The French civil servant pension fund ERAFP (Établissement de retraite additionnelle de la fonction publique) and KENFO, Germany’s sovereign wealth fund, have joined the United Nation’s Net-Zero Asset Owner Alliance, becoming its 20th and 21st asset owner members.
The move brings the Alliance’s total assets under management (AUM) to more than $4.5trn (€4trn).
By joining the Alliance, both schemes are formalising their commitment to the decarbonisation of their investment portfolio, in order to achieve a carbon-neutral investment portfolio by 2050 and help prevent global temperature from rising above the 1.5°C target set by the Paris Climate Agreement.
Convened by United Nations Environment Programme’s Finance Initiative and the Principles for Responsible Investment, the Alliance is supported by the World Wide Fund and is part of the Mission 2020 campaign, an initiative led by Christiana Figueres, former executive secretary of the United Nations Framework Convention on Climate Change.
ERAFP chief executive officer Laurent Galzy said: “As an institutional investor, it is our responsibility to contribute to carbon neutrality by 2050. For that reason, for ERAFP, joining the Net-Zero Asset Owner Alliance is no longer a challenge but a duty: it will be a question of leading the way by engaging with companies, in order to adjust their business models and, as a result, to align our portfolio more closely with our long-term commitments.”
Anja Mikus, KENFO’s CEO, said: “KENFO is proud to become part of the alliance as the first sovereign fund. We believe that such a strong community will be an important contributor in aligning our finance industry and business environment with the goals of the Paris Agreement.”
She added that global climate change “probably is the most significant event of our time, affecting both the real economy and the financial markets”.
An increasing number of companies already integrate sustainability principles such as the reduction of carbon emissions into their strategies and operations, she said, because “they know that long-term financial success goes hand in hand with environmental stewardship, social responsibility and good governance”.
The Alliance will work closely with portfolio companies to change their business models and adopt climate friendly practices, and it has already begun the process of establishing a work plan for 2020.
Fiona Reynolds, CEO of PRI, said: “We encourage more governments, companies and investors around the world to address the net zero challenge.”