Institutional investors with $2.4 trillion in combined assets formed an alliance Monday aimed at having carbon-neutral investment portfolios by 2050, in an effort to boost the provisions of the 2015 Paris Agreement.
Intended to limit the increase in global temperature to no more than 1.5 degrees Celsius, a United Nations-convened Net‐Zero Asset Owner Alliance was announced at U.N. Secretary‐General Antonio Guterres' Climate Action Summit on Monday.
Members of the alliance — among which are the $380.7 billion Sacramento-based California Public Employees' Retirement System, Sacramento, and the 877 billion Swedish kronor ($91.1 billion) Alecta, Stockholm — will immediately start to engage with the companies in which they are investing to ensure they decarbonize their business models and hold themselves publicly accountable on their progress by setting and publicly reporting on intermediate targets, in line with the Paris Agreement.
Other investors that formed the initiative include Allianz Group; the C$309.5 billion ($233 billion) Caisse de Depot et Placement du Quebec, Montreal; €29 billion ($32.1 billion) PensionDanmark, Copenhagen; the 649 billion Swedish kronor AMF Pension, Stockholm; and the €41.8 billion Nordea Life & Pensions, Helsinki.
"Mitigating climate change is the challenge of our lifetime. Politics, business and societies across the globe need to act as one to rapidly reduce climate emissions," said Oliver Bate, Allianz CEO, in a news release. "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. We've already started and, by 2050, our portfolios will be climate neutral."
Michael Sabia, president and CEO of CDPQ, added in the news release: "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. For investors like CDPQ, there are so many opportunities to earn commercial returns by investing in low‐carbon solutions and to work with portfolio companies to decarbonize."
CalPERS CEO Marcie Frost said in the release that the pension fund "recognizes that climate change poses urgent and systemic risk given our responsibility to protect our members financial assets and provide the long-term returns that can pay pensions for this and coming generations. The net-zero alliance gives us the platform to drive the change needed to achieve the demanding goals of the Paris Agreement.
Hazel Bradford contributed to this story.
