Asset managers’ Net Zero Framework outlined in ‘blueprint for action’

Net Zero Investment Framework 1.0 launched with guidance for asset managers

Planet Blueprint


Natalie Kenway

Asset managers that signed up to the Net Zero Investment Framework have been issued with updated guidance and implementation tools to maximise the contribution they make to decarbonisation of the global economy and tackling climate change.

Last December, ESG Clarity reported groups representing $9trn of assets under management (AUM) have signed the newly created Net Zero Asset Managers initiative, part of the Paris Aligned Investment Initiative,  and 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.

At the time, it was explained that this would be met 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, putting in place engagement strategies to ensure voting policies are consistent with net-zero ambitions, and creating investment solutions that will focus on climate change mitigation and support global efforts in reducing greenhouse gas emissions.

Today, the Institutional Investors Group on Climate Change (IIGCC) has launched the ‘Net Zero Investment Framework 1.0′ with assistance on methodologies, how to address data gaps and guides for setting targets for climate solutions as well as details on offsetting.

It also sets out the components needed for an effective net-zero investment strategy based on feedback from a IIGCC consultation carried out in August 2020. The Implementation Guide sets out detailed checklists on emissions accounting, high impact sectors and market engagement to allow asset managers to apply the framework “decarbonise investment portfolios in a way that is consistent with achieving global net zero greenhouse gas (GHG) emissions by 2050, and increase investment in the range of climate solutions needed to meet that goal”. Investors adopting the Framework are expected to use it on an ‘implement or explain’ basis.

“The global investment community has been called on to play its part in the transition to net zero – and it is answering that call,” said Stephanie Pfeifer, CEO, Institutional Investors Group on Climate Change. “This new swathe of net-zero commitments from asset owners demonstrates the growing determination from investors to make important decisions to support a net zero and resilient future.

“Commitments are vital, but only meaningful for the long term when realised. The net-zero transition itself requires an ongoing transition from making commitments to delivering impact. The Net Zero Investment Framework, developed with and for investors, is a blueprint for action that will enable and support investors in reaching these goals.”

Patricia Espinosa, executive secretary for the United Nations Framework Convention on Climate Change, also commented: “Investing in a net-zero future is key to tackling the climate crisis and unlocking truly sustainable growth. It is actually in the interest of all. I encourage others to join investors already showing leadership in using the Net Zero Investment Framework. The race to a net-zero future is on and the benefits it offers are critically important.”

Signatories to the Net Zero Investment Framework include: Scottish Widows, the Environment Agency Pension Fund, NN Group, Royal London, the Church of England Pensions Board, Brunel Pension Partnership, Lloyds Banking Group, Nest Corporation, AXA Investment Managers, DWS, Aberdeen Standard Investments, PIMCO, Legal & General Investment Management, Jupiter Asset Management, Robeco and Fidelity International.

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