Sustainable investment framework launched

11th March 2021


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IEMA

A new framework has been launched to help investors maximise their contribution to decarbonising the global economy by aligning their portfolios with net-zero emissions.

A total of 37 investors with $8.5trn (£6.1trn) in assets under management are already using the new Net Zero Investment Framework, which was developed by the Institutional Investors Group on Climate Change (IIGCC).

Moreover, 22 investors managing $1.2trn in assets have used the framework's launch to announce their aim to achieve alignment with net-zero emissions by 2050, including the Church of England and Lloyds Banking Group.

“Commitments are vital, but only meaningful for the long term when realised,” said Stephanie Pfeifer, CEO of the IIGCC.

“The net-zero transition itself requires an ongoing transition from making commitments to delivering impact. The Net Zero Investment Framework, developed with and for investors, is a blueprint for action that will enable and support investors in reaching these goals.”

Investors can use the framework to develop a ‘net-zero investment strategy’ built around several core components, including objectives and targets, strategic asset allocation and asset class alignment, policy advocacy and investor engagement activity and governance.

The net-zero investment strategy is also underpinned by metrics used to measure effective action, such as time-bound portfolio coverage targets for companies and assets to meet net zero or aligned criteria.

It is hoped that findings of real-word portfolio testing, using the framework to assess the impacts of net-zero alignment, across five investor funds collectively valued at $1.3trn, will strengthen the case for further uptake.

Pfeifer said that the new swathe of net-zero commitments from asset owners demonstrates the growing determination from investors to make important decisions to support a net zero and resilient future.

“The global investment community has been called on to play its part in the transition to net zero – it is answering that call,” she added.

Image credit: iStock

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