A Sustainable Investment in Journalism

A sustainable business requires diverse revenue streams. ESG Investor now operates a subscription service as of Tuesday 14th May. To find out more please get in touch with our subscription team on subscriptions@esginvestor.net

IIGCC Outlines Principles for Enhancing Net Zero Benchmarks

The Institutional Investors Group on Climate Change (IIGCC) has issued a set of five principles to evaluate and enhance the quality of net zero benchmarks, having formed a working group that engaged with prominent providers, including Bloomberg, FTSE Russell, MSCI, and S&P Global. The group aimed to make net zero alignment with the Paris goals an attainable objective for a wider range of market participants, while also considering EU regulation. The working group concluded that progress has been made at different paces across asset classes, with equities being the most advanced. However, more work is needed regarding fixed income net zero benchmarks, particularly for sovereign bonds, which have proven to be a challenge for benchmark innovation due to limited integration into net zero investment strategies. While the EU climate benchmarks regulation is seen as a step in the right direction, the working group believes it falls short as benchmarks implementing the regulation tend to comply with emission reduction targets through capital reallocation, rather than promoting actual emissions reductions. The working group’s recommendations aim to promote best practices and encourage benchmarks that drive real-world emissions reductions. Its five key principles  include: prioritising real-world emissions reductions; ensuring transparency of benchmark rules and their consequences; incorporating a sectoral and regional based approach; prioritising publicly available data and integrating alternative alignment metrics; and facilitating engagement to improve issuer behaviour.

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.

Copyright © 2024 ESG Investor Ltd. Company No. 12893343. ESG Investor Ltd, Fox Court, 14 Grays Inn Road, London, WC1X 8HN

To Top