By Fiona Reynolds, CEO, PRI
Last Friday, we saw huge global protests, organised by students and other stakeholders, demanding that governments around the world take greater action on climate change.
The PRI was delighted to see people from so many different countries forming a united front on this issue.
We know of course that not just governments, but also investors have a huge role to play when it comes to climate action, so it was a considerable step forward when today, at the UN Secretary General’s Climate Action Summit in New York, we saw some of the world’s largest pension funds and insurance companies—representing more than US$2.4 trillion in assets under management—commit to being carbon neutral by 2050 through the newly launched Net‐Zero Asset Owner Alliance. The initiative was announced by Allianz CEO, Oliver Bäte:
“As the CEO of Allianz, I launch this initiative on behalf of 12 asset owners who have come together to act. We call on other asset owners, including sovereign wealth funds, to join us. We commit to transition our entire portfolios to net zero - it’s an ambitious journey.”
This week’s Summit brings together governments, companies and civil society to strengthen commitments and accelerate the implementation of the Paris Agreement on Climate Change. Asset owners, who sit at the top of the investment chain, have an especially important role to play as the principal holders of retirement savings, as well as insurance companies, who are investing their customers’ premiums. They therefore represent some of the largest pools of capital on the planet.
Responsible asset owners are powerful allies to limit the rise in global temperatures to no more than1.5 degrees warming. As long‐term investors who must look far into the future to fund their liabilities, asset owners are keen to ensure that the global economy prospers, that climate‐related risks are addressed, and that opportunities to invest in a cleaner tomorrow are captured.
Convened by the United Nations Environment Programme’s Finance Initiative (UNEP FI) and the Principles for Responsible Investment, the Alliance is supported by WWF and is part of the Mission 2020 campaign, an initiative led by Christiana Figueres, former Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC).The Net‐Zero Asset Owner Alliance is an example of investors stepping up to protect people and the planet. Investors know that companies which are able to deliver a low carbon economy will benefit most from the opportunities presented by climate change.
The members of the Alliance will immediately start to engage with the companies in which they are investing to ensure they decarbonise their business models. Initiatives such as the UN Global Compact “Business Ambitionfor1.5°C—Our Only Future” campaign will be a partner in mobilising corporations to commit to net zero emissions. The Alliance will collaborate with other initiatives, such as the Investor Agenda, Climate Action100+, and the newly announced 2050 Ambition Alliance.
The members will also hold themselves publicly accountable on their progress by setting and publicly reporting on intermediate targets—for the same points in time for which countries will set targets—in line with Article 4.9 of the Paris Agreement.
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.
We urge all asset owners to join this groundbreaking initiative and put their money to work addressing the biggest challenge that the world faces today.
This blog is written by PRI staff members and guest contributors. Our goal is to contribute to the broader debate around topical issues and to help showcase some of our research and other work that we undertake in support of our signatories.
Please note that although you can expect to find some posts here that broadly accord with the PRI’s official views, the blog authors write in their individual capacity and there is no “house view”. Nor do the views and opinions expressed on this blog constitute financial or other professional advice.
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