Net Zero Asset Managers initiative signatories disclose interim targets, with over a third of assets managed in line with net zero

  • 43 asset managers share first interim targets for the proportion of assets managed in line with achieving net zero by 2050, and set shorter term targets for reducing emissions within their investments
  • Signatories disclose that 35% of their total assets under management, totalling USD 4.2 trillion out of a possible USD 11.9 trillion, is being managed in line with achieving net zero by 2050
  • A record 92 new asset managers representing USD 10.8 trillion in assets join initiative, bringing the total to 220 investors managing USD 57.4 trillion
  • Network partners managing the initiative set out expectations on fossil fuel investment, asking signatories to adopt robust and science-based policies aligned with a 1.5°C scenario

43 investors have disclosed their first interim targets for the proportion of assets managed in line with achieving net zero by 2050, according to a new progress report released today. The asset managers have committed USD 4.2 trillion out of a possible USD 11.9 trillion, meaning that 35% of their total assets under management is in line with net zero.

As signatories to the initiative, asset managers also commit to set interim targets consistent with afair share of the 50% global reduction in greenhouse gas emissionsby 2030, with 15 setting shorterterm targets for 2025. Investors must disclose their initial interim target within a year of joining the initiative and review on a regular basis with a view to increasing the proportion of assets until 100% are included. If this initial target were reflected across all current signatories, more than USD 20 trillion managed would be in line with net zero and subject to 2030 targets by the end of 2022.

“Aviva Investors warmly welcomes the release of this Progress Report of the Net Zero Asset Managers initiative. With the release of the IPCC’s sixth Assessment Report, we now know that everyone needs to do all that they can to tackle this crisis, shift the trajectory of emissions and align financial flows with 1.5°C. To do this successfully we need to harness markets to deliver a smooth and just transition. Asset management is an important part of that, and the growth of the Net Zero Asset Managers initiative and the wider finance sector committed to GFANZ provides both hope and an example of leadership for others to follow.” said Steve Waygood, Chief Responsible Investment Officer, Aviva Investors.

“For many years we have invested in our own capabilities to help us measure and manage climate risks and to push companies to transition. We welcome the transparency and accountability that externally validated methodologies such as the Science Based Targets initiative demand, and as founding signatories to the Net Zero Asset Managers initiative, we recognise the essential role that collective action by our industry plays at this defining moment.” said Andrew Howard, Global Head of Sustainable Investment, Schroders.

“The climate is the greatest challenge of our time and is being debated extensively. However, the debate must not be at the expense of action, and here initiatives such as Net Zero Asset Managers are an important key in driving development forward. I am very proud of Swedbank Robur’s disclosure, which shows that we have already made a major move and reduced carbon emissions by 50% since 2017, and that we are well on the way to our goal of securing our managed capital in line with the Paris Agreement as early as 2025. But we have to keep pushing, and our way forward will include an even stronger focus on investing in climate solutions and influencing our portfolio companies to set goals in line with the Paris Agreement.” said Liza Jonson, CEO, Swedbank Robur.

“Since our founding commitment, we have been working diligently to turn aspiration into accountable action. We are pleased to report our initial commitment of net-zero-aligned assets and are excited about the solid foundation we have built for further progress. We plan to continue to develop measurable net-zero implementation plans client by client, and investment strategy by investment strategy. As a large active manager we believe we have an important role to play in helping companies prepare for this significant economic transition.” said Jean Hynes, CEO, Wellington Management.

The Net Zero Asset Managers initiative Progress Report comes as COP26 begins and at a critical time or increasing investor action on the climate crisis. In addition, a record 92 asset managers representing USD 10.8 trillion in assets are joining the initiative today, bringing the total to 220 investors managing USD 57.4 trillion. These latest numbers indicate that investors representing nearly 60% of the world’s total managed assets are now committed toward achieving the goal of net zero emissions by 2050 or sooner.

New signatories include J.P. Morgan Asset Management, Metrics, Mitsubishi UFJ Trust and Banking, Nikko Asset Management, Nomura Asset Management, Rockefeller Asset Management and Vancity, significantly boosting the representation of Asian and US-based asset managers within the initiative.

“This is a critical time to join forces to combat climate change and the consequences of global warming. We have a collective responsibility to work alongside issuers to deliver the net zero ambition for future generations. Eurizon firmly believes in sustainable and responsible investments and we are ready to play our part.” said Saverio Perissinotto, CEO, Eurizon Capital SGR.

