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- Investment in climate solutions surged to $175 billion in 2023, a 38% increase from $127 billion in 2022, per the Net-Zero Asset Owner Alliance (NZAOA) report.
- 81 of the Alliance’s 88 members have committed to intermediate net-zero targets, aiming for a 26% emissions reduction in key assets by 2025, covering about $4.3 trillion of the group’s total $9.5 trillion AUM.
- The Alliance urges a “decisive shift in policy” to align government actions with net-zero goals, citing a slow global transition despite increased climate investments.
The UN-backed Net-Zero Asset Owner Alliance (NZAOA) reported a record $175 billion investment in climate-focused solutions by its members in 2023, marking a nearly 38% jump from the previous year’s $127 billion. Representing 88 of the world’s leading asset owners, including the California Public Employees’ Retirement System and Allianz SE, the Alliance collectively manages $9.5 trillion in assets. According to Net-Zero Asset Owner Alliance’s latest progress report, $555 billion, or 6% of these assets, were allocated to climate solutions such as corporate bonds and real estate investments through 2023.
Günther Thallinger, Board Member, Allianz SE, and Chair, Net-Zero Asset Owner Alliance, said,
“The Alliance sets a powerful example for meaningful progress. To maintain momentum, governments must implement bold climate policies and define concrete sector-based and investible transition plans with short-term targets to meet their Paris commitments.”
The Alliance highlighted that 81 members have now committed to intermediate targets aimed at achieving net-zero emissions by 2025—a significant increase from 69 members last year. Of these members, 79 have also set sub-portfolio decarbonization targets, targeting a 26% average emissions reduction across bonds, equities, real estate, and infrastructure. These targets cover $4.3 trillion in assets, aligned with the Paris Agreement and IPCC’s 1.5°C pathway.
Wendy Walford, Head of Climate Risk at The Legal & General, and Policy track co-lead (from 1st of January 2025), Net-Zero Asset Owner Alliance, said,
“As long-term investors, we see the difference between governments’ climate commitments and current policies as unsustainable, and a decisive shift in policy is required to align policy frameworks with the net-zero transition more widely. Governments have the tools – such as carbon pricing – to meet their Nationally Determined Contributions (NDCs), as highlighted in the Alliance’s white paper earlier this year.”
“Despite significant advances in asset owner portfolio decarbonisation, the pace of transition in the real economy remains insufficient, with global emissions continuing to rise each year.”
The 12 new members that have set their targets for the first time in 2024 have all set both their sub-portfolio and climate solution investments targets, together with mandatory engagement targets.
With the addition of new members, a total of 79 asset owners have chosen to set sub-portfolio targets. On average, members targeted a reduction of 26 per cent by 2025 for bonds, equities, real estate, and infrastructure. These reductions are aligned with the Paris Agreement and the IPCC Sixth Assessment Report pathways for achieving net zero greenhouse gas (GHG) emissions by 2050.
While the Alliance’s membership grew to 88 from 86 last year, the Danish pension fund PKA withdrew in August. Despite the Alliance’s substantial investments and expanded membership, the report underlined that the remainder of the Alliance’s assets is not yet covered by sub-portfolio targets. These include certain asset classes, such as sovereign debt, that fall outside the Net-Zero Asset Owner Alliance’s target-setting framework.
As the COP29 climate change summit approaches on Nov. 11 in Baku, Azerbaijan, the Alliance’s annual progress report signals both progress and the pressing need for policy shifts to match climate investment momentum.