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AUM in Action

Investor Groups Launch Updated NZIF

The Paris Aligned Asset Owners initiative has updated its Net Zero Investment Framework, providing new guidance for those wanting to align their portfolios with the Paris Agreement. First launched in 2021 by the Institutional Investor Group on Climate Change (IIGCC), the NZIF provides guidance on most asset classes – including listed equities, corporate fixed income, sovereign bonds, real estate, infrastructure, private equity, and private credit. NZIF 2.0 includes new guidance on sovereign bonds, real estate and private debt. It also outlines new emissions performance criterion for listed equities and corporate fixed income, and new certificate deposits guidance to support net-zero cash management. A key change in the new version is the approach to financed emissions, which has shifted from an emphasis on “reducing financed emissions” to “financing reduced emissions”. According to the IIGCC, the previous emphasis had had “perverse outcomes” by dissuading investment in climate solutions at a time when the mobilisation of capital to finance these areas should be encouraged. The update acknowledges that financed emissions “don’t tell the whole story”. “Based on three years of practical experience, NZIF 2.0 incorporates the latest guidance on net-zero target setting and the latest thinking on the levers available to investors to meet their goals,” said Stephanie Pfeifer, CEO of the IIGCC. “For investors looking to identify and manage climate-related transition risks and opportunities in their portfolios, the framework has cemented its position as the number one resource to accompany them along their journey.”

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