“Addressing climate-related risks and opportunities is a critically important issue in the evolution of the asset management industry. Thoughtful government policy, investments in low-carbon technologies, and collaboration between the public and private sectors are all prerequisites to a transition to a low carbon world. Asset managers, together with our institutional and individual clients, also have an important role to play. We are pleased to have joined the Net Zero Asset Managers Initiative as we seek to work with clients to deliver products and solutions that support their net zero ambitions.” said George Gatch, CEO, J.P. Morgan Asset Management.

“Metrics is determined to play a leading role in promoting and assisting with the transition to a low carbon economy. This presents an enormous opportunity and Metrics is committed to ensuring that we both lead by example and ensure our stakeholders have the means to participate in achieving a just and timely transition.” said Andrew Lockhart, Co-Founder and Managing Partner, Metrics.

“We believe that addressing climate change is essential to achieving a sustainable society over the medium- to long-term and contributing to the expansion of customer assets through increasing the value of our investees. We, together with the asset management companies in our group, will promote efforts to mitigate climate change by making maximum use of approaches that we can take as investors, such as engagement and voting rights. Through participation in the Net Zero Asset Managers initiative, we will strengthen collaboration with a wide range of stakeholders more than ever before, contribute to a smooth transition to a decarbonized society, and fulfil our fiduciary responsibility.” said Iwao Nagashima, President and CEO, Mitsubishi UFJ Trust and Banking.

“Sustainable investment is at the core of our business and we believe it is inherent to long-term value creation. We are excited to make a commitment to achieve global net zero emissions by 2050 and honored to be part of this growing group of global asset managers. While we acknowledge there are many hurdles and challenges, by collaborating with our clients, investee companies, and other initiative members we can accelerate progress to meet this ambitious goal.” said Hiroki Tsujimura, Global Head of Investment and CIO, Nikko Asset Management Co., Ltd.

“Nomura Asset Management is proud to be part of the Net Zero Asset Managers initiative and we firmly believe that asset managers play a key role in changing the world and achieving a decarbonized and climate-resilient society. As one of the largest asset managers in APAC, we are advantageously positioned to create a positive impact through effective stewardship activities and leveraging our profound climate-related expertise in collaboration with stakeholders. With our interim target and goal as guides, I am confident we will be successful in accelerating this important transition and achieving global net zero emissions by 2050, if not sooner” said Hiroyasu Koike, President and CEO, Nomura Asset Management.

“We are proud to be joining this initiative, which is driving greater insights into the climate trajectory of our underlying holdings and contributing to robust shareholder engagements activity related to climate risk and GHG emissions,” said Casey Clark, Deputy CIO and Global Head of ESG Investments, Rockefeller Asset Management.

“The financial sector holds critical keys to reducing emissions across the economy, deciding what gets unded and where capital is directed. As a founding signatory of the Net Zero Banking Alliance, it was a natural decision for us to join the Net Zero Asset Managers initiative and to foster collaboration to support the ongoing effort to limit warming to 1.5°C.” said Joe Reid, Vice President of Wealth Management and Impact Investing, Vancity.

Today, the network partners also published a set of expectations for investors in relation to fossil fuel investment, asking that signatories adopt robust and science-based policies which are aligned with the Intergovernmental Panel on Climate Change (IPCC)’s 1.5°C scenario.

“It has been remarkable to see the level of commitment coming from the global asset management community when it comes to tackling climate change and decarbonising the global economy. We continue to see a significant number of investors making net zero commitments, but importantly are now also seeing action on those commitments as asset managers begin to share their targets. However, there is still work to do if we are to meet the goals of the Paris Agreement. I look forward to seeing these targets put into action and would encourage the investors who will be disclosing over the coming months to match – or exceed – the ambition set out by the first wave of signatories.” said Stephanie Pfeifer, CEO, IIGCC.

“We welcome the asset managers who have stepped up and committed to reaching net zero emissions, helping the world address the climate crisis. The collaboration of global asset managers is a critical contribution as the world transitions to a decarbonised economy. We look forward to seeing strong action and increasing commitments from investors to achieve their targets.” said Rebecca Mikula-Wright, CEO, the Asia Investor Group on Climate Change (AIGCC) and the Investor Group on Climate Change (IGCC).

