At the United Nations Climate Change Summit in New York in September 2019, the UN launched the Net-Zero Asset Owner Alliance. The members of this group commit to reduce the carbon emissions of their investment portfolios to net-zero by 2050. By this, the Alliance aims to do its share in limiting global warming to 1.5°C compared to pre-industrial times.
Allianz has helped to set up this group consisting of the world’s largest pension funds and insurers, together with the Finance Initiative of United Nations Environment (UNEP FI), the Principles for Responsible Investment (PRI), WWF as well as the Mission 2020 campaign.
At its launch in 2019, the Alliance consisted of twelve asset owners from across the globe, responsible for approximately 2.4 trillion USD of assets under management.
The Asset Owner Alliance (AOA) is the most ambitious platform for asset owners committed to tackle global warming. It reinforces and supports the implementation of existing decarbonization strategies.
We are making this commitment as we expect to capture first-mover advantages and protect long-term returns by structuring the investment portfolios of our insurance clients’ capital in a climate-smart manner.
The commitment covers the proprietary investment portfolio of Allianz, i.e. our insurance clients’ capital.
Allianz and the other members of the AOA have committed to fulfill the Paris agreement in our portfolios. And we have the clear ambition to deliver real-economy action. The AOA will immediately start to engage with companies in which we are investing to ensure they decarbonize their business models. We want to enable and engage on a robust transition with and within the real economy but also with policy-makers.
Swift and robust asset owner collaboration on the basis of a 1.5°C commitment helps to have a common voice and a transparent long-term vision. Thereby, we enable a structured approach and discussion for the real economy, policy-makers, shareholders, clients and other stakeholders on how to best achieve stringent climate action.
Science Based Targets initiative (SBTi) is a cross-sectoral initiative allowing corporations of all sectors to get their reduction targets verified. The AOA focuses on asset owners like pension funds and insurance companies and will be the hinge between them, target verification initiatives and tools like SBTi, corporate engagement platforms like Climate Action 100+, and policy-makers.
Allianz Group already joined the SBTi in 2018, thereby committing to set a portfolio-wide emission-reduction target in line with requirements of climate science.
The Alliance chose the year 2050 as the long-term target. It represents the current scientific consensus on when net-zero emissions need to be reached to limit global warming to 1.5°C compared to preindustrial times. However, this does not mean that the Alliance members will remain inactive until that date, to the contrary.
Asset owners will begin to take action immediately, including engaging with portfolio companies. Asset owners will set intermediary targets for the target years 2025, 2030 and onwards to ensure that their portfolios decarbonize in a timely manner and gradual manner and will report on progress towards these targets. Furthermore, over the next 3 years all asset owners will perform the following actions:
1. Portfolio baseline assessments carried out & disclosed
2. Climate strategies & action plans, including trajectories, developed
3. By December 2023: Disclosure of first quantitative joint Alliance report (to be paired with first global stocktake of the UNFCCC under Paris Agreement Article 14.2)
Alliance members are already working together to define best practice to reduce greenhouse gas emissions by engaging with portfolio companies and with governments on public policies. Through engaging with portfolio companies, GHG emission reductions in the real economy can be achieved, as compared to divestments which might only lead to emission reductions in asset owners’ portfolios, not in the real economy.
No. While an asset owner retains full discretion as to which assets it holds, the commitment requires the asset owner to take measures which bring about portfolio decarbonization and ultimately deliver a net-zero portfolio by 2050, and to do so in ways that will be as conducive as possible to GHG emissions reductions in the real economy.
UNEP FI and the UN-supported PRI are jointly convening the Alliance, providing expert input and drawing on their investor-convening abilities and relationships with the United Nations and member states.
Mission 2020, convened by former UNFCCC Executive Secretary, Christiana Figueres, and WWF will provide strategic advice to the Alliance as NGO actors.