The Net Zero Asset Owner Alliance (NZAOA) has celebrated the first decline of its financed emissions, after new figures confirmed the 85 members of the group saw the collective emissions from their portfolios fall 3.5 per cent in 2022.
The group – which brings together investors with $8.4tr in assets under management, including many of the world’s largest financial firms – said the fall in absolute financed greenhouse gas emissions from 221.2 million tonnes of carbon dioxide equivalent in 2021 to to 213.4mTCO2e in 2022 had been driven by the actions taken by its members.
In its third progress report, published this morning, the financial alliance also noted how the emissions reductions had been achieved despite its membership growing from 74 to 84 members over the past year. It credited the emissions cuts to members’ “real-world emissions reduction”, allocation changes, and divestment efforts.
Gunther Thallinger, board member at Allianz SE and chair of the UN-convened NZAOA, said the world was at a “pivotal moment” that called for a strengthening of efforts to deliver the system-wide transformation needed to achieve global climate goals.
“Alliance members are making solid progress towards achieving their 2025 emissions targets, showing that, step-by-step, the crucial long-term transition to achieve 1.5C can be implemented,” he said. “Our work is supporting governments to implement their net zero programmes by accelerating the reform of existing financial and investment policy frameworks.”
The news comes at a turbulent time for financial climate groups and their umbrella group, the Glasgow Financial Alliance for Net Zero (GFANZ), with several coalitions seeing some members quit citing concerns about the legal ramifications of efforts to cut emissions from investment portfolios. Earlier this year, the Church of England Pensions Board become the third firm to leave the NZAOA.
But in its update, the NZAOA stressed it was continuing to grow with more firms embracing its membership requirements.
Sixty-nine members, with $8.4tr in assets under management, have now set intermediate climate targets in line with the Alliance’s target-setting requirements, up from $7.1tr last year, the report notes.
Meanwhile, the number of members with sub-portfolio net zero targets which encompass corporate debt, listed equity, and directly held real estate grew from 41 in early 2022 to 67 a year later, it said.
Elsewhere in the report, the Alliance said that the absolute value invested in climate solutions by members had reached £380.6bn in 2023, with most investments going towards the buildings and energy sectors.
The report comes on the same day as a similar update from the Climate Action 100+ group of investors, which found that while carbon intensive listed firms are making progress in their adoption of net zero targets the vast majority are yet to deliver credible decarbonisation strategies, despite growing pressure from investors for them to do so.
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