A $9.5 Trillion Climate Investor Group Releases Target-Setting Protocol for Assets in Private Equity, Debt

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Key Impact Points:

  • The Net-Zero Asset Owner Alliance, managing $9.5 trillion, releases its most comprehensive Target-Setting Protocol, extending to private assets for the first time.
  • The protocol aims to halve emissions by 2030 and achieve net-zero emissions by mid-century.
  • Members are required to set 40 to 60 per cent GHG emissions reduction targets by 2030 compared to 2019 levels.
  • Sovereign debt emissions assessment introduced through ASCOR database pilot, enhancing climate alignment understanding.
  • The initiative emphasizes engagement with fund managers and tailored mandates to ensure climate-compliant asset procurement.

In a significant stride towards combating climate change, the Net-Zero Asset Owner Alliance, a coalition of major institutional investors, unveils its latest initiative to steer $9.5 trillion in assets towards sustainability. The fourth edition of the Target-Setting Protocol, announced today, marks a pivotal moment in the alliance’s journey, extending its purview to encompass private assets and sovereign debt, while intensifying its commitment to slashing emissions.

The newly introduced Target-Setting Protocol emerges as a beacon of hope in the fight against climate change. In a world grappling with environmental challenges, the protocol signifies a united front among 89 major institutional investors, including industry titans like CalPERS, CDPQ, Nippon Life, and Axa. The protocol’s comprehensive approach, covering a spectrum of private assets, heralds a paradigm shift in sustainable investment strategies, propelling the finance industry towards a greener future.

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Günther Thallinger, Board Member of Allianz SE and Chair of the Alliance, underscores the collective determination driving this ambitious endeavor. He affirms, “The fourth and most comprehensive Target-Setting Protocol has been approved by every Alliance member, managing a total of $9.5 trillion, as we continue to work towards a 1.5°C scenario.” Thallinger’s statement encapsulates the resolute commitment shared by members to align their investment portfolios with the imperative of sustainable development.

One of the protocol’s groundbreaking features is its inclusion of sovereign debt emissions assessment through the Assessing Sovereign Climate-related Opportunities and Risks (ASCOR) database pilot. This pioneering initiative seeks to illuminate the climate alignment of countries’ sovereign debt holdings, providing a holistic understanding of emissions implications. By bridging the gap between emissions data and real-world impact, the ASCOR framework empowers investors to make informed decisions that resonate with climate-conscious objectives.

Furthermore, the protocol underscores the importance of engagement with fund managers to drive emissions reduction strategies. Rather than resorting to a mass exodus from high-emitting assets, the Alliance advocates for tailored mandates and collaborative partnerships to foster the transition towards climate-compliant investments. This nuanced approach not only mitigates risks associated with the private market but also catalyzes sustainable economic growth, aligning with the broader ethos of the United Nations Sustainable Development Goals.

As the Net-Zero Asset Owner Alliance paves the way for a greener financial landscape, its endeavors echo beyond the realm of investment. By setting ambitious targets and embracing innovative methodologies, the alliance embarks on a transformative journey towards a net-zero future. In doing so, it not only fulfills its fiduciary duties but also exemplifies the pivotal role of finance in driving positive global change.

In a world characterized by uncertainty and environmental degradation, the Net-Zero Asset Owner Alliance emerges as a beacon of hope, illuminating a path towards a sustainable future—one investment at a time.