“Asset managers play a critical role in achieving a 1.5°C future. It is encouraging to see leading investors commit to aligning their portfolios with net zero by setting interim targets. To address the climate crisis, we must see increasing ambition and action from global investors towards meeting the goals of the Paris Agreement through robust disclosure, setting science-based portfolio targets and aligning all investment activity with a 1.5°C scenario. It’s critical that asset managers work with their asset owner clients and engage with their investee companies urgently to decarbonize at scale and support the transition to a resilient economy. As this initiative grows, we anticipate increased ambition from investors reflected in an ever greater proportion of assets under management covered by mid-term targets.” said Paul Simpson, Chief Executive Officer, CDP.

“Investors increasingly grasp not only the risks posed by the climate crisis, but also the economic opportunities in the global transition to a net zero emissions economy. This first group of asset managers disclosing interim targets for aligning their investments with net zero emissions will help accelerate that transition. To limit global warming to 1.5°C, we need all asset managers and owners, governments, businesses and sectors of society to scale up climate action. At the start of COP26, I call on all investors worldwide to commit to setting a net zero target, including science-based interim targets, and to laying out comprehensive investor climate action plans,” said Mindy Lubber, CEO and President, Ceres.

“The most recent round of target setting by NZAM signatories is a welcome step forward in the mission to reach net zero. Of particular note should be firms’ commitment to net zero plans by 2025 or 2030. We know it is vital for investors to set near-term targets, ahead of 2050, in order to have a realistic chance of making the shift to net zero in time to keep global temperature rises below 1.5°C of warming. We now need to see pledges go deeper and further – with a higher proportion of assets aligned with net zero and further meaningful collective action on the topic, to ensure the industry is on track for 2050.” said Fiona Reynolds, CEO, Principles for Responsible Investment (PRI).

 

– ENDS –

Notes to Editor

Full list of new signatories:

ACTIAM, Addenda Capital, Aegon Asset Management, Aker Horizons, Aktia Bank Plc, Alpha Trust, Angel Oak Capital, Apostle Funds Management, Acadian Asset Management, Arjuna Capital, Artemis Investment Management LLP, Baillie Gifford & Co, BBVA Asset Management, BentallGreenOak, Bin Yuan Capital, BNK Asset Management, BNP Paribas Asset Management, Border to Coast Pensions Partnership Limited, Brawn Capital, Bregal Investments LLP, Brewin Dolphin, Bridges Fund Management, Brown Advisory, Camco Clean Energy, CANDRIAM, Columbia Threadneedle Investments, Community Capital Management LLC, CQS, Deka Investment GmbH, Deka Vermögensmanagement GmbH, Desjardins Global Asset Management, Dream Unlimited, DUGUUD, ESPIRIA, Ethical Partners, Eurizon Capital, EV Private Equity, Fideuram Asset Management Ireland, Fideuram Asset Management SGR, FSN Capital Partners, GMO, Great Lakes Advisors, Green Investment Partners, Greencoat Capital LLP, Grupo Bancolombia, Hannon Armstrong, Hg, Ibercaja AM, ICG, IG4CAPITAL, Impax Asset Management, Investindustrial, J.P. Morgan Asset Management, LaSalle Investment Management, Linzor Capital Partners, Local Pensions Partnership Investments Ltd, Mackenzie Investments, Maple-Brown Abbott, Metric Credit Partners Pty Limited, Metzler Asset Management, MidOcean Partners, Mitsubishi UFJ Asset Management (UK) Ltd., Mitsubishi UFJ Kokusai Asset Management, Mitsubishi UFJ Trust & Banking Corp, MU Investments, Munich Re Investment Partners, Muzinich & Co. Inc, NEI Investments, Neuberger Berman, Nikko Asset Management Co., Ltd. Nomura Asset Management. Oakham Wealth Management, OP Asset Management, OP Real Estate Asset Management Ltd, Orchard Street Investment Management, Pictet Group, PineBridge Investments, Polymer Capital Management, Quoniam Asset Management, Rathbone Brothers, Rockefeller Asset Management, Rothschild & Co Asset Management Europe, Salm-Salm & Partner GmbH, Savills Investment Management, SKY Harbor Capital Management, SLGI Asset Management Inc., Sprucegrove Investment Management, Stance Capital LLC, Stonepeak, Taaleri Plc, Union Asset Management Holding AG, Vancity Investment Management Ltd. (VCIM) and Veritas Asset Management.

