Dozens of big-name investors including BlackRock join Net Zero Asset Managers Initiative

36% of assets under management globally are now covered by the scheme

The initiative, which commits members to reaching net-zero financed emissions by 2050 or sooner, announced this weekend that now it has more than 70 members, collectively representing $32trn of assets under management.

New members include Aviva Investors, Allianz Global Investors, BlackRock, Macquarie Asset Management, Standard Life Aberdeen and the Vanguard Group.

Beyond the headline net-zero financed emissions target, the initiative requires members to set interim targets for 2030 or sooner, in line with climate science. Targets should be met using direct emissions reductions rather than offsetting where possible.

Members should also disclose climate risks in line with the Task Force for Climate-related Financial Disclosures (TCFD) recommendations and develop credible plans for minimising risks in the long-term.

Many of the new members have their own net-zero targets and strategies, including Aviva, which announced a 2040 target for financing activities and the supply chain this month.

For these firms, the benefit will be ensuring a standard level of ambition and delivery pathway across the wider sector. Other members are yet to develop net-zero targets and strategies and hope to use the best-practice advice of other initiative members during the development process.

“Helping investors prepare their portfolios and capture investment opportunities on the path to net-zero is one of our greatest responsibilities,” BlackRock chief executive and chairman Larry Fink said.

“BlackRock is proud to put its name behind this initiative, and I am encouraged to see the increasing momentum towards net zero across the public and private sectors.”

The elephant in the room – fossil fuel finance

The announcement from the Net Zero Asset Managers Initiative comes just days after it was revealed that big-name banks and investors provided $750bn of financing for fossil fuel firms in 2020. This figure was down 9% year-on-year but ultimately up 6% on 2016 levels.

The figure was the headline of Rainforest Action Network’s annual ‘Banking on Climate Chaos’ report.

According to the report, US firms continued to invest more heavily in the sector than their European counterparts – and to attach lighter environmental conditions to packages. JP Morgan Chase is named as the world’s biggest fossil fuel backer in 2020 alone, and in the 2016-2020 period. Other laggards include Wells Fargo, Bank of America, Citi, HSBC, Bank of China and Barclays.

Barclays remains Europe’s largest fossil bank and the seventh-largest globally. But the biggest year-on-year increase in fossil finance in 2020 was 41%, attributed to BNP Paribas, which upped support for offshore oil and gas and tar sands.

Rainforest Action Network is urging banks to go beyond headline net-zero commitments and to take action to change their portfolios.  Inaction, it warns, will not only increase physical climate risks, but leave banks behind the regulatory curve as net-zero commitments become increasingly widespread. It will also leave banks exposed to Covid-19, which has caused oil and gas demand to fall.  

Without interim targets and commitments to stricter exclusions policies, the report warns, banks’ “ever-multiplying” net-zero targets become “hollow”.

“Many of the world’s largest banks, including all six major US banks, have made splashy commitments in recent months to zero-out the climate impact of their financing over the next 30 years,” report contributor and Sierra Club financial advocacy campaign manager Ben Cushing said.

“But what matters most is what they are doing now, and the numbers don’t lie. This report separates words from actions, and the picture it paints is alarming: Major banks around the world, led by US banks in particular, are fuelling climate chaos by dumping trillions of dollars into the fossil fuels that are causing the crisis.”

Sarah George

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