Investor Case Studies Show Paths to Net Zero Transition

Engagement highlighted as key facet towards decarbonising portfolios across global efforts by investors.

New case studies show investor action on climate change is increasing and that there is more interest about net zero ambitions from wider markets.

The studies are part of the Investor Agenda’s highlights of best practices in its Investor Climate Action Plans (ICAPs) scheme. Investor Agenda is a collaboration of several investor groups focused on achieving net zero greenhouse gas (GHG) emissions.

The ten investors featured in the case studies from around the world included: Cathay Financial Holdings (Taiwan), Mirae Asset Global Investments (South Korea), Sumitomo Mitsui Trust Asset Management (Japan), Allianz (Germany), Aware Super (Australia), CalSTRS (US), FAMA Investimentos (Brazil), IFM Investors (Australia), PensionDanmark (Denmark), and UniSuper (Australia).

The case studies showed how asset managers’ and owners’ climate action plans were aligned with measures outlined in the Investor Agenda’s ICAPs Expectations Ladder, released in May 2021.

Most included engagement as a key theme, though several emphasised other aspects. Australia’s Aware Super was highlighted for its anti “set and forget” policy, which meant the A$150 billion in assets under management (AUM) superannuation fund was continually engaging with its investments to track progress and update policies where appropriate.

FAMA Investimentos, a Brazilian independent asset manager, and the only case study from Latin America emphasised how economically successful ESG and net zero goals could be. However, the case study underscored FAMA’s biggest strength was its engagement work. “It does not invest in coal or any other fossil fuel,” said Investor Agenda’s statement. “[FAMA] has been compensating its emissions since 2018 through the purchase of carbon credits from the Jari-Pará REDD+ Project. These offsets contribute to the conservation of 700,000 hectares of native Amazon rainforest.”

Investor Agenda showed how these investors’ climate action plans aligned with the measures outlined in the organisation’s ICAPs Expectations Ladder. The framework was designed to help investors decarbonise their portfolios and align investment strategies with policymakers’ efforts to achieve net-zero emissions by 2050.

The framework gives “expectations for ICAPs, wherever investors are on their climate journey, including steps for investors to deliver on their climate commitments and support the global goal of a net zero emissions economy by 2050 or sooner,” said Investor Agenda. Over 270 asset managers and asset owners with nearly US$60 trillion in AUM have now committed to issuing ICAPs.

The ICAPs Expectations Ladder uses a tiered system approach, from Tier 4 to Tier 1, to measure progress. Tier 4-ranked investors are beginning to think about climate action and Tier 1-ranked investors are net zero standard setters.

“We are publishing these case studies to showcase examples of investors taking action to publicly disclose ICAPs, and to improve transparency and accountability in transition planning,” said Rebecca Mikula-Wright, CEO of Asia Investor Group on Climate Change (AIGCC) and Investor Group on Climate Change (IGCC), and founding partner of the Investor Agenda. “The ICAPs are a way to help mobilise investors, but especially in Asia Pacific, where we need to see more using these frameworks to help with climate integration into their portfolios.”

The practical information hub for asset owners looking to invest successfully and sustainably for the long term. As best practice evolves, we will share the news, insights and data to guide asset owners on their individual journey to ESG integration.

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