Fund Solutions

Net Zero Asset Managers Pot Grows by US$7 Trillion

New signatories commit to net-zero emissions; French investors collaborate on just transition efforts.

Climate commitments by asset managers are gaining momentum with the Net Zero Asset Managers initiative welcoming 41 new signatories, representing US$6.8 trillion in assets under management (AUM). New members include Amundi, Franklin Templeton, Sumitomo Mitsui Trust Asset Management and the International Business of Federated Hermes.

First launched in December 2020 with US$9 trillion in AUM, all 128 members (US$43 trillion) of the initiative have committed to working with clients to achieve net-zero emissions across their portfolios by 2050 or sooner. The total assets committed by managers to net-zero targets now exceed the combined GDP of the US, China and UK (US$42 trillion) and represents just under half of the global asset management sector.

“2021 needs to be the year of climate action for all economic actors. We are convinced that the financial sector is a key catalyst for action in this race to net zero,” said Valérie Baudson, Amundi CEO.

Other new signatories include HSBC Asset Management, GAM, Willis Towers Watson, Ninety One and Ashmore Group.

The initiative is managed globally by six founding partner investor networks: CDP, Ceres, the Principles for Responsible Investment (PRI), Investor Group on Climate Change (IGCC), Asia Investor Group of Climate Change (AIGCC) and the Institutional Investors Group on Climate Change (IIGCC).

Signatories must set interim decarbonisation targets for 2030 which are consistent with the Intergovernmental Panel on Climate Change’s recommendation that the world’s total emissions must be halved by the end of this decade to keep global warming to 1.5°C.

Within a year of joining, new initiative members need to set an interim target for the percentage of AUM that will be managed in line with net zero by 2050 or sooner. The target will be reviewed every five years, increasing gradually until 100% of assets are managed accordingly.

All signatories are expected to produce annual reports that align with Task Force on Climate-related Financial Disclosures (TCFD) guidelines. Asset managers will also create investment products aligned with net-zero emissions and invest in climate solutions.

“This marks a fundamental tipping point across the investment sector and a significant boost in efforts to tackle climate change and decarbonise the global economy. There’s a lot more to achieve, but the sector is increasingly on a path to a net zero future,” said Stephanie Pfeifer, CEO of the IIGCC.

The initiative is accredited by the UN Framework Convention on Climate Change Race to Zero campaign and has an advisory group drawn from representatives from signatories.

Financing tomorrow

Amundi is also a founding member of the French investor engagement coalition Investors for a Just Transition, launched last week. Initiated by Finance for Tomorrow, the coalition represents €3.6 trillion in AUM and will work with different stakeholders to define and promote a socially acceptable transition a low-carbon economies.

Members will partner with a leading French university or research institute to enable “knowledge sharing” through publishing research papers, Finance for Tomorrow noted. The coalition will also establish a ‘Just Transition Hub’ which will serve as an interactive tool for investors to assess the social-related performance of corporates in transition.

The coalition also includes Aviva France, AXA and AXA Investment Managers, CPR Asset Management and Eiffel. Although launched by French investors, all investors and companies are encouraged to join the initiative in preparation for its international launch at COP26 in November.

“The decision to create the first investor coalition for a just transition stems from several observations. First of all, the just transition is a necessary condition for implementing the Paris Agreement. Our climate objectives can and will only be reached if we ensure that every one of society’s stakeholders is included in the process. Then, the financial sector has a role to play here by fully integrating the social dimension in their financing policies,” said Jean-Jacques Barbéris, Vice-President of Finance for Tomorrow and Head of the Institutional and Corporate Clients Division and ESG at Amundi.

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