Over 70 asset management firms with $16 trillion of assets have developed the first-ever Net Zero Investment Framework that “provides the first-ever practical blueprint for investors to maximise the contribution they make in tackling climate change and achieving net zero emissions globally by 2050.”
The framework has been developed through the Institutional Investors Group on Climate Change (IIGCC).
The asset managers involved include Aberdeen Standard Investments, Scottish Widows, Phoenix Group, Aegon Asset Management, Royal London Asset Management, Aviva Investors, AXA Investment Managements, Church of England Pensions Board, HSBC Global Asset management, L&G Investment Management, PIMCO and Robeco.
The IIGCC said the framework’s primary objective is to ensure investors can decarbonise investment portfolios and increase investment in climate solutions “in a way that is consistent with a 1.5°C net zero emissions future.”
Four different asset classes – sovereign bonds, listed equities and corporate fixed income and real estate – are covered by the framework, with others to follow.
Five investors — APG, Brunel, the Church of England Pensions Board, PKA and Phoenix Group — will put the framework to the test by modelling its impact across performance of their real-word portfolios collectively valued at $1.3 trillion.
The results of this analysis will be launched with the final framework, expected before the end of 2020.
Institutional Investors Group on Climate Change CEO Stephanie Pfeifer said: “The willingness is there, but until now the investment sector has lacked a framework enabling it to deliver on this ambition.
“As we work towards investors adopting the framework before the end of the year, the race is now on in the run-up to COP26 for asset owners and managers to show they will be net zero investors.”
Standard Life Aberdeen CEO Keith Skeoch said: “The transition to net zero is fundamentally an investment transition: shifting capital from high carbon to low carbon alternatives.
“This innovative framework provides investors with a roadmap to help accelerate this capital shift and support the goals of the Paris Agreement.”
Scottish Widows CEO Antonio Lorenzo said: “We are proud to have supported IIGCC in this vital piece of work.
“There are many notable examples in the financial industry of investors seeking to incorporate sustainability into their investment strategies, and for those who are seeking to align their portfolios to the goals of Paris Agreement this initiative helps provide a roadmap of how they can begin this journey.”
Phoenix Group Chief Investment Officer Michael Eakins said: “We are very pleased to be participating in and supporting the important work of the IIGCC to help maximise the contribution that the investment community is making towards the decarbonisation of the global economy.
“As a leading retirement and savings business, Phoenix Group has committed to fostering responsible investment across its investments portfolios.
“We work closely with our asset management partners, including Aberdeen Standard Investments, to achieve this for our business and for our customers who are investing for their future.
“This project has given us valuable insights into what the net zero journey for our investment portfolios could look like, and recommends a Framework that will help everyone make the progress that is vital.”