An alliance of some the world’s largest pension funds and insurers with assets of more than US$2.4 trillion under management has committed to achieving carbon-neutral investment portfolios by 2050.
This commitment comes from United Nations-convened Net-Zero Asset Owner Alliance, a move announced at the UN Secretary-General’s Climate Action Summit this week.
Inger Andersen, Executive Director of the UN Environment Programme (UNEP) said: “The commitment sends a strong signal that financial markets and investors are listening to science, and moving us to a path of resilience and sustainability.”
The Alliance was formed by Allianz, Caisse des Dépôts, La Caisse de dépôt et placement du Québec (CDPQ), Folksam Group, PensionDanmark and Swiss Re at the beginning of 2019.
Since then, Alecta, AMF, CalPERS, Nordea Life and Pension, Storebrand, and Zurich have joined as founding members.
The Allianz was convened by UN Environment Programme’s Finance Initiative and the Principles for Responsible Investment and is supported by the global conservation charity WWF.
Allianz’s CEO Oliver Bäte said: “Mitigating climate change is the challenge of our lifetime. Politics, business and societies across the globe need to act as one to rapidly reduce climate emissions. 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. We’ve already started and, by 2050, our portfolios will be climate neutral.”
The members of the Alliance have undertaken to immediately start to engage with the companies in which they are investing to ensure they decarbonise their business models.
They will also hold themselves publicly accountable on their progress by setting and publicly reporting on intermediate targets in line with Article 4.9 of the Paris Agreement.
The UN says that by committing to transitioning their investment portfolios to net-zero greenhouse gas emissions by 2050, asset owners are significantly raising the bar for other investors, industry associations and, importantly, the global economy.
CDPQ CEO, Michael Sabia said: “The Net-Zero Alliance is the recognition that institutional investors collectively have an important role to play in fostering the energy transition the world needs.
“For investors like CDPQ, there are so many opportunities to earn commercial returns by investing in low-carbon solutions and to work with portfolio companies to decarbonize. Combined with the necessary changes in public policies, investors’ actions will induce real change in every sector.”