Net Zero Asset Managers Initiative Passes $60 Trillion AUM
More than 270 asset managers, representing over $61 trillion is assets have joined the Net Zero Asset Managers (NZAM) initiative, committing to transition their investment portfolios over time to be in line with achieving net zero greenhouse gas (GHG) emissions by 2050, according to a new update report released by the group.
The Net Zero Asset Managers initiative launched in December 2020 with a with 30 asset managers representing approximately $9 trillion in assets, committing to support the goal of net zero by 2050 or sooner, in line with global efforts to limit warming to 1.5°C.
Recent additions to the group since the last update in November include T. Rowe Price, Credit Suisse Asset Management and Frontier Investment Management.
Signatories to the initiative agree to a series of commitments, including working in partnership with asset owner clients on decarbonisation goals, setting an interim target for the proportion of assets to be managed in line with the attainment of net zero emissions by 2050 or sooner, and reviewing the interim target every five years, with a view to ratcheting up the proportion of AUM covered until 100% of assets are included.
The new report indicated that to date, 83 of the asset managers have set their initial targets, creating a collective commitment to align $16 trillion of assets to be in line with the 2050 net zero goal by 2050, representing 39% of those asset mangers’ AUM. Additionally, some asset managers including AXA Investment Managers and Wellington Management have updated their initial targets with more ambitious goals.
Marco Morelli, Executive Chairman, AXA Investment Management, said:
“Since our first submission in October, we have further intensified our efforts across the whole business to develop an approach which is robust and can be implemented in an effective manner by investment teams, meaning our revised figure now stands at 65% of total assets managed in line with net zero by 2050.”
The report also highlighted several key themes that have emerged through the target disclosure and review process by the asset managers. These include the impact of different firms’ business models or investment approaches to the net zero transition process, with asset managers with a large number of clients across many funds indicating that adjusting the funds to align with net zero can be a lengthier process than for asset managers with concentrated funds, or active managers having greater flexibility to more rapidly align their funds with net zero than passive managers.
NZAM forms part of the Glasgow Financial Alliance for Net Zero (GFANZ), and was convened by six Founding Partner investor networks, including Asia Investor Group on Climate Change (AIGCC), CDP, Ceres, Investor Group on Climate Change (IGCC), Institutional Investors Group on Climate Change (IIGCC) and Principles for Responsible Investment (PRI).
Rebecca Mikula-Wright, CEO of the AIGCC and the IGCC, said:
“In the 18 months since NZAM launched, the world’s biggest asset managers have started on the journey of setting targets and getting their portfolios on track for net zero by 2050. This momentum must continue; climate is a risk that can’t be divested from, so investors will need to use their influence over capital flows, their influence on companies and their voice to policy-makers to speed up the transition to a net zero global economy.”