Asset managers responsible for over $9 trillion of investments under management around the globe have pledged to support a goal of net zero greenhouse gas emissions by 2050 or sooner, in line with the Paris Accord target to limit Earth’s warming to 1.5°C.
The mostly non-U.S. signatories, announced Friday, also set interim targets for 2030, and will take account of portfolio Scope 1 and 2 emissions and, to the extent possible, material portfolio Scope 3 emissions, they said. Scope 1 emissions are the pollution directly released by a source; scope 2 covers power usage and scope 3 refers to the emissions of companies, in a supply chain, for instance, that the primary entity may not have direct control over.
The group, which named its effort The Investor Agenda, will implement a stewardship and engagement strategy, and vote on shareholder proxies consistent with the climate-change ambitions of their pledge. Further, they vow to create investment products aligned with green goals, and many already do.
“Asset managers around the world have a critical role to play in the transition that is already well underway, and today they have sent a powerful signal to global markets and across the broader investment community,” Mindy Lubber, CEO of sustainable-investing advocate and a member of the global steering committee of The Investor Agenda. “We look forward to working with them every step of the way to becoming ‘net-zero’ asset managers, and welcoming other asset managers to our initiative in the coming months.”
The Investor Agenda did pledge to review its interim target at least every five years, with a view to ratcheting up the proportion of AUM covered until 100% of assets are included.
The voluntary Paris pact that includes major governments, with private companies participating from the sidelines, will mark five years on Saturday. The agreement aims to hold the increase in average global temperatures “well below” 2 degrees Celsius (3.6 degrees Fahrenheit), and ideally no more than 1.5C (2.7 F), compared to pre-industrial levels.
Pledges for net zero emissions have gathered traction in recent months, including at the national level. China, the world’s largest polluter, said earlier this fall it will try to flip to carbon-neutral by 2060, a nonbinding pledge that nonetheless raises the pressure on the U.S. to toughen its national response to man-made climate change.
The asset managers’ announcement comes in a week with other developments for climate-change policy shifts in the investment world. New York State’s $226 billion pension fund, one of the world’s largest and most influential investors, said it will eliminate many of its fossil-fuel stocks in the next five years.
Also out this week, BlackRock, the world’s largest asset manager, said it would look to support more shareholder votes on climate issues after critics of the firm said its climate pledges to date have made waves but not delivered at proxy season. Officials in charge of stewardship at the firm said it had preferred to deal with companies counted among its holdings directly on climate issues. BlackRock was not included in the Investor Agenda announcement.
Read: BlackRock vows to support more shareholder votes on climate change after proxy record disappoints
The initial 30 global firms to sign on are: a.s.r. Asset Management, Anaxis Asset Management, Arisaig Partners, Asset Management One, ATLAS Infrastructure Partners, AXA Investment Managers, BMO Global Asset Management, Calvert Research and Management, CCLA Investment Management, Clean Energy Ventures, DWS, FAMA Investimentos, Fidelity International (which was spun off from U.S.-based Fidelity Investments in the 1980s), Generation Investment Management LLP, Gulf International Bank Asset Management, Handelsbanken AB Publ, IFM Investors, Inherent Group LP, Kempen Capital Management, Legal & General Investment Management, M&G plc, New Forests Pty Ltc, Nordea Asset Management, Robeco, Sarasin & Partners LLP, Schroders, Swedbank Robur, UBS Asset Management UBS, -1.94%, Wellington Management and WHEB.
“It is clear from scientific reports about climate change and carbon emissions that society has to act now. We cannot solve big problems such as climate change and the rapid decline of biodiversity on our own. But what we can do is set a clear example for the broader industry, work together and encourage other financial institutions such as asset managers to follow suit,” said Gilbert Van Hassel, CEO, Robeco. His firm has $160 billion in ESG-integrated assets (Environmental, Social and Governance).
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