Towards Net-Zero 2050

The ground was prepared last year. It’s now time to plant the seeds.

In September 2019, Allianz had joined forces with 11 other large institutional investors of the world to take a bold pledge: facilitate the decarbonization of the world economy, starting with making own portfolios carbon-neutral by 2050.

Since then, both the number of members of the Asset Owner Alliance (AOA) and their collective assets under management have doubled. The United Nations-convened alliance is now 30-strong, comprising insurers, pension funds, a state wealth fund and a foundation, controlling investments of about $5 trillion.

This month, the AOA set its first defined target for members – a reduction of 16-29 percent in greenhouse gas (GHG) emissions contained in own portfolios until 2025.

To facilitate transparency in the alliance’s efforts, its 2025 Target Setting Protocol  will be available until November 13, 2020 for comments from members of the general public, academia, government and business.

When the alliance was announced, many people might have had the question: why would an investor accept the target of net-zero emissions for an investment portfolio?

As an investor, it pays to listen to science and understand that there is enormous risk from climate change and its societal implications not only for the economy and businesses but also for assets in a portfolio.

This commitment reflects that understanding. Since the inception of the AOA, Allianz has been working on approaches that enable the group to steer the investments in its portfolios towards net zero. 

Dialog, not divide

In terms of how AOA plan to reach its targets, the alliance is clear that it wants to achieve a change in the economy and to have positive climate impact.

There are several aspects to this.

The members require inputs from scientists, climate models and scenarios to define the pathways for individual assets. For some assets that are directly owned, for instance real estate, the pathway is straightforward. The members can decide internally to retrofit or refurbish these assets to steer them to the path to net-zero emissions. However, with other assets such as publicly-listed companies, the way forward is reaching out to their leadership and discussing their approach to sustainability.

Wherever possible, the AOA recommends that its members use science-based targets and methodologies. The members are responsible for employing the recommended science-based criteria outlined in the protocol. If they chose an alternative target or methodology from the range of options discussed in the protocol, they should explain why.

The protocol has undergone testing by asset owners in their portfolios. Several alliance members will set large reduction targets, while others have already made substantial progress in their journey to net-zero in recent years. Therefore, the reductions required for their portfolios will be at the lower end of the range.

The new climate leadership in finance

United action

While the investment industry has a big role to play in the decarbonization of the economy, the support of other stakeholders cannot be emphasized enough.

The alliance continues dialogs with governments on GHG-reduction programs. Among the major discussion topics are the establishment of mandatory reporting on emissions for all companies and transparency on the true price of carbon.

A concerted action by governments, businesses and society will not only reduce the risks and costs of climate change but create tremendous economic opportunities.

The alliance gets stronger with each new member. Allianz invites all asset owners to join the AOA to bring about real change in the economy.

We all have a stake in sustainability. 

The Allianz Group is one of the world's leading insurers and asset managers with more than 100 million retail and corporate customers in more than 70 countries. Allianz customers benefit from a broad range of personal and corporate insurance services, ranging from property, life and health insurance to assistance services to credit insurance and global business insurance. Allianz is one of the world’s largest investors, managing around 774 billion euros on behalf of its insurance customers. Furthermore, our asset managers PIMCO and Allianz Global Investors manage 1.7 trillion euros of third-party assets. Thanks to our systematic integration of ecological and social criteria in our business processes and investment decisions, we hold the leading position for insurers in the Dow Jones Sustainability Index. In 2019, over 147,000 employees achieved total revenues of 142 billion euros and an operating profit of 11.9 billion euros for the group.

These assessments are, as always, subject to the disclaimer provided below.

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Christiane Hach
Allianz SE
As with all content published on this site, these statements are subject to our cautionary note regarding forward-looking statements:
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Further information

Asset Owner Alliance: Towards Net-Zero 2050

The UN-convened Net-Zero Asset Owner Alliance (AOA), of which Allianz is a founding member, has set its first target range for portfolio decarbonization until 2025. What role does this alliance aim to play in the world economy and what is the way forward?

UN calls for action on Sustainable Development – Allianz co-chairs initiative to bring investor know-how to the table

United Nations Secretary General António Guterres has announced the Global Investors for Sustainable Development Alliance (GISD) initiative at the UN headquarters. The initiative is co-chaired by Oliver Bäte, CEO of Allianz SE, and Leila Fourie, CEO of the Johannesburg Stock Exchange.

UN-backed asset owner alliance to drive portfolio companies to carbon neutrality by 2050

In one of the boldest actions yet by the world’s largest investors to decarbonize the global economy, an alliance of the world’s largest pension funds and insurers – responsible for directing more than 2.4 trillion U.S. dollars in investments – has today committed to carbon-neutral investment portfolios by 2050.