Asset managers commit $61.3 trillion of assets to net-zero target

273 signatories have so far committed $61.3 trillion of assets to achieve net-zero greenhouse gas emissions by 2050 or sooner, the latest report from Net Zero Asset Managers Initiative shows.

The industry coalition launched in late 2020 to encourage asset managers to reach net zero greenhouse gas emissions by 2050 or sooner, in line with global efforts to limit warming to 1.5 degrees Celsius; and to support investing aligned with net zero emissions by 2050 or sooner.

The initiative is designed to mobilise action by the asset management industry that demonstrates leading practice in driving the transition to net zero and delivers the ambitious action and investment strategies that will be necessary to achieve the goal of net zero emissions. It also provides a forum to share best practice and overcome barriers to aligning investments to that net zero goal.

The transition to net zero will be the biggest transformation in economic history. The opportunities to allocate capital to this transition over the coming years cannot be underestimated. The financial industry’s ability to drive the transition to net zero is extremely powerful; without industry commitment, the goals set out in the Paris Agreement will be difficult to meet.

With only a proportion of assets being managed in line with net zero, the initiative has been described as greenwashing by some industry insiders. Sasja Beslik, chief investment officer at NextGen ESG Japan, a sustainable investment specialist, says: “The NZAM commitments are purely aspirational and lack any detail explaining how the objective of decarbonising their investment portfolios will be achieved.” He dismisses the NZAM initiative as “just a beauty parade”.

The commitment is designed to ensure asset managers will have to work with their clients and are expected to ratchet up the proportion of assets managed in line with net zero goals. The commitment should also ensure that several important actions – such as stewardship and policy advocacy – are comprehensively implemented. The expectation is that governments will follow through on their own commitments to ensure the objectives of the Paris Agreement are met.

Whatever your perspective, it’s undeniable that asset managers cannot exploit rapidly growing demand for ESG strategies by enticing investors with misleading or unrealistic claims.

The recent resignation of Asoka Wöhrmann, the head of Germany’s largest asset manager, following a police raid over claims it had misled investors on its environmental record, signifies that accountability now extends to the very top of an asset manager, representing a very real warning to rival investment chiefs.
“All regulations, initiatives and action groups are potential precursors to a more detailed framework or standard that we hope will give investors the detail and therefore confidence needed in choosing the right investment vehicles for them”, says SI Engage co-founder John Goodchild. “ It could evolve into something with more substance if evolving alongside a detailed and regulated framework.”

Tracking and reporting on corporate engagement are becoming a key part of asset managers showing adherence to frameworks and regulations. SI Engage proudly works with Net Zero Asset Managers Initiative signatories to ensure they fulfil their commitments with greatest ease, efficiency and transparency.

If you’re looking to harness ESG engagement, and improve asset owner stewardship reporting, get in touch to find out how our system can help.

Image credit: Still from Nasa Scientific Visualisation Studio film

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