The Institutional Investors Group on Climate Change (IIGCC) has launched a net zero standard for oil and gas – Net Zero Standard for Oil & Gas – aimed at helping investors assess alignment of oil and gas companies’ transition plans with a 1.5°C climate scenario.

The framework will help inform investors’ corporate engagement priorities and escalation strategies, and assist them to better understand the transition risk in their portfolios.

The publication follows a two-year collaborative process led by IIGCC with support from the Transition Pathway Initiative (TPI), investors and regional investor groups. Provisional indicators were published in September 2021 and subsequently tested in a pilot study covering five major European oil and gas companies.

Results from the pilot study showed increasing transparency over decarbonisation plans, including disclosures on the contribution of offsets to targets and guidance on production plans.

However, the pilot study also showed the need for continued improvement in several areas, in particular the alignment of all targets and plans with relevant 1.5°C scenario benchmarks.

Adam Matthews, chair of the process for the oil and gas net zero standard and chief responsible investment officer for the Church of England Pensions Board, said: “This is intentionally a demanding yet practical standard that ensures investors will have the transparency they need to differentiate between companies that are genuinely transitioning and those that are not. It levels the disclosure landscape.”

He added: “We recognise it will not be easy to meet the standard from day one, but we are inviting companies to unequivocally commit to disclose against the standard and to set out a timeline to do so over the coming year.”

Based on the two objectives of enhancing investors’ corporate engagement and improving understanding of the transition risks of underlying investments, the Net Zero Standard for Oil & Gas was developed following a growing interest amongst investors to better understand the increasing differences in company transition plans and to capture sector-specific nuances when conducting company assessments.

The new framework was developed by IIGCC to complement the Disclosure Framework of the Climate Action 100+ Net Zero Company Benchmark.

Amundi launches net zero strategies

Amundi has launched a comprehensive range of net zero ambition funds across its main asset classes. This suite of actively and passively managed funds is open to institutional and retail investors, it was announced.

“Governments and companies have a responsibility to decarbonise economies by setting testing emission reduction targets,” the firm said.

“The financial and investment industry is a vital catalyst in this race to net zero,” it continued, adding that as a member of the Net Zero Asset Manager initiative, “we are developing solutions for clients that facilitate the transition while seeking strong risk-adjusted returns for investors, looking to respond to different investor needs and profiles”.

The net zero strategies also support Amundi’s ESG Ambition Plan 2025 as well as Crédit Agricole Group’s Societal Project, and in particular Amundi’s plan to achieve a faster path towards decarbonisation by designing solutions that seek to address investors’ requirements and preferences when it comes to responsible investment implementation.

All of Amundi’s actively managed Net Zero Ambition strategies have set a common intermediary objective of reducing their portfolios’ carbon intensity by 30% by 2025 and 60% by 2030 compared to 2019.

“However, we believe there is no ‘one size fits all’ when it comes to net zero portfolio construction. As such we are proposing a suite of strategies that integrate ESG considerations with a net zero ambition pathway, using differing approaches with a common philosophy: assessing the credibility and feasibility of net zero by moving away from pledges towards action, and selecting companies best equipped to transition to net zero by 2050 with regards to their carbon reduction pathway,” the firm stated.

The net zero strategies launched include:

  • equity: Amundi Funds Net Zero Ambition Global Equity and Amundi Funds Net Zero Ambition Top European Players;
  • fixed income: Amundi Funds Net Zero Ambition Global Corporate Bond fund and Amundi Funds Net Zero Ambition Pioneer US Corporate Bond fund;
  • real estate: Amundi Real Estate European Net Zero Ambition Strategy;
  • multi-asset: Amundi Funds Net Zero Ambition Multi-Asset;
  • emerging markets: Amundi EM Equity Target Net Zero.

Amundi has also launched one of Europe’s most comprehensive passive suites of net zero strategies across both equity and fixed income, with more than 30 climate ETFs aligned with the goals of the Paris Agreement. Amundi’s ETF, indexing and smart meta business line offers investors a simple way to invest in climate transition and Paris-Aligned benchmarks across World, Europe, EMU, US, and emerging market exposures.

The latest digital edition of IPE’s magazine is now available