US$5t investor group sets tougher portfolio carbon targets

London

THIRTY of the world's largest investors managing a combined US$5 trillion said on Tuesday they plan to set targets to lower their portfolio carbon emissions by as much as 29 per cent over the next five years.

All members of the Net-Zero Asset Owner Alliance, a group which includes the biggest US pension scheme CalPERs and German insurer Allianz, are aiming to align their portfolios with the 2015 Paris Agreement on climate change.

The move is the most ambitious yet by the influential group, whose members own sizeable stakes in many of the world's top companies, and comes as pressure builds for asset owners to use their financial muscle to push for quicker change.

While an increasing number of investors, companies and governments are committing to net zero carbon emissions by 2050, some have been criticised for not setting the clear nearer-term targets needed to ensure the goal is met.

With policymakers gearing up for the next round of global climate talks in Scotland next year, the group's move is likely to act as a challenge for other leading investors to step up their own efforts.

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The group said its members would implement cuts in greenhouse gas emissions from their portfolios of between 16 per cent and 29 per cent, with each confirming their own particular target in the first quarter of 2021.

The plan, called the 2025 Target Setting Protocol, should help increase investment in those companies contributing to the transition to a low-carbon economy and influence both markets and government policies, the group said in a statement.

Specifically, the group said it would send a message to the thousands of companies owned by the investors that "deep emissions cuts are required", and that the group would work with boards willing to adjust their business models.

The Protocol has been made available for comment by the public, academics, government and business until Nov 13.

"Reaching net-zero is not simply reducing emissions and carrying on with the business models of today," said Günther Thallinger, Alliance chair and member of the Board of Management, Allianz SE.

"There are profound changes and opportunities that will come from the net-zero economy, we see new business opportunities and strong wins for those who are ready to lead," he added. REUTERS