Nordic pension investors have committed to carbon neutral portfolios by 2050 as part of a new asset owner campaign.

Members of the alliance will set and publicly report on intermediate targets “in line with Article 4.9 of the Paris Agreement”, thereby holding themselves publicly accountable, according to a statement about the new initiative.

A spokeswoman said this meant the investors would be setting targets for the same points in time as countries will under the accord.

“The idea is that investors and countries can influence each other towards higher levels of ambition as they set such targets, especially when they set them in synchronicity, and when they proceed in lock-step,” she added.

The announcement about the alliance described the asset owners’ commitment to carbon-neutral investment portfolios by 2050 as “one of the boldest actions yet by the world’s largest investors to decarbonise the global economy”.

“By committing to transitioning their investment portfolios to net-zero greenhouse gas emissions by 2050, asset owners are significantly raising the bar for other investors, industry associations, and, importantly, the global economy,” it said.

To maximise their impact, current members of what has been dubbed the Net-Zero Asset Owner Alliance actively encouraged others to follow suit.

According to the Intergovernmental Panel on Climate Change, restricting warming to 1.5°C above pre-industrial levels would require emissions to decrease to net zero by 2050. 

In terms of how the goal of carbon-neutral portfolios would be achieved, the statement said that members of the alliance would immediately start to engage with investee companies to ensure they decarbonised their business models.

Low carbon alternatives for big emitters

Investments in low carbon solutions were also identified as important.

Torben Möger Pedersen, CEO, PensionDanmark

“The Alliance can act together as active owners and ask companies to transform their business models to comply with the Paris Agreement and limit the temperature increase to 1.5°C”

Torben Möger Pedersen, CEO, PensionDanmark

Torben Möger Pedersen, CEO of PensionDanmark, said: “To achieve net-zero emissions in the real economy by 2050 we will need to enhance the impact we make ourselves as investors in new clean technologies, renewable energy infrastructure and sustainable buildings among others in order to provide realistic and feasible alternatives for the big CO2-emitters to change their businesses.

“Against this background, the Alliance can act together as active owners and ask companies to transform their business models to comply with the Paris agreement and limit the temperature increase to 1.5°C.”

Many of the investors in the alliance will already be engaging with companies as members of other investor groups such as Climate Action 100+, a heavyweight institutional collaboration targeting change at major corporate greenhouse gas emitters.

AMF, Sweden’s third-largest pension fund with €60.6bn in assets, signed up to Climate Action 100+ last week, according to a spokesman for the investor.

The Net-Zero Asset Owner Alliance was announced today at the UN Climate Action Summit in New York.

It was initiated at the beginning of 2019 by Allianz, Caisse des Dépots, Caisse de dépôt et placement du Québec, Folksam Group, PensionDanmark and Swiss Re.

Alecta, AMF, CalPERS, Nordea Life and Pension, Storebrand, and Zurich have also joined as founding members.

The alliance will collaborate with various initiatives such as Climate Action 100+, the Science-Based Targets Initiative, and the 2050 Ambition Alliance. It is convened by the UN Environment Programme Finance Initiative and the Principles for Responsible Investment.

Record support for statement to governments

Last week a record number of investors called on governments across the world to do more to rein in global warming.

The latest global investor statement to governments on climate change was signed by 515 investors managing $35trn (€32trn) in assets, and called on governments to phase out thermal coal power worldwide, put a “meaningful” price on carbon pollution, end government subsidies for fossil fuels, and update and strengthen national action plans to meet the emissions reduction goal of the Paris Agreement no later than 2020.