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IIGCC event marks net zero momentum and sets out Investor Practices programme strategy for 2023

IIGCC event marks net zero momentum and sets out Investor Practices programme strategy for 2023

Mahesh Roy

Investor Strategies Programme Director

The first part of the event brought Paris Aligned Asset Owners Group together for its biannual meeting. Asset managers and guests then joined for a second plenary outlining IIGCC’s Investor Practices Programme strategy for the year ahead.

In our first in-person event of the year, IIGCC invited institutional investors to hear our plans for 2023, hosted by member HSBC Asset Management. Speakers also reflected on the challenges investors faced during 2022 and their resilience despite them:

“I want to praise everyone in this room,” remarked Mahesh Roy, IIGCC Investor Practices Programme Director:

“Despite war, covid outbreaks, floods, inflation, food shortages, and a market crash, we’ve continued to make progress.”

A growing commitment

This progress was reflected in continued momentum across key investor net zero initiatives; the Paris Aligned Asset Owners (PAAO) and the Net Zero Asset Managers (NZAM) initiatives.

Stephanie Pfeifer, IIGCC’s CEO, opened the biannual PAAO meeting by reflecting on its journey from an initial concept in late 2020 to the widely recognised commitment it is today:

“There was clear appetite for a public pledge,” Stephanie explained to the audience, some of whom were founding members: “This has led to huge momentum and ambition from the asset owner community.”

PAAO is now a global group of 57 signatories representing more than USD 3.3 trillion in assets under management – 40 of whom have already disclosed initial targets.

Welcoming asset managers into the second session, Mahesh shared a similar story in the open plenary:

“The Net Zero Asset Managers initiative had 301 signatories representing USD 59 trillion in assets as of November 2022. And of those signatories, 169 have set interim targets.”

IIGCC reviewed 105 target submissions in 2022, Mahesh said, covering half of all targets set for NZAM and all targets set for PAAO. The remaining targets were reviewed by IIGCC’s partner networks worldwide, who co-convene the initiatives.

A shared objective

The need for increased collaboration was a common theme throughout both parts of the event; be it between asset owners; with asset managers; or across policy frameworks and guidelines.

One place where this is already happening frequently is in IIGCC’s surgeries, which have become a firm member favourite. These cross-programme roundtables, which also discuss our Corporate Engagement and Public Policy programmes, often see more than 140 participants sharing best practices.

The Investor Practices team will build on this momentum as it rolls out its 2023 priorities, organised under three core pillars:

  • Initiatives
  • Frameworks
  • Implementation (of initiatives and frameworks)

This includes net zero guidance for private equity (PE). Misa Andriamihaja, newly-joined IIGCC Senior Investment Specialist for Private Markets, confirmed that new guidance is scheduled for May 2023 and will cover scope, metrics and targets, and implementation actions relevant to General Partners and Limited Partners.

Growing challenges

Recruiting new expertise into the team is a core part of IIGCC’s ambition to support investors. This includes growing workstreams for real estate, covering topics such as embodied carbon, as well as nature and biodiversity.

Aligning investments in emerging markets is another priority focus area for many investors.

Dr Adrian Fenton, IIGCC Senior Programme Manager, introduced a discussion on this critical topic with Daisy Streatfeild, Sustainability Director at Ninety One, Katharina Lindmeier, Senior Responsible Investment Manager at Nest Corporation, and Helen King, Senor Fund Manager at HSBC Asset Management.

The first consensus was that the term ‘emerging markets’ is extremely broad:

“The economy of South Korea is almost incomparable to Mozambique in terms of investment flows,” Daisy pointed out.

Katharina explained that for asset owners, a key challenge in this space is asset alignment with net zero targets. China and India, which make up a large proportion of emerging market indices, do not subscribe to a 2050 net zero target.

However, there is a funding gap and demand is growing:

“Given the scale of investment needed, energy generation in emerging markets can be viewed through the lens of alpha generation as well as risk management,” Helen told the audience.

Formalising external collaboration on emerging markets to establish guidance is another deliverable on the Investor Practices roadmap for 2023.

An open forum

Though IIGCC works closely with members in virtual working groups and projects, surgeries and discussion papers, there’s often no substitute for getting together in person.

In her closing remarks, Stephanie Pfeifer reiterated the shared level of investor ambition to net zero and to a sustainable economy, considering climate as a financial risk and the transition as an opportunity:

“It is good investment practice in line with client and beneficiary needs.”

If you’d like to join future events and read our exclusive member-only analysis, reach out to our investor relations manager today to find out more about becoming part of IIGCC.