“Net zero” investment blueprint launched

The Institutional Investors Group on Climate Change (IIGCC) has launched a consultation on a blueprint to enable asset owners and managers to work towards becoming “net zero” investors in line with the goals of the Paris Climate Agreement.

The framework was developed with over 70 global investors, representing more than $16 trillion in assets, including Brunel Pensions Partnership and the Church of England Pensions Board.

It identifies five components of a “net zero” strategy – advocacy and engagement, asset class alignment, strategic asset allocation, setting targets and objectives and governance and strategy.

The framework recommends setting emissions intensity reduction goals and reference targets of up to 10 years for equity, fixed income and real assets, covering scope one and two emissions. Another option is setting an absolute aggregate asset emissions reduction goal and a reference target of less than five years, covering scope one, two and three emissions.

Brunel is testing the framework for its clients by modelling its impact on real-world portfolios and plans to publish the results before the end of 2020.

“Our own responsible investment ethos has always stressed the need for holistic approaches,” said Faith Ward, Brunel’s chief responsible investment officer. “Our Climate Policy identified five areas in which we seek to make a difference, from portfolio construction to policy advocacy. As key supporters of the IIGCC, we have championed this approach in developing the framework, resulting in a holistic guide to meeting the net zero challenge across multiple asset classes.”