Some 70 investors with $16 trillion in assets have developed recommendations for investing sustainably in major asset classes that seek to limit the rise in global temperatures to less than 1.5 degrees Celsius.
The "Net Zero Investment Framework for Consultation," published Wednesday, provides a set of recommendations on asset allocation, engagement and advocacy that is aimed at achieving net-zero emissions globally by 2050.
Developed through the Institutional Investors Group on Climate Change, an investor-led forum on climate change collaboration, the framework provides guidelines on investing in sovereign bonds, listed equities, corporate fixed income and real estate and incorporates more than 25 methodologies.
"Setting a long-term net-zero target is the easy part; the challenge is to have a credible and transparent framework that enables your fund to convert intent into practical decisions and action," said Adam Matthews, director of ethics and engagement at the £2.8 billion Church of England Pensions Board, London, in a news release.
The initiative is a "major step forward for the industry," Laura Chappell, CEO of the £30 billion pool of U.K. local authority pension funds Brunel Pension Partnership, Bristol, England, said in a news release. "Investors need to play a central role if the world is to meet the Paris commitment of limiting climate change to below 2 degrees.
The investors are consulting their peers on the framework with a final version to be released by the end of the year.