More of the world’s largest asset managers are joining a global initiative supporting the goal of net-zero greenhouse gas emissions by 2050 or sooner. Ahead of Earth Day on April 22, 14 new signatories to the Net Zero Asset Managers initiative, which collectively manage nearly US$5 trillion in assets, joined 73 other signatories in committing to reach the emissions target in line with global efforts to limit warming to 1.5 degrees Celsius, and to set interim targets for 2030.
Launched in December 2020 with 30 signatories, the initiative has now grown to include 87 signatories with nearly US$37 trillion in assets under management, representing nearly 40% of the total assets under management across the globe. With State Street Global Advisors announcing its commitment on Wednesday, the worlds’ three largest asset managers are now signatories to the initiative. BlackRock and Vanguard announced their participation in March 2021.
Aside from State Street, the new signatories include: Alquity Investment Management, BankInvest, Colony Capital, Coutts Asset Management, EcoFin, Insight Investment, Quinbrook Infrastructure Partners, Ridgewood Infrastructure, Russell Investments, Sage Advisory, Trillium Asset Management, Valo Ventures, and Vert Asset Management.
Cyrus Taraporevala, president and chief executive officer of State Street Global Advisors, says: “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.”
A formal announcement was to be made on Wednesday at a special event hosted by Ceres with the US Special Presidential Envoy for Climate John Kerry showcasing how private sector finance leaders are key to driving the net zero transition. The US administration under President Joe Biden is mobilizing world leaders on April 22-23 for a virtual Leaders Summit on Climate to galvanize efforts by major economies to scale action on the climate crisis.
Says Kerry: “The largest financial players in the world recognize energy transition represents a vast commercial opportunity as well as a planetary imperative. As countries around the world move to decarbonize, the large sums these institutions are dedicating to climate finance also reflect a growing understanding of how critical a low-carbon global economy is to their business models. Ultimately, their commitment of capital and assets, as well as adherence to high standards and reporting, will accelerate the transition to this new economy, create a massive number of new jobs, and increase our collective ability to tackle the climate crisis.”
The asset managers commit to set interim targets for 2030, consistent with a fair share of the 50% global reduction in emissions identified as a requirement in a special report by the Intergovernmental Panel on Climate Change to limit increase in global temperatures to no more than 1.5 degrees Celsius. They will be asked to submit an interim target, within a year of joining the initiative, for the proportion of assets to be managed in line with reaching net-zero emissions by 2050 or sooner.
Signatories will also commit to transparent and rigorous accountability. They will annually report progress against the Task Force for Climate-related Financial Disclosures (TCFD) recommendations, including implementing a climate action plan and ensuring their plans are based on a robust methodology, consistent with the Race to Zero criteria, and action is being taken in line with the commitments.
The Net Zero Asset Managers initiative is managed globally by six founding partner 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. In turn, the initiative is endorsed by The Investor Agenda, of which the investor networks are all founding partners, along with the United Nations Environment Programme Finance Initiative.