round up of net-zero pledges in April, there are more than 10 within the investment management industry alone. From global banks with asset management arms to advisers, discretionary fund managers and consultants, businesses are aligning their portfolios and processes to reduce greenhouse gas emissions to carbon neutral within a set timeframe – varying from 2030 to 2060 deadlines – in a bid to lower global warming to meet the 1.5 degrees Celsius as outlined in the Paris Agreement.
Although laudable, the commitments come in various shapes and sizes. While some have unveiled detailed roadmaps with objectives, interim targets and investment into tools and resources to monitor progress, others have given little detail on current plans to get there.
As Reclaim Finance’s report shows, signing up to initiatives such as the Net Zero Asset Managers’ Initiative does not mean a manager has comprehensive coal exclusion policies in place, for example.
Investors and asset owners alike will be keeping a close eye on net-zero commitments as COP26 draws closer. We have seen the UN-supported Race to Zero campaign restrict and clarify its criteria just this week to include greater demonstration of how emissions will be halved, greater clarity and specificity around targets and language used, and the introduction of leadership practices on equity and empowerment.
We have written before 2021 will be the year that investors unearth the greenwashers and as investors narrow in on climate commitments in their engagement with investee companies and shareholder votes, those that are not transparent with policies may find themselves exposed.
With the Taskforce for Climate Related Disclosures becoming mandatory in the UK within the next two years, the Sustainable Financial Disclosures Regulation in Europe and further legislation being reviewed, and US policymakers looking to take a similar route in terms of ensuring companies are transparently disclosing climate commitments, the time for genuine action is now. It will become impossible to hide behind vague pledges and lip service.
Natalie Kenway is moderating a panel discussing the key themes in the responsible investment industry including the path to net zero at the Global ESG Summit for the UK, European and Asian audiences.
To find out more and register visit: Global ESG Summit