Net Zero Investment Consultants Initiative launched

Written by Adam Cadle

20/09/2021

Twelve investment consulting firms, representing assets of around US$10trn, have launched the Net Zero Investment Consultants Initiative (NZICI), committing to support a global goal to reach net-zero greenhouse gas emissions by 2050 or sooner.

The commitments developed for the NZICI were designed to facilitate alignment with the UN-convened Net-Zero Asset Owner Alliance, the Net Zero Asset Managers Initiative, and other signatories of the United Nation (UN) Race to Zero Campaign.

They will apply to investment advisory services and business operations, while an additional pledge to align with the Net Zero Asset Managers Initiative within two years is also included for consultants which offer discretionary asset management services.

In relation to investment advisory services, the group has pledged to integrate advice on net-zero alignment into investment consulting services as soon as possible, and within two years of making this commitment.

The firms have also committed to working with institutional asset owner clients to identify investment risks from climate change, and to support efforts to decarbonize the global economy by helping clients prioritize real economy emissions reductions.

In relation to the firms' own business operations, meanwhile, the 12 organisations have committed to setting emissions reduction targets across all our operational emissions in line with 1.5°C scenarios.

This is alongside a pledge to work collaboratively for the benefits of clients to address challenges and seek harmonised net methodologies, and to engage, independently or as a group, with regulators and policymakers, to facilitate the transition to net zero.

All 12 firms will also be expected to report on their individual progress against the commitments at least annually in a public domain to ensure accountability.

The 12 investment consultants are: Barnett Waddingham, Bfinance, Cambridge Associates, Cardano, Frontier, Hymans Robertson, JANA, LCP, Meketa, Redington, Willis Towers Watson and Wilshire.

The initiative is led by some members of the Investment Consultants Sustainability Working Group in the UK and US, and has also been endorsed by the UN Race to Zero campaign and backed by the Principles for Responsible Investment (PRI).

Commenting on the launch, PRI CEO, Fiona Reynolds, said: “We welcome the establishment of the Net Zero Investment Consultants Initiative. The initiative underlines the growing awareness that a move to net zero must be realised at every stage and level of the investment process.

"Investment consultancies have a key role to play in facilitating this shift, by working with their clients to help embed ESG considerations throughout their investment activity. The scope and influence of the founding partners behind the initiative is extensive and sets the tone for the rest of the sector.

"We encourage other investment consultancies to consider their involvement in positively affecting the shift to net zero and to come together to support this vital work.”

UN Climate Change Conference (COP26) high level champion for climate action, Nigel Topping, added: “We are delighted to announce the launch of Net Zero Investment Consultants Initiative. Assisting and advising asset owners to meet net-zero goals through investment choices is crucial in meeting the collective decarbonisation targets.

“This commitment also cements their role in holding asset managers accountable on stewardship and product innovations. As part of Glasgow Financial Alliance for Net Zero, we look forward to working together to make the investment process align to net zero.”

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