IPE ESG Briefing: European investors plough ahead

Those involved have described it as a groundbreaking initiative. The Avoided Emissions Platform (AEP) is dedicated to harmonising the evaluation of the impact of climate solutions, which are increasingly being incorporated into net zero investors’ portfolios.

Climate solutions are in many ways the flip-side to the shift away from carbon-intensive activities that the energy transition necessitates. Decarbonised alternatives are also needed, but being able to assess their impact has been difficult for methodological and data reasons.

The AEP, launched by asset managers including Mirova and Robeco, is intended to help fix that. Its launch comes as some see secular headwinds for the climate solutions investment opportunity set, launching new funds to meet client demand.

Last month the chair of the investment board for German insurer wrote a hard-hitting blog, arguing that fast-approaching temperature levels threaten “the very foundation of the financial sector”.

“Capitalism as we know it ceases to be viable,” he said.

So far, the progress that Allianz has made in cutting portfolio emissions has mainly been down to a reallocation of capital, however. Last year the Net-Zero Asset Owners Alliance, of which Allianz is a member, told IPE that the lion’s share of its members’ progress on decarbonisation goals was driven by portfolio companies becoming greener, rather than through divestment.

This week the FT reported that the Trump administration has written to several major EU-based companies to urge them to comply with an executive order prohibiting DEI programmes. In yet another sign of the growing trans-Atlantic divide on environmental and social matters, pension funds in Europe, have signalled a continuing commitment to pushing for diversity in the composition of the boards at investee companies this year.

They also remain committed to achieving net zero goals, saying they are ready to hold asset managers accountable and recognising that short-term returns may fluctuate.

Last but not least, last week the European Parliament agreed to delay the EU’s corporate sustainability reporting rules and due diligence rules. The next steps involve negotiating a second proposal with substantive changes to the Corporate Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive, which is likely to provoke significant disagreement among lawmakers.

Items to note:

• The IPE Transition Conference & Awards 2024 is taking place on 17 June at the Cardo Brussels, Autograph Collection in Belgium

Susanna Rust

ESG Editor