IIGCC’s Paris Aligned Investment Initiative (PAII) looks at how investors can align their portfolios to the goals of the Paris Agreement. Launched in May 2019, the initiative has the following objectives:
- Develop working definitions of concepts, terms and pathways relevant to Paris alignment.
- Assess methods and approaches relevant to measuring alignment and transitioning different asset classes.
- Test the implications of aligning to support delivery of the Paris Agreement goals using real-world portfolios.
A first output of this process is a framework for ‘Paris alignment’ by investors (see the next section below). This looks to ensure investors can maximise the contribution they make in limiting global warming to no more than 1.5°C, in line with the latest science and higher end ambition of the Paris Agreement.
Putting this objective into practice means investors should look to ensure their portfolios are working to help achieve net zero emissions by 2050 at the latest. The way to achieve Paris alignment is therefore by becoming a ‘net zero investor’. IIGCC’s Net Zero Investment Framework (covered below) has been developed with this aim in mind.
Net Zero Investment Framework
The Net Zero Investment Framework, currently open for consultation, provides a common set of recommended actions, metrics and methodologies through which investors can maximise their contribution to achieving global net zero global emissions by 2050.
Its primary objective is to ensure investors can decarbonise investment portfolios and increase investment in climate solutions, in a way that is consistent with a 1.5°C net zero emissions future.
An ‘investment strategy’ led approach, supported by concrete targets set at portfolio and asset level – combined with smart capital allocation, and engagement and advocacy activity – ensures investors can maximise their impact in driving real-world decarbonisation.
Four different asset classes – sovereign bonds, listed equities and corporate fixed income and real estate – are covered by the framework, with others to follow. Five investors will also be putting the framework to the test, by modelling its impact across performance of their real-word portfolios collectively valued at $1.3 trillion. The results of this analysis will be launched with the final framework, expected before the end of 2020.
The Framework is intended to be adopted and implemented by investors following its finalisation. More detail on this process will be shared in coming months and will help build momentum in the run-up to the UN COP 26 climate talks.
The Framework has been developed through the collaborative input of the 70 plus IIGCC members who are participating in PAII. We are grateful for the valuable contributions and insight of the investors that are part of the initiative.
Supporting presentation - this slide deck helps provide an overview of PAII and detail behind the Net Zero Investment Framework. See here for a slide only version of the presentation and here for a version with accompanying notes. See here to watch our webinar from September 2020, where investors provide an overview of the Framework out for consultation and next steps for IIGCC’s Paris Aligned Investment Initiative.
Consultation launch press release - see the accompanying announcement here on the launch of the Net Zero Investment Framework, as the first-ever blueprint to help investors become 'net zero investors'.
PAII backgrounder - see here for a supporting backgrounder, providing more context on the aims, objectives and deliverables of the PAII initiative.
This version of the Net Zero Investment Framework was issued as a draft for consultation earlier this year, the responses are now being carefully considered.
IIGCC expects to publish an updated version of the Framework in November, taking into account feedback received during the consultation period.