September 26, 2019

Pension Funds, Insurers Commit to Carbon-Neutral Investments by 2050

Institutional investors with $2.4 trillion in assets aim for Paris agreement standards.

Reported by Michael Katz

A group of some of the largest pension funds and insurers in the world, overseeing more than $2.4 trillion in investments, have formed an alliance committed to carbon-neutral investment portfolios by 2050.

The Net-Zero Asset Owner Alliance was announced at the UN Secretary-General’s Climate Action Summit being held this week in New York. The group said they are concerned about the detrimental effect climate change will have on societies and economies, and are looking to limit the rise in global temperature to no more than 1.5 degrees Celsius.

The alliance was created by German financial services firm Allianz, French public sector financial institution Caisse des Dépôts, Quebecois pension fund La Caisse de dépôt et placement du Québec (CDPQ), Swedish insurance firm Folksam Group, Danish pension PensionDanmark, and reinsurance firm Swiss Re. Other institutional investors have also joined them, including California Public Employees’ Retirement System (CalPERS), Nordea Life and Pension, and Norway’s Storebrand.

The alliance was convened by the United Nations Environment Programme’s (UNEP) Finance Initiative and the Principles for Responsible Investment and is supported by the World Wildlife Fund (WWF). It is also part of the Mission 2020 campaign, an initiative led by former Executive Secretary of the UN Framework Convention on Climate Change (UNFCCC) Christiana Figueres.

“It is encouraging to see asset owners flex their financial muscle and guide companies they’re invested in towards a net-zero emissions world,” said Figueres in a statement. “Investors are waking up to the enormous economic transformation that entails and starting to put their money behind it, but we are going to need more money, more scale and more speed.”

The members of the alliance said they will engage with the companies they are invested in to push them to decarbonize their business models. They will also collaborate with other initiatives such as the Investor Agenda, Science Based Targets initiative, Climate Action 100+, and the newly announced 2050 Ambition Alliance.

“We, as asset owners, will live up to our responsibility and, in dialogue with the companies in which we invest, steer towards low-carbon business practices,” Oliver Bäte, CEO of Allianz, said in a statement. “We’ve already started and, by 2050, our portfolios will be climate neutral.”

Additionally, the group of institutional investors said they will lead by example by setting and publicly reporting on intermediate targets that are in line with Article 4.9 of the Paris Agreement.

“The Net-Zero Alliance is the recognition that institutional investors collectively have an important role to play in fostering the energy transition the world needs,” said CDPQ CEO, Michael Sabia. “Combined with the necessary changes in public policies, investors’ actions will induce real change in every sector.”