Monday, December 5, 2022

Fund managers with $ 9 billion in assets set net zero goal

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Thirty of the world’s largest asset managers, who collectively oversee $ 9 billion, have set a goal of achieving net zero carbon emissions in their investment portfolios by 2050, which should huge ramifications for businesses around the world.

The group, which includes Fidelity International, Legal & General Investment Management, Schroders, UBS Asset Management, M&G, Wellington Management and DWS, said it would work with its clients to reduce emissions from their investments.

The move means asset managers would be forced to avoid companies that are ill-prepared for a low-carbon economy if they are to meet their net zero goals.

“The transition to net zero will be the biggest transformation in economic history and we want to send a clear signal that there is simply no more time to waste,” said David Blood, who co-founded Generation Investment. Management with the former American vice-president. Al gore.

“The opportunities to allocate capital to this transition over the next few years cannot be underestimated. Without the asset management industry on board, the goals set in the Paris Agreement will be difficult to achieve. “

More and more asset managers are concerned on the risks of climate change for financial returns. At the same time, the industry has been target by climate activists, who argue that investors have a vital role to play in the fight against global warming, either by pulling investment out of carbon-intensive industries or by supporting cleaner groups.

“Climate change poses one of the risks, if not the most important, to the profitability and long-term sustainability of companies, including our own,” said Anne Richards, Managing Director of Fidelity International.

The investors, which also include Japan’s Asset Management One and France’s Axa Investment Managers, formed the Net Zero Asset Managers initiative ahead of the fifth anniversary of the Paris Agreement this weekend, where countries agreed to limit the rising global temperatures.

As part of this initiative, investors have committed to set an interim target for the proportion of assets to be managed based on achieving net zero emissions by 2050 or earlier and to review it at least every five years. The goal is to eventually have all of their assets under management included.

Stephanie Pfeifer, managing director of the Institutional Investors Group on Climate Change and founding partner of the initiative, said the scale and importance of asset managers joining the group was a “clear signal” that the ” financial firepower ”of institutional investors would be“ determined to make real progress towards a net zero and resilient future ”.

However, others gave the group a more cautious welcome.

Lucie Pinson, founder and director of Reclaim Finance, a nonprofit that has lobbied financial groups on climate change, said many founding members of the new initiative had little or no policies on fossil fuels such as coal. “We remain skeptical,” she added.

Colin Baines, director of investment engagement at the Friends Provident Foundation, said the adoption of net zero goals by large asset managers “accompanied by meaningful and clear transition plans and milestones could have an impact. real impact on the world economy ”.

But he warned that concrete plans were needed to avoid accusations of greenwashing.


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