Media contacts

For more information or further comment contact:

About the Net Zero Asset Managers initiative

The Net Zero Asset Managers initiative is an international group of asset managers committed to supporting the goal of net zero greenhouse gas emissions by 2050 or sooner, in line with global efforts to limit warming to 1.5°C; and to supporting investing aligned with net zero emissions by 2050 or sooner. The Net Zero Asset Managers initiative launched in December 2020 and aims to galvanise the asset management industry to commit to a goal of net zero emissions. The initiative is endorsed by Investor Agenda and governed by six investor networks – also referred to as the ‘Network Partners’. The Steering Committee of the Network Partners’ CEOs is responsible for the coordination and implementation of the initiative, which includes ensuring that relevant support is provided to signatories to enable best practice implementation of the commitment. The initiative is open to any asset manager globally that is also a member of one of the Network Partner networks. For more information on the initiative please contact us.

Wellington Management Case Study

Net Zero Asset Managers initiative: Target disclosure announcement – Wellington Management

What does your initial interim target look like?
We have initially committed to manage 10.6% of our total assets under management in line with net zero – approximately USD 146 billion. We have set a baseline of 2019 and by 2030 intend to either have invested in a percentage of companies with science-based targets that is consistent with a linear increase from the baseline to 100% in 2040, or to achieve a 50% reduction in average carbon intensity.

Can you elaborate on the methodology and scenarios you have used in setting this target?
Our approach is aligned with a combination of the SBTI Guidance for Financial Institutions and the Paris Aligned Investment Initiative’s Net Zero Investment Framework. We have taken a combined approach which allows options focused on engagement and portfolio construction. Each investment team determines which approach is most consistent with their philosophy and process and implements it accordingly as the default proposed approach for clients with net zero targets. Targets are set using either a science-based pathway to 1.5°C or a 50% reduction in greenhouse gas emissions by 2030.g

How did you approach deciding what to include in scope for your initial target?
We are holding ourselves to a high standard of accountability in setting our target. The funds included are only within asset classes where there are well-established methodologies for decarbonisation and where we have approval from clients and commitment from investors to implement an objective consistent with net zero by 2050 or sooner. Current factors affecting our ability to increase our target include our business model – nearly 90% of our business is made up of separately managed and sub-advisory accounts, availability of appropriate methodologies and sufficient data, and tools for implementation. We intend to update our commitment as we reach new milestones, such as establishing an actionable climate plan for a new asset class or receiving additional client approvals and hope that we can accelerate our climate action development plans in the coming years.

What are you plans when it comes to setting a policy on coal and other fossil fuel investments?
We have a client exclusion policy in place, which was updated in October this year. It covers climate risk in relation to thermal coal extraction and power generation, and oil sands extraction, evaluating companies based on revenue thresholds, reserves and announced phase-out plans. More than 90% of our cross-border sponsored funds are covered by this policy.

You recently hosted a webinar on developing net zero commitments and tools and have a paper on implementation coming soon – can you share any highlights?

Swedbank Robur Case Study

Net Zero Asset Managers initiative: Target disclosure announcement – Swedbank Robur Fonder

What does your initial interim target look like?
Our interim target is 88%, which means that around USD 126 billion of our total assets are committed to be managed in line with net zero. Our baseline year is 2019, and assets are subject to a number of additional targets by 2030, including goals for Scope 1 and 2 emissions and the proportion of assets in material sectors that aligned or aligning with net zero. Our net zero timeline is an aggressive one, being set at 2040 with a 50% decarbonisation by 2030 intensity-based target. We are also tracking absolute carbon emissions to ensure that these are close to zero by 2040.

Can you elaborate on the methodology and scenarios you have used in setting this target?
We have used the Paris Aligned Investment Initiative’s Net Zero Investment Framework and focused on the IEA’s NZE 2050 scenario, which we have adjusted for 2040 to generate our decarbonisation and solutions curves.

How did you approach deciding what to include in scope for your initial target?
The scope of AUM to be managed in line with net zero includes corporate bonds and equities for funds covered by our policy for responsible investments. It does not include our discretionary mandates, rate funds and alternative investments, however targets will be developed for these in the future when appropriate methodologies are available.

What are you plans when it comes to setting a policy on coal and other fossil fuel investments?
From 2021 we have adopted an aggressive exclusion policy on fossil hydrocarbon-based extraction and power generation. This has resulted in an approximate decrease of 50% in the carbon intensity of our aggregated investments in the last three years, and led to us being one of the top five large asset managers globally according to CDP and Climetrics ratings.

Are you able to share any highlights from your net zero methodology or climate strategy?

