Asset managers urged to align to UN guidelines

Written by Adam Cadle

12/10/2022

The Sierra Club, BankTrack and a coalition of 22 advocacy groups have sent an open letter to the Net Zero Asset Managers Initiative (NZAM), urging it to update expectations for its members to reflect the latest Race to Zero criteria on net-zero.

NZAM membership includes 273 asset managers, including BlackRock, Vanguard, State Street, Fidelity, representing over $61.3trn in assets.

The UN-backed Race to Zero campaign, of which NZAM is a partner, updated its criteria in June to explicitly require its partners to phase down and out all unabated fossil fuels as part of a just transition aligned to a 1.5C scenario. In September, the Race to Zero issued clarifications on its guidance that provides flexibility for transition planning while reaffirming core elements of the criteria.

"When the Race to Zero campaign updated its criteria, it affirmed what has been obvious for years: if financial institutions want their net-zero commitments to be credible, they must phase out financing for new fossil fuel development. Now NZAM leadership must get serious about upholding these criteria and make it clear that asset managers cannot achieve their climate commitments while financing the expansion of fossil fuels and failing to hold the companies in their portfolios accountable to align with the science," said Jessye Waxman, senior campaign representative in the Sierra Club's Fossil-Free Finance campaign.

The letter calls on NZAM to, at minimum, provide clear guidance to its members on how best to bring their policies into alignment with the new Race to Zero criteria. The letter recommends the guidance be completed in time for NZAM members to update their policies by the June 2023 deadline for compliance.

The letter comes just weeks after a similar coalition of advocacy groups sent a letter to the Net Zero Banking Alliance (NZBA), urging the alliance to encourage its member banks to phase out their financing of fossil fuel development in order to align with the updated Race to Zero criteria. However, the response has not been universally positive, with several US banks including JPMorgan Chase, Morgan Stanley, and Bank of America reportedly threatened to leave the Glasgow Financial Alliance for Net Zero (GFANZ), and the associated Net Zero Banking Alliance.

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