Paris Aligned Asset Owners group grows to $1.9 trillion as ABP, National Trust, TPT & others join
– Paris Aligned Asset Owners group grows to 28 investors with combined AUM of $1.9 trillion
– Europe’s largest public sector pension fund ABP and National Trust, among six new signatories
– Investors commit to achieving net zero emission portfolios and increasing investments in climate solutions
– Initiative included in the United Nation’s Race to Zero campaign
Europe’s largest pension fund ABP, the National Trust for Places of Historic Interest or Natural Beauty, the Church of Sweden, South Yorkshire Pension Fund, Wiltshire Pension Fund and TPT Retirement Solutions – collectively representing $617 billion in assets under management – are new signatories to the Paris Aligned Investment Initiative’s, Net Zero Asset Owner Commitment1.
The Paris Aligned Investment Initiative is a collaborative investor-led global forum enabling investors to align their portfolios and activities to the goals of the Paris Agreement. The asset owner Commitment will see the pension funds decarbonise their investment portfolios by 2050 or sooner and increase investment in climate solutions, in line with a 1.5°C net zero emissions future. They must also set interim targets for decarbonisation and investment, and undertake policy advocacy and engagement, and voting in line with net zero goals.
The funds will be using ‘Net Zero Investment Framework’ as the practical basis for delivery, in maximising the contribution they make to tackling climate change2. The six investors making the commitment today join a larger group of 38 existing investors – both asset owners and asset managers – representing $8.5 Tn in assets that are already using the Framework3.
The Paris Aligned Investment Initiative was established in May 2019 by the Institutional Investors Group on Climate Change (IIGCC). As of March 2021, the initiative has grown into a global collaboration supported by four regional investor networks – AIGCC (Asia), Ceres (North America), IIGCC (Europe) and IGCC (Australasia)4. It is also included in the United Nation’s Race to Zero campaign.
Stephanie Pfeifer, CEO, Institutional Investors Group on Climate Change, said: “Net zero commitments are vital but must be matched with robust action plans. Growing uptake of the Net Zero Investment Framework ensures more investors are now able to maximise their contribution to the energy transition by adopting a net zero investment strategy.”
Independent analysis, across $1.3 trillion real-world investor portfolios, shows net zero alignment is a no regrets choice with scope for investors to secure notable benefits over a business-as-usual approach to investment5.
The current Framework provides metrics and methodologies for four asset classes (sovereign bonds, listed equity and corporate fixed income and real estate), with work already underway through the Paris Aligned Investment Initiative to establish approaches for infrastructure and private equity. The initiative is today also launching a workstream to define how to align to net zero for derivatives as an asset class, and broadening the scope of strategies and asset classes covered by the Framework, including hedge funds.
Loek Sibbing, board member, ABP, said: “Climate change is one of the biggest issues facing the world today. We at ABP are taking actions in our Responsible Investment Policy to counter it. Much depends on standards to be able to steer in the right direction. The Net Zero Investment Framework commitment will help ABP on our pathway to an effective net zero investment strategy.”
Cliff Speed, Chief Investment Officer, TPT Retirement Solutions, said: “Climate change represents a systematic risk to the long-term value of our investment portfolio and has the potential to reduce the security of our members’ retirement benefits. At the same time, the investment required to transition to a net zero economy presents a significant opportunity to support the expansion of climate solutions.
“Making a commitment to transition our portfolio to net zero by 2050 or sooner and becoming a signatory to the Paris Aligned Investment Initiative, Net Zero Asset Owner Commitment, signals we will continue to allocate capital to sustainable businesses, consistent with our investment objectives.”
Alice Bordini Staden, National Trust Investment Committee Member, said: “As Europe’s biggest conservation charity, we have a responsibility to do everything we can to fight climate change, which poses the biggest threat to the places, nature and collections we care for. The financial sector has a pivotal role in enabling the transition to a low carbon economy: our entire organisation is committed to this mission, not just with positive climate solutions, but also with active stewardship activities to encourage and promote the financial sector’s role in achieving net zero.
“Climate change represents a systematic risk to the long-term value of our investment portfolio and has the potential to reduce the security of our members’ retirement benefits. At the same time, the investment required to transition to a net zero economy presents a significant opportunity to support the expansion of climate solutions.
“Making a commitment to transition our portfolio to net zero by 2050 or sooner and becoming a signatory to the Paris Aligned Investment Initiative (PAII), signals we will continue to allocate capital to sustainable businesses, consistent with our investment objectives.”