Schroders Case Study

Net Zero Asset Managers initiative: Target disclosure announcement – Schroders

What does your initial interim target look like?
We have set an initial target of 60% of AUM – approximately USD 396 billion – committed to be managed in line with net zero. We have started from a baseline year of 2019 and set mid and long-term targets of 2030 and 2040 respectively. Our mid-term target of 2.19°C covers Scope 1 and 2, while our long term one is 1.5°C also includes Scope 3 as indicated by the Partnership for Carbon Accounting Financials (PCAF) timeline.

Can you elaborate on the methodology and scenario you have used in setting this target and why you’ve chosen them?
– SBTi for Financial Institutions
– IPCC AR5 1.5°C

How did you approach deciding what to include in scope for your initial target?
Currently we have included asset classes that we have been able to obtain the required data for and have developed models to measure the financed emissions and temperature alignment of these assets. Currently these include listed equities and credit, but in future as more methodologies are developed, we will be able to add to the list and increase the proportion of our assets that are included. [Anything to add here?]

What are you plans when it comes to setting a policy on coal and other fossil fuel investments?
We are planning to start disclosing our investments in fossil fuel sectors and have coal exclusions for our sustainable product range. We continue to keep our fossil fuel investment policy under review.

Schroders has recently published its climate change strategy – can you share some highlights?

Aviva Investors Case Study

Net Zero Asset Managers initiative: Target disclosure announcement – Aviva

What does your initial interim target look like?
Our initial target is around 70% of AUM, which equates to USD 346 billion in assets managed in line with net zero. We have set our baseline as 2019 and intend to reduce greenhouse gas (GHG) emissions 25% by 2025 and 60% by 2030. We currently include Scope 1 and 2 in our targets, where there is sufficient coverage to enable measurement of progress towards them. Access to Scope 3 data is currently not sufficient to allow for us to measure effectively against targets, but where it is available we report internally on it.

Can you elaborate on the methodology and scenario you have used in setting this target?
We have used the Net Zero Asset Owners Alliance (NZ AOA) Target Setting Protocol, which covers public equities, credit and direct real estate and based our targets on the IPCC special report on global warming scenario of 1.5°C. We have set a target of a 25% reduction by 2025, which aligns with the 50% reduction required by 2030.

How did you approach deciding what to include in scope for your initial target?
Our initial target includes public equities, credit and direct real estate, as per the NZ AOA methodology and exclude assets including infrastructure equity and sovereign bonds that are outside of the 2025 guidance. Cash and derivatives will also be excluded, as will segregated mandates which are invested fully at the client’s discretion and externally managed funds for the time being.

What are you plans when it comes to setting a policy on coal and other fossil fuel investments?
We will have divested from all companies that make more than 5% of their revenue from thermal coal [by when?], unless they have set a science-based target and we are convinced of their ability to transition to net zero. This applies to all Aviva Investors managed funds, subject to investor consent and regulatory approval.

Aviva Investors has published its climate change strategy online – can you share some highlights?

Arisaig Partners Case Study

Net Zero Asset Managers initiative: Target disclosure announcement – Arisaig Partners

What does your initial interim target look like?
We are committing to managing 100% of our assets in line with net zero – approximately USD 5 billion in total. We have set a baseline of 2019, with a number of targets for 2025 and 2030. By 2025 we aim to have reduced Scope 1 and 2 emissions by 9% from the baseline, increased the proportion of holdings that score highly in the TPI’s Climate Risk Management tool and focus our engagement on those that TPI does not score as highly, as well as the top emitting companies with the expectation that they align with net zero.

Can you elaborate on the methodology and scenarios you have used in setting this target?
We have used the Paris Aligned Investment Initiative’s Net Zero Investment Framework and taken a self-decarbonisation approach from a methodology perspective. We have based our targets on the Net Zero 2050 Pathway by International Energy Agency for Emerging and Developing Markets, mainly due to our focus on investing in emerging markets. This is one of the few 1.5°C pathways that provides a granular pathway for emerging markets, although does consider the entire emerging market economy rather than considering sectoral differentiation. We will continue to seek more granular pathways that are consistent with the decarbonisation of the sectors that we are predominantly invested in, which tend to be lower in carbon intensity.

What are you plans when it comes to setting a policy on coal and other fossil fuel investments?
We do not invest in companies involved in the production of fossil fuels across our funds. This is laid out clearly in our long-term investing policy on ESG integration

Arisaig is due to publish more detail on its climate strategy in November – are you able to share any highlights?