FRR And Insurer Trio Boost Asset Owner Net Zero Carbon Alliance

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France’s Fonds de Réserve pour les Retraites (FRR) and three insurers are joining a UN-convened group of asset owners pushing for investment portfolios to be carbon neutral by 2050.

With FRR, Axa, Aviva, and CNP Assurances, the Net Zero Asset Owner Alliance, which was launched in September at a UN climate summit, will count 16 members.

Eric Usher, head of the UNEP Finance Initiative, said: “The addition of four significant asset owners signals growing commitment by investors to align their portfolios with the ambitious 1.5°C target that goes beyond even the level of ambition reflected in the Paris Agreement.

“Concerted investor action led by the Alliance signals to financial markets that making entire portfolios net zero carbon is now clearly on the agenda.”

Yves Chevalier, executive director at FRR, said the Net Zero Asset Owner Alliance was aligned with its recently updated responsible investment strategy , which “ushers in a new phase that will drive ambition further by increasing accountability at all portfolio levels and involving the entire financial management ecosystem to underline the leadership role assumed by the FRR over many years”.

Axa’s joining the alliance forms part of a new phase in its climate strategy. Unveiled this week, it includes the insurer doubling its target for environmentally-friendly investments to €24bn by 2023, and investing in transition bonds, a new asset class it conceptionalised to support companies shifting towards less carbon-intensive business models – as opposed to green bonds, which Axa said are designed to finance projects that are already “green”.

Axa also said it would be completely exiting the coal industry by 2030 in OECD and EU countries, then in the rest of the world by 2040.

Members of the Net-Zero Asset Owner Alliance commit to transitioning their investments to net-zero greenhouse gas emissions by 2050 “in support of a global economy that delivers emissions reductions in line with scientifically determined targets”.

They are to ramp up engagement with investee companies and convenors of the alliance also said it will “use its powerful voice to engage with governments and ask them to urgently increase their Nationally Determined Contributions ambitions”.

Nationally Determined Contributions are the post-2020 actions that countries signed up to the Paris Agreement commit to outlining and communicating.

Citing an Emission Gap report published by the UN Environment Programme this week, the convenors of the Net Zero Asset Owner Alliance said G20 nations collectively account for 78% of all emissions, but seven of them do not yet have policies in place to achieve their current NDCs, “let alone strategies for transformative climate commitments at the breadth and scale necessary”.