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International Investor Bloc Pledges to Align $5T in Portfolios with Paris Agreement

Thirty investor giants that manage a combined US$5 trillion in assets have committed to lowering the carbon emissions in their portfolios by as much as 29% by 2025—a pledge that will align them with the 2015 Paris Agreement.

The group, called the Net-Zero Asset Owner Alliance, includes both CalPERS (America’s biggest pension fund, covering public servants in California) and the German insurer Allianz, reports Reuters. Calling the pledge “the most ambitious yet by the influential group,” Reuters notes that the move “is likely to act as a challenge for other leading investors to step up their own efforts.”

To hold up their part of the pledge, each member of the UN-convened investor group will be required to cut its portfolio emissions by between 16% and 29%, “with each confirming their own particular target in the first quarter of 2021.” In a statement, the Alliance said the protocol “should help increase investment in those companies contributing to the transition to a low-carbon economy and influence both markets and government policies.”

In its coverage of the new protocol, Climate Action says the move sends “a very loud signal” to the thousands of companies within the Alliance’s portfolios that it is time to start making emissions cuts. However, it notes, “they will work with those willing to adjust their business models, and do not wish to engage in a divestment exercise.”

More importantly, the message might be heard by the countries and administrations that rely on those businesses. “In order for their efforts to be met with success, substantial government action is required,” writes Climate Action.