The Institutional Investors Group on Climate Change (IIGCC) launched the „Net Zero Investment Framework”, enabling investors to maximise the contribution they make to decarbonisation of the global economy and tackling climate change. This is achieved by ensuring investment portfolios are aligned with net zero emissions and investors are working in a comprehensive manner to help deliver on the goal of the Paris Agreement to keep global warming below 1.5°C. The finalised Framework is being published in partnership with other investor groups across the globe. It will be rolled out globally as the basis for investors worldwide to implement their net zero strategies.
Climate Endowment Group strongly backs the IIGCC in this framework. We share their vision to drive for a Net-Zero world and are committed to doing our part to achieve it by aligning ourselves with the Paris Agreement and the Net Zero Investment Framework.
The net-zero framework is intended to help decarbonise investment portfolios and increase investment in “climate solutions”, according to the statement. It encourages investors to develop net-zero strategies for asset allocation, policy advocacy and engaging with portfolio companies. It is designed to provide a basis on which investors can make commitments to reaching net-zero emissions and define strategies, measure alignment, and transition portfolios. It establishes several components for an effective net-zero investment strategy, with recommendations on the key actions and methodologies investors can use to implement a strategy.
The framework is intended to be a tool to guide asset manager actions, including supporting the implementation of commitments that are part of the Net Zero Asset Managers initiative, which is a group of international asset managers committed to supporting the goal of net-zero greenhouse gas emissions by 2050 or sooner.
The framework follows 5 key principles to guide its work:
- Impact. The primary objective is achieving emissions reductions in the real economy. The framework encourages investors to maximize their efforts to achieve the greatest impact possible.
- Rigor. Alignment should be based on sound evidence and data, and should be consistent with the best available science on meeting the temperature goals of the Paris Agreement.
- Practicality. The methods and approaches should be feasible for a range of investors to implement, build on existing work, and be compatible with existing processes or requirements of investors.
- Accessibility. Definitions, methodologies, and strategies should be clear and easily applied, using publicly available information and assessments whenever possible.
- Accountability. Definitions, methodologies, and strategies should allow clients, beneficiaries, and other stakeholders to assess whether investors and assets are aligned with the goals of the Paris Agreement.
The urgency of addressing the climate crisis is increasingly understood and achieving net zero emissions is key to success. Momentum is increasingly clear, with nine of the world’s 10 largest economies pledging to reach net zero emissions by mid-century. Investors have a vital contribution to make to this process but have lacked a standardised approach to convert intent into practical decisions and action.