Councillor Richard Britton, Chair, Wiltshire Pension Fund Committee, said: “As the world transitions to a low carbon economy, Wiltshire Pension Fund has made the vital decision of committing to net zero by 2050 within its investment portfolios. This is in order to safeguard our members’ pensions and enable us to benefit from the opportunities presented by a green economy.”
Gunnela Hahn, Head of Sustainable Investment, The Church of Sweden, said: “To protect our planet and civilization from devastating climate change, we urgently need to decarbonise our economies. The financial industry has a key role in ensuring this happens. Church of Sweden therefore divested from oil, gas and coal in 2009, and are now committed to net zero emissions.”
George Graham, Director, South Yorkshire Pensions Authority, said: “Climate change is the most significant risk facing the value of our pension fund’s investments, and the need to take action on this is urgent. However, the transition to a low carbon economy is also a significant investment opportunity which we can look to exploit for the longer-term sustainable benefit of our scheme members.”
The Paris Aligned Investment Initiative is also now collaborating with the Partnership for Carbon Accounting Financials (PCAF), a rapidly growing collaboration of financial institutions working together to develop a harmonised approach to measuring and disclosing greenhouse gas emissions of loans and investments. PCAF is the leading accounting approach underpinning the Net Zero Investment Framework, and the two initiatives will work together to develop greenhouse gas accounting methodologies for asset classes such as sovereign bonds, accounting for carbon removals/sequestered emissions and technical issues such as aggregation of Scope 3 emissions.
With existing initiatives such as Net Zero Asset Managers providing a basis for asset managers to already commit to net zero alignment, the Paris Aligned Investment Initiative’s Net Zero Asset Owner Commitment was developed for asset owners also looking to put the Framework into practice. Signatories to the commitment become part of the Paris Aligned Asset Owners group.
– Ends –
Elliot Frankal: [details to be added.]
Notes to Editor:
URL link for inclusion in reporting: https://www.parisalignedinvestment.org
- A full list of asset owners already having made the Paris Aligned Asset Owners Commitment is available here.
- Developed by the Institutional Investors Group on Climate Change, the Framework offers a comprehensive approach to developing a ‘net zero investment strategy’. Its five components enable investors to maximise their impact in driving real-world decarbonisation, well beyond portfolio decarbonisation alone. The five key components of the Net Zero Investment Framework are: objectives and targets, strategic asset allocation and asset class alignment, alongside policy advocacy and, investor engagement activity and governance. A ‘net zero investment strategy’ is also underpinned by three types of targets, as the main metrics to measure effective action:
- Portfolio level targets for decarbonisation and investment in climate solutions
- Timebound portfolio coverage targets for companies and assets to meet net zero or aligned criteria
- Engagement coverage threshold (>70% emissions in material sectors) ensuring intensive engagement to drive the transition
- A full list of investors already using the Net Zero Investment Framework is here.
- 118 investors are participants of the Paris Aligned Investment Initiative, see here for a full list.
- See IIGCC Net Zero Investment Framework: Portfolio Testing Results.
About Paris Aligned Investment Initiative
The Paris Aligned Investment Initiative is a collaborative investor-led forum to support investors to align their portfolios and activities to the goals of the Paris Agreement, and achieve net zero alignment. The initiative involves more than 110 investors representing USD $33 trillion in assets.
Launched in May 2019 by the Institutional Investors Group on Climate Change (IIGCC), the initiative is now a global collaboration involving three other additional regional investor networks supporting a growing number of investors take action: the Asian Investors Group on Climate Change (AIGCC – Asia), Ceres (North America), and the Investor Group on Climate Change (IGCC – Australasia).
The Institutional Investors Group on Climate Change (IIGCC) is the leading European membership body enabling the European investment community in driving significant and real progress by 2030 towards a net zero and resilient future. IIGCC’s 300 members representing €37 trillion AUM are in a position to catalyse real world change through their capital allocation decisions and engagement with companies and the wider market as well as through their policy advocacy. IIGCC has three clear areas of focus: policy, investor practices and corporate engagement reflecting the key investor levers for change. The programme teams work in strategic partnership with investors supporting, enabling and showcasing their role in the realisation of the transition to net zero in support of the goals of the Paris Agreement. For more information visit www.iigcc.org and @iigccnews.