State Street CEO highlights key tools for investors to achieve net zero goals

State Street Global Advisors (SSGA), the third largest investment manager in the world, announced that it has joined the Net Zero Asset Managers initiative, a coalition of asset managers committed to supporting the goal of net zero greenhouse gas emissions by 2050 or sooner. SSGA joined the coalition along with 13 other new signatories, representing nearly $5 trillion in assets.

Other new signatories to the initiative include Alquity Investment Management, BankInvest, Colony Capital, Coutts & Co, EcoFin, Insight Investment, Quinbrook Infrastructure Partners, Ridgewood Infrastructure, Russell Investments, Sage Advisory, State Street Global Advisors, Trillium Asset Management, Valo Ventures, and Vert Asset Management.

The Net Zero Asset Managers initiative launched in December 2020 with a group of asset managers committing to support the goal of net zero greenhouse gas emissions by 2050 or sooner, in line with global efforts to limit warming to 1.5°C.

The initiative has rapidly grown, reaching 87 members managing $37 trillion in AUM. With today’s announcement, the initiative now includes the three largest asset managers in the world, BlackRock, Vanguard, and SSGA.

Signatories to the initiative commit to a series of actions including 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, prioritising the achievement of real economy emissions reductions within the sectors and companies in which they invest, creating investment products aligned with the net zero goal, facilitating increased investment in climate solutions, and confirming that policy advocacy undertaken by the firm is supportive of achieving global net zero emissions by 2050 or sooner, among others.

Additionally, signatories agree to submitting disclosures in line with the Task Force on Climate-related Disclosures (TCFD) recommendations and climate action plans for review through The Investor Agenda, an organization developed for the global investor community to accelerate and scale up the actions that are critical to tackling climate change and achieving the goals of the Paris Agreement.

Cyrus Taraporevala, President and Chief Executive Officer, State Street Global Advisors, said:

“Climate change poses one of the most serious risks to long-term investors and we are pleased to join this important initiative. We are especially keen to leverage our position as one of the world’s largest asset managers to raise awareness of the systemic risks associated with climate change, and to help all stakeholders navigate the difficult choices we face as we effectively manage the transition risks. The goal of net-zero-carbon emissions by 2050 is consistent with our commitment to drive long-term value on behalf of our clients.”

In a separate statement discussing the role of investment management in addressing climate change, State Street Chairman and CEO Ronald O’Hanley highlighted the key tools of engagement, investment in climate mitigation and adaptation projects and new technologies, as well as disclosure as key tools to achieve the goal of net zero by 2050.

State Street and its investment management arm SSGA are active in several major engagement initiatives, including leading a global Task Force of Asset Owners and Asset Managers within the Sustainable Markets Initiative to consider ways of strengthening the impact of net-zero engagement in addition to other tangible actions, as well as Climate Action 100+, an investor initiative engaging the world’s top corporate global emitters.

The company is also a strong advocate of consistent and transparent climate risk disclosure, adopting the framework created by the Taskforce for Climate-related Financial Disclosures (TCFD), as well as providing tools for institutional investors with their own TCFD reporting, including its recently launched ESG Risk Analytics platform, and an agreement announced earlier this week with S&P Global Trucost, bringing enhanced carbon and environmental data and analytics solutions to State Street’s clients.

O’Hanley wrote:

“One of the most powerful lessons from the pandemic is that none of us is safe if we aren’t all safe; like deadly pathogens, greenhouse gases know no borders. Solving the climate problem really is our generation’s final exam. It is not easy, but it is doable. On this Earth Day, as world leaders gather to put the world on a more sustainable path, let us take inspiration from the resolve, ingenuity, and science that have coalesced to defeat COVID and commit ourselves to joining the race to net zero and to a more resilient future.  As with pandemics, ignoring the problem is no longer an option.”