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Financial Asset Managers Supporting Net Zero Emissions

Wind farm

(Vitor Bitencourt Silva, Pixabay)

14 Dec. 2020. Thirty asset managers, directing investments worth some $9 trillion, agreed to encourage their clients to achieve global net zero greenhouse gas emission goals. The group on Friday launched the Net Zero Asset Managers initiative to achieve meaningful reductions in greenhouse gas emissions by the year 2050 or sooner in the companies and industry sectors where they invest.

Asset managers direct investments of clients’ portfolios for financial institutions, usually investment banks. In recommending investments for clients, asset managers are expected to find vehicles for growing assets over time, while mitigating risks. These services are usually offered to corporations, government entities, and high net-worth individuals.

The 30 financial asset managers, working worldwide, say they will encourage clients to support decarbonizing their operations for reducing global warming to 1.5 degrees Celsius and achieve net zero greenhouse gas emissions no later than 2050. As an interim goal, the group plans to help clients reduce carbon dioxide emissions by at least half by 2030, as called for in the Intergovernmental Panel on Climate Change or IPCC report in 2018. In addition, the group expects to review its interim targets every five years, eventually expanding the proportion of assets managed under this initiative to 100 percent.

The asset managers’ work with clients will focus initially on direct emissions from their own operations, e.g. heating systems and vehicle fleets, as well as indirect emissions from fuel or power they acquire from third parties, such as electricity from a utility, known respectively as scope 1 and 2 emissions. The asset managers will also encourage as much reduction as possible in sources the companies normally cannot control, such as business travel and waste management, called scope 3 emissions.

The Net Zero Asset Managers project is founded and led by six investor networks: Asia Investor Group on Climate Change, CDP, Ceres, Investor Group on Climate Change, Institutional Investors Group on Climate Change, and Principles for Responsible Investment. The initiative is endorsed by the Investor Agenda, formed in 2018 to encourage greater action by investors on the issue of climate change. The leaders of Net Zero Asset Managers are also the founders of the Investor Agenda.

“The scale and significance of the asset managers joining the Net Zero Asset Managers initiative,” says Stephanie Pfeifer, CEO of Institutional Investors Group on Climate Change, a founding partner of the initiative, in a statement, “sends a clear signal to the wider sector that the financial firepower of institutional investors will be committed to making real progress towards a net zero and resilient future.”

Pfeifer adds, “We talk a lot of tipping points in our sector, but 30 of the world’s leading asset managers with assets under management of over $9 trillion committing to the goal of net zero by 2050 really can help tip the balance in favor of the global economic transition to net zero.”

The 30 Net Zero Asset Managers signatories are: a.s.r. Asset Management, Anaxis Asset Management, Arisaig Partners, Asset Management One, ATLAS Infrastructure Partners, AXA Investment Managers, BMO Global Asset Management, Calvert Research and Management, CCLA Investment Management, Clean Energy Ventures, DWS, FAMA Investimentos, Fidelity International, Generation Investment Management LLP, Gulf International Bank Asset Management, Handelsbanken Fonder AB, IFM Investors, Inherent Group LP, Kempen Capital Management, Legal & General Investment Management, M&G plc, New Forests Pty Ltc, Nordea Asset Management, Robeco, Sarasin & Partners LLP, Schroders, Swedbank Robur, UBS Asset Management, Wellington Management and WHEB.

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