NZAM initiative announces initial net zero targets

The Net Zero Asset Managers (NZAM) initiative has reported initial targets for 86 investors as the total number of asset managers committing to net zero increases to 291.

Less than two years since the initiative launched, the latest disclosures take the total number of asset managers that have set initial targets to 169, it stated, adding that the group continues to grow, with 21 managers joining since May 2022, bringing the total to 291, representing more than $66trn in assets under management.

New signatories include Northern Trust Asset Management and AllianceBernstein.

The 86 asset managers – the largest group to date – have disclosed their initial targets for the proportion of assets managed in line with achieving net zero by 2050 or sooner.

The latest targets mean that, collectively, approximately $21.8trn – out of a possible $55.3trn managed by the asset managers who have set targets to date – is now committed to be managed in line with achieving net zero by 2050 or sooner, the initiative said.

Collectively signatories have now committed on average 39% of assets to net zero by 2050, with all NZAM signatories committing to increasing their assets committed to net zero with a view to reaching 100%.

Achieving this, however, is dependent on numerous factors including the mandates agreed with clients, clients’ and managers’ regulatory environments, supportive policy environments and the development of target setting methodologies for all asset classes, the initiative said.

For the latter, most targets set to date cover listed equity and fixed income due to available target setting methodologies for both asset classes, whereas fewer cover other asset classes, such as private equity and infrastructure, due to the nascency of supporting target setting methodologies.

NZAM’s intention is that as methodologies develop to cover more asset classes, as illustrated by the ongoing development and broadening of the Net Zero Investment Framework (NZIF), additional asset classes will be incorporated into targets.

Stephanie Pfeifer, chief executive officer of Institutional Investors Group on Climate Change (IIGCC), one of the initiative’s network partners, said: “In less than two years the Net Zero Asset Managers initiative has managed to significantly raise the scale of ambition towards net zero across the global asset management industry.”

She added: “Building on the initiative’s positive start, the focus must now be on supporting managers to increase their targets and turning commitments into action with an emphasis on supporting real world emission reductions – without this, the likelihood of limiting temperature rises to no more than 1.5°C becomes more distant.”

David Atkin, CEO of Principles for Responsible Investment (PRI), said: “This latest round of targets, released by NZAM signatories, is a welcome indicator of the ongoing shift to a global net zero financial system. We know that there is still work to be done to assist NZAM signatories in overcoming the systemic barriers to net zero, and we look forward to continuing our important work to this end. But these targets should be welcomed, as a strong indicator of investor ambition, and as a baseline for future progress.”

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