The Net Zero Asset Managers (NZAM) initiative managed to retain 250 of its members as a result of its big rebrand, announced on Wednesday.
The group convenes investors seeking to align their portfolios with net zero over the coming decades, and it has published a new commitment statement that it hopes will placate a growing number of signatories that have been threatening to quit.
The trend is largely a result of political and legal pressure in the US, where asset managers are being accused of pursuing decarbonisation on ideological grounds, and, therefore, flouting their fiduciary duties.
But it’s also a response to the economic and financial realities of aligning investment portfolios with net-zero by 2050 at the latest: momentum has slowed among policymakers and companies since NZAM’s early days, and it’s looking increasingly less likely that the economy will move fast enough to achieve the goal.
So who’s in and who’s out?
More than 250 of NZAM’s signatories – of which there were 330 at the height of its popularity – have signed up to the new commitment statement.
They include big names like Legal & General, BNP Paribas, Aviva Investors, and Nordea Asset Management.
Others have chosen to keep parts of their business involved, while removing others – specifically those exposed to US law.
For example, State Street Investment Management’s UK and mainland European entities have signed up, but not the global business.
Similar compromises appear to have been made by DWS, Columbia Threadneedle, Wellington and T. Rowe Price.
BlackRock, which left NZAM more than a year ago, has opted to remain completely withdrawn, despite the new overhaul.
Others to have left completely include HSBC Asset Management, which told IPE it “recognise[d]” the role NZAM had played in developing guiding frameworks for asset managers”.
“With this foundation now in place, we will not be signing up to the restated commitment,” a spokesperson explained, adding that HSBC maintained its 2030 emissions targets and would continue its existing stewardship activities, climate research, responsible investment and participation in other industry initiatives.
“The transition to net zero remains a priority for our clients and we remain resolutely focused on supporting them with their investment goals,” she claimed.
Invesco has also “elected to step away from NZAM after careful consideration”.
“We continue to believe our clients’ interests are best served through our existing investor-led, client-centric approach,” said a spokesperson, adding: “We remain committed to helping clients who wish to align their assets with sustainability objectives.”
Other drop-outs include Franklin Templeton, which did not respond to a request for comment, and BMO Asset Management.
Asset owner reaction
A number of pureplay responsible investment houses have also stepped away – among them US stalwarts Boston Common, Arjuna Capital and Calvert.
Some asset owners have expressed disappointment at the departures, having recently urged asset managers to stick with NZAM in a joint statement.
However, many also said they were pleased that most managers had doubled down on their commitment to net zero.
Swedish pension fund AP3, which co-signed the asset-owner letter despite running most of its assets in-house, told IPE it was “happy to see that many asset managers remain signatories to NZAM, and [are still] committed to manage climate change risks”.
Asa Norman, the head of sustainability and communications at AP2, which also signed the recent letter, told IPE that it also manages most of its assets internally.
As a result, NZAM applies mostly to its managers for unlisted assets, she explained, “some of which were signatories before and remain signatories after the relaunch”.
In December, UK investment pool Border to Coast Pensions Partnership revealed it was planning to remove a requirement for its managers to be members of NZAM, given “uncertainty around its status” as it underwent its redesign.
Itself a signatory to NZAM, Border to Coast confirmed to IPE this week that it would stick with its position that NZAM membership was not a deal breaker for external managers, as long as they could demonstrate adherence with its broader responsible investment standards.
However, a spokesperson stressed that it was “still as committed as ever to engaging managers on their net zero roadmap, and how they are evidencing and communicating it”.
