NZAM initiative confirms initial net zero targets for 86 asset managers

Written by Michael Griffiths

09/11/2022

The Net Zero Asset Managers (NZAM) initiative has announced that a total of 86 asset managers have disclosed their initial targets for the proportion of assets managed in line with achieving net zero by 2050, the largest group of firms to date.

Less than two years since the initiative launched, the latest disclosures, which include Northern Trust AM and AllianceBernstein, take the total number of asset managers that have set initial targets to 169.

These latest targets mean that, collectively, approximately $21.8trn – out of a possible $55.3trn managed by the asset managers who have set targets to date – is now committed to be managed in line with achieving net zero by 2050 or sooner.

All targets are available on the Net Zero Asset Managers initiative (NZAM) and follow May’s target disclosure report.

According to the Institutional Investors Group on Climate Change (IIGCC), the initial targets are only a “starting point” and represent what asset managers can feasibly commit to today.

Collectively signatories have now committed on average 39% of assets to net zero by 2050, with all NZAM signatories committing to ratchet up their assets committed to net zero with a view to reaching 100%. Achieving this, however, is dependent on numerous factors including the mandates agreed with clients, clients’ and managers’ regulatory environments, supportive policy environments, as well as the development of target setting methodologies for all asset classes.

“In less than two years the NZAM initiative has managed to significantly raise the scale of ambition towards net zero across the global asset management industry,” said IIGCC CEO, Stephanie Pfeifer.

“Building on the initiative’s positive start, the focus must now be on supporting managers to increase their targets and turning commitments into action with an emphasis on supporting real world emission reductions – without this, the likelihood of limiting temperature rises to no more than 1.5 degrees becomes more distant.”

Across the 169 initial targets submitted to date, 87 are using the Paris Aligned Investment Initiative Net Zero Investment Framework (NZIF), 39 use the Science Based Targets initiative for Financial Institutions (SBTi), nine use the UN-convened Net Zero Asset Owner Alliance Target Setting Protocol (TSP), 23 use a combination while 11 are using their own or other methodology.

“This latest round of targets, released by NZAM signatories, is a welcome indicator of the ongoing shift to a global net zero financial system,” added Principles for Responsible Investment (PRI) CEO, David Atkin.

“We know that there is still work to be done to assist NZAM signatories in overcoming the systemic barriers to net zero, and we look forward to continuing our important work to this end. But these targets should be welcomed, as a strong indicator of investor ambition, and as a baseline for future progress.”

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