Asset managers representing $9trn of assets under management (AUM) have signed the newly created Net Zero Asset Managers initiative to support global efforts in reducing greenhouse gas emissions.
Coinciding with the fifth anniversary of the Paris Climate Agreement (on 12 December), Fidelity International, AXA Investment Managers, Legal & General Investment Management, Schroders, BMO Global Asset Management, DWS and Robeco are among the 30 founding signatories for the new initiative, put in place by six investor networks including the Institutional Investors Group on Climate Change (IIGCC).
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The asset managers have committed to supporting the goal of net zero greenhouse gas emissions by 2050 or sooner, in line with efforts to limit global warming to 1.5°C, by working with asset owners to set their own decarbonisation goals, setting targets for proportions of AUM to be aligned with net zero emissions – and reviewing these targets, put in place engagement strategies to ensure voting policies are consistent with net zero ambitions and create investment solutions that will focus on climate change mitigation.
IIGCC said the groups’ commitment in turn recognises “an urgent need to accelerate the transition towards global net zero emissions and for asset managers to play a part to help deliver the goals of the Paris Agreement and ensure a just transition.”
The six founding partner investor networks working with IIGCC are Asia Investor Group on Climate Change (AIGCC), CDP, Ceres, Investor Group on Climate Change (IGCC), IIGCC and Principles for Responsible Investment (PRI). The initiative is also endorsed by The Investor Agenda, of which the investor networks are all founding partners.
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Stephanie Pfeifer, CEO of IIGCC and founding partner of the initiative, commented: “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.”
The commitments are:
- 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.
- 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
- As required, create investment products aligned with net zero emissions by 2050 and facilitating increased investment in climate solutions
Asset managers 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. IIGCC added this process will ensure the approach applied is based on a robust methodology, and is consistent with the United Nations’ Race to Zero criteria.
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The organisation is also looking to expand the initiative over the coming months with further asset manager signatories and also join the UNFCCC’s Race to Zero campaign.
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 Management, Calvert Research and Management, CCLA Investment Management, Clean Energy Ventures, DWS, FAMA Investimentos, Fidelity International, Generation Investment Management, Gulf International Bank Asset Management, Handelsbanken Fonder AB, IFM Investors, Inherent Group, Kempen Capital Management, Legal & General Investment Management, M&G, New Forests Pty, Nordea Asset Management, Robeco, Sarasin & Partners, Schroders, Swedbank Robur, UBS Asset Management, Wellington Management and WHEB.
Comments from founding signatory asset managers:
Anne Richards, CEO at Fidelity International: “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, CEO at Legal & General Investment Management and member of UK Government’s COP26 Business Leaders Group: “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.”
Marco Morelli, executive chairman, AXA Investment Managers: “There is an urgent need now 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 goals of the Paris Agreement and can play a pivotal role in tackling these challenges, which we know are also key concerns for our clients.
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Asoka Wöhrmann, CEO of DWS: “We are at the precipice of the era of sustainability. The fight against climate change is the social and economic imperative of our time. Anyone who opposes it, will lose. As a fiduciary asset manager, it is our mission to pave the way to a carbon-free economy. Our membership in the Net Zero Emission Goal initiative of the IIGCC underlines our commitment to this goal. On behalf of our clients, we will ensure that companies take sustainability seriously. And if those companies that need to catch up do not make tangible progress, we will exclude them from our investment universe.”
Lars Dijkstra,CIO at Kempen Capital Management: “Investors can play a key role in easing the transition to a low-carbon economy as well as in reducing the climate risks of the companies in which they invest. Kempen has been a longstanding proponent in the fight against climate change through active management and a long-term focus. By partnering with 30 other international asset managers in the Net Zero Asset Managers initiative, we join forces and increase our impact.”
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.”
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.”
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: “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.”
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.”
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.”
Guy Matthews, managing director of Sarasin and Partners: “Today’s launch of the Asset Manager Net Zero Commitment is an important milestone, and deserves the support of all asset managers. As stewards of savers’ assets, asset managers play a critical role in ensuring the Paris Climate Agreement actually gets delivered. We do this not just by channelling capital towards sustainable activities; but – critically – we can press investee companies to align their businesses with the Paris Climate Agreement. The more asset managers who sign this Commitment, the better our chances of protecting all of our futures. Surely, this is an investment proposition no one would turn down?”