‘Unprecedented’: Investors responsible for $2.4trn commit to net-zero alignment

The UN claims this is the first time this many investors have made a net-zero pledge on the same day.

The pledge was made late on Monday (23 September) at the UN’s Climate Summit in New York, as the UN founded what it is calling the Net-Zero Asset Owner Alliance.

In joining the alliance, insurers, re-insurers and fund managers are required to ensure that companies backed by their portfolios are operating in line with the Paris Agreement’s more ambitious 1.5C trajectory. As per the Intergovernmental Panel on Climate Change’s (IPCC) advice, reaching 1.5C will require global carbon emissions to reach net-zero by mid-century.

The Alliance was initiated by Allianz, Caisse des Dépôts, La Caisse de dépôt et placement du Québec (CDPQ), Folksam Group, PensionDanmark and Swiss Re. Alecta, AMF, CalPERS, Nordea Life and Pension, Storebrand and Zurich have also signed up.

As these firms work to align with a 1.5C trajectory, they will be required to publicly report on their progress and to encourage other asset managers to follow suit.

Support in delivering these requirements will be offered by UN Global Compact, UNEP’s Finance Initiative and the Principles for Responsible Investment, and WWF.

“Mitigating climate change is the challenge of our lifetime,” Allianz’s chief executive Oliver Bäte said.

“We, as asset owners, will live up to our responsibility and, in dialogue with the companies in which we invest, steer towards low-carbon business practices.”

“There are no short-cuts to decisive climate action – we need to take a long-term view,” UNEP’s executive director Inger Andersen added.

“I applaud the leadership of the investors in this Alliance. Their commitment sends a strong signal that financial markets and investors are listening to science and moving us to a path of resilience and sustainability.”

1.5C: The new leadership standard?

The UN had said ahead of the Climate Summit that a key purpose of the event would be to give nations and businesses an opportunity to outline their plans for aligning with a 1.5C trajectory.

Earlier in the event, a coalition of 130 banks, representing one-third of the worldwide banking sector, did just that. Barclays, Santander, BNP Paribas, RBS, UBS, Lloyds China’s Industrial Bank, DNB, Citi and Credit Suisse are among these banks.

The Summit has also seen 87 corporates from outside of the finance space committing to set 1.5C-aligned science-based targets within the next 24 months.

The Science Based Targets Initiative (SBTi), which approves these targets, estimates that the 87 firms collectively generated the same amount of Scope 1 (direct) and Scope 2 (power-related) greenhouse gas emissions as 73 coal-fired power plants during 2018. The body notably recently updated its target validation criteria and resource package for businesses in order to better foster the uptake of 1.5C goals.

According to the IPCC, the difference between a 1.5C trajectory and a 2C world is stark, in terms of human health, social sustainability and economic impacts and well as the degradation of nature.

Green finance at edie’s Sustainability Leaders Forum

edie’s Sustainability Leaders Forum returns in 2020, as some of the biggest companies, individuals and organisations championing sustainability gather at the Business Design Centre on 4 & 5 February.

Green finance will be a key discussion point, with speakers including Green Finance Institute CEO Rhian Mari Thomas, M&G Investment’s head of responsible investment and ESG Anita McBain and Aviva Investors’ global head of governance Mirza Baig. 

Other keynote speakers at this flagship, multi-award-winning event features include Mary Robinson, former President of Ireland; Rebecca Marmot, Unilever CSO; Tom Szaky, TerraCycle CEO;  and Gilbert Ghostine, Firmenich CEO. For details and to register, visit: https://event.edie.net/forum/

Sarah George