Investors launch fresh guidance to help financial firms set net-zero targets and transition plans

The Institutional Investors Group on Climate Change (IIGCC), which accounts for more than 400 financial members worth more than $65trn in assets under management, has this week unveiled its latest net-zero guidance – the Net Zero Investment Framework 2.0.

The original framework was already the most widely used resource by investors to develop their net-zero strategies and transition plans; more than 200 organisations have used it to date.

The ‘NZIF 2.0: Summary Guide’ provides new examples and approaches to target setting and was developed following extensive consultation with over 200 investors. It doesn’t outline one single way to set such targets, and is described as “agnostic” about how investors should implement plans.

NN Group’s head of responsible investment and the Co-Chair of the Steering Group for the Paris Aligned Investment Initiative, Nathalie van Toren said: “The Net Zero Investment Framework has been incredibly valuable for any investors wanting to develop and implement their individual net zero strategy and transition plans. At NN Group, the NZIF was the natural starting point when we went about setting our initial targets to underpin our net zero strategy.

“By bringing the latest thinking and guidance together in one place, NZIF 2.0 will undoubtedly continue to play an important role in our net zero journey and I congratulate everyone involved in its development.”

The standard also covers investments in climate solutions and engagement – directly and indirectly – with green policymaking.

At the start of the year, the IIGCC released its Net Zero Voting Guidance.

The guidance is designed to help shape voting policies and practices across the financial sector in alignment with the net-zero transition. The guidance looks at how investors engage with organisations in their portfolio and how this can be focused on catalysing climate action in line with fiduciary duties.

The IIGCC states the guidance is aligned with the Net Zero Investment Framework to ensure voting policies will support portfolios in achieving net-zero emissions by 2050 at the latest.

Historically, investors have not voted in line with climate stewardship.

Analysis at the start of the year from ShareAction found that only 3% of shareholder resolutions aimed at improving corporate sustainability passed in 2023, down from 21% the year prior.

The NGO assessed the voting patterns of 69 of the world’s largest asset managers at annual general meetings in 2023, with a focus on resolutions intended to force businesses to improve ESG outcomes.

The 2.0 guidance also summarises best practices shared by investors, collected from the past three years and shows more than 40 potential actions an investor can choose to take to beef up net-zero approaches.

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