UN Secretary-General António Guterres has called on investors who move much of the world’s money to set increasingly ambitious targets and adopt specific plans for achieving net-zero carbon emissions.
“The private sector has a crucial role to play in building a more equitable and sustainable world. Our simple objective for 2021 is to make sure that we are able to build a truly global coalition for carbon neutrality by 2050,” he said at a recent meeting with CEOs of some of the world’s largest asset owners.
All are members of the Net-Zero Asset Owners Alliance, formed by 33 of the world’s largest institutional investors, with $5.1 trillion assets under management. Investors in the Alliance commit to achieving net-zero emissions for their entire portfolios by 2050. They also agree to align with the most ambitious decarbonization pathways set by the Intergovernmental Panel on Climate Change, and to adopt intermediary targets every five years, starting in 2021 for 2025.
Endorsing the group’s drive to double membership within the coming months, the Secretary-General emphasized expanding the engagement of investors particularly in Asian countries with governments that have committed to carbon neutrality, and defining rules and benchmarks to keep progress on track and avoid greenwashing. The Secretary-General described the Alliance as a “gold standard” for a slew of emerging net-zero commitments, backed by credible actions.
The Secretary-General further commended investors’ plans to advance net zero and a low-carbon transition across the investment chain. Interactions between asset owners and asset managers can influence incentives, decisions and time horizons throughout the financial industry, and ultimately the economy as a whole.
In recent months, the Alliance has published groundbreaking work to guide early actions by members. Its 2025 Inaugural Target Setting Protocol, for instance, lays out how all members can achieve substantial emissions reductions from 2020 to 2025 through transparent five-year targets set according to scientific evidence.
“Asset Owner Alliance members start out with changing themselves first and then reach out to various companies to work on the change of their businesses,” explained Günther Thallinger, Chair of the Alliance and member of the board of management of Allianz SE, in launching the Protocol.
Targets carefully balance ambition, active ownership engagement and divestment constraints, and can be selected by Alliance members to allow different approaches that best support their decarbonization strategies. Developing the Protocol drew on feedback from civil society partners, the general public, academia, government and business.
The Net-Zero Asset Owner Alliance was launched in September 2019 at the United Nations Secretary-General’s Climate Action Summit. The Alliance is convened by the UNEP Finance Initiative and the Principles for Responsible Investment and supported by WWF and Global Optimism. Find out more here. Or check out this short video.
For more on private finance and climate, see a recent interview with UN Special Envoy Mark Carney.