Investors in the Net-Zero Asset Owner Alliance, which was convened by the United Nations, announced Oct. 13 its portfolio decarbonization targets for 2025 as part of wider efforts to align their portfolios with the Paris Climate goals, including limiting the global temperature increase to 1.5-degree centigrade above pre-industrial levels.
The Net-Zero Alliance is a group of 30 investors, mostly insurance companies and pension firms, representing $5.0 trillion in assets and includes Allianz SE, AXA, AVIVA, Generali, Munich RE, Swiss Re, SCOR, Zurich, the California Public Employees’ Retirement System, several pension funds and the Church of England as members.
The alliance’s members will reduce the greenhouse gas emissions of their equity, corporate bond, and real estate investments by between 16 percent and 29 percent by 2025 from 2019 levels. The goal covers direct emissions and those from the generation of energy the company buys. The alliance’s goal does not track emissions which result from customers using portfolio companies’ products, but they aren’t required to set targets until the data become more reliable.
The members have committed to transition their investment portfolios to net-zero greenhouse gas emissions by 2050.
Net-Zero members will identify the top 20 emitters responsible for the bulk of their portfolio emissions and set goals for slashing emissions in key sectors including oil and gas, utilities, transport and steel, according to The Guardian.
The members of the group hope to avoid divesting from polluting firms, The Guardian reported, and instead want to encourage companies to reduce their emissions. Some of that work will be achieved by pushing companies to supply mandatory climate reports and produce clear business transition plans.
Asset owners will set their individual targets in the first quarter of 2021, according to The Guardian.
In the meantime, the United Kingdom said that companies, including insurers and large private businesses, need to report the financial impacts of climate change on their businesses within the next five years, becoming the first country to make the disclosures mandatory as investors and governments demand corporations curb their greenhouse gas emissions, The Wall Street Journal reported Nov. 9.
Similarly, the WSJ said, last month, New York Department of Financial Services Superintendent Linda Lacewell recommended that banks and insurers report through the Task Force on Climate-related Financial Disclosures.
