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Initiative for Net Zero Asset Managers Reaches $66 Trillion AUM

More than 290 asset managers representing over $66 trillion in assets under management have joined the Net Zero Asset Managers (NZAM) initiative, pledging to align their investment portfolios with achieving net zero greenhouse gas (GHG) emissions by 2050, according to a new update report released by the group.

Since the last update in May, Northern Trust AM, and AllianceBernstein have been revealed as new signatories to the effort.

The Net Zero Asset Managers project was launched in December 2020 with 30 asset managers representing roughly $9 trillion in assets promising to support the aim of net zero by 2050 or earlier, in accordance with global efforts to limit warming to 1.5°C. NZAM is part of the Glasgow Financial Alliance for Net Zero (GFANZ) and was founded by six investor networks: Asia Investor Group on Climate Change (AIGCC), CDP, Ceres, Investor Group on Climate Change (IGCC), Institutional Investors Group on Climate Change (IIGCC), and Principles for Responsible Investment (PRI).

Stephanie Pfeifer, CEO, IIGCC, said:

"In less than two years, the Net Zero Asset Managers initiative has greatly increased the ambition of the global asset management sector towards net zero. " 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 degrees Fahrenheit becomes less likely."

Signatories of the initiative agree to a set of commitments, such as working with asset owner clients on decarbonization goals, setting an interim target for the percentage of assets to be managed in a way that achieves net zero emissions by 2050 or sooner, and reviewing the interim target every five years with the goal of increasing the percentage of AUM covered until all assets are included.

As part of the current update, NZAM noted that an additional 86 managers have disclosed their initial aims for the proportion of managed assets consistent with attaining net zero by 2050, bringing the total number of managers with reported targets to 169. Collectively, these asset managers have now pledged to manage approximately $22 trillion of their $55 trillion in AUM in accordance with the net zero aim, with 63 managers covering more than 75% of their assets.

According to NZAM, the pledges stated to far are primarily to listed stock and fixed income, for which target-setting mechanisms exist. As techniques are established for asset classes such as private equity and infrastructure, it is anticipated that these assets will eventually be incorporated into the targets.

To attain the initiative's aim of aligning 100 percent of assets with net zero, NZAM emphasized that numerous issues, including client requirements, regulatory and policy settings, and the development of target-setting procedures, must be addressed.

Principles for Responsible Investment (PRI) CEO David Atkin stated:

"This newest wave of targets, announced by NZAM signatories, is an encouraging sign of the gradual transition to a global net-zero financial system. We recognize there is still much work to be done to assist NZAM signatories in overcoming systemic barriers to net zero, and we look forward to continuing our vital efforts in this regard. However, these goals should be applauded as a strong indication of investor desire and as a benchmark for future improvement."

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