In a bold move today, an alliance of the world’s largest pension funds and insurers – including German insurer Allianz, the California Public Employees’ Retirement System (CalPERS), and Swedish pension fund Alecta – launched the new “Net Zero Asset Owner Alliance” at the UN Climate Summit.
“Mitigating climate change is the challenge of our lifetime. Politics, business, and societies across the globe need to act as one to rapidly reduce climate emissions,” Oliver Baete, chief executive of Allianz, said in a statement, reports Reuters.
Inger Andersen, the Executive Director of the UN Environment Programme (UNEP) said, “There are no short-cuts to decisive climate action. We need to take a long-term view. I applaud the leadership of the investors in this Alliance. Their commitment sends a strong signal that financial markets and investors are listening to science, and moving us to a path of resilience and sustainability.”
With accelerating climate impacts becoming increasingly apparent in the guise of extreme heatwaves, wildfires, receding coastlines, and other extreme weather events, the financial sector is under increased pressure by shareholders, activists, and regulators to respond.
Companies that handle retirement savings or are insurance companies investing their customers’ premiums , represent some of the largest pools of capital funds on the planet. These companies are known as “asset owners,” and as responsible asset owners, they are powerful allies in the global action to fight the climate crisis.
As long-term investors, “asset owners” are also committed to seeing that the global economy prospers, that climate-related risks are addressed, and that opportunities to invest in a cleaner tomorrow are captured.
To this end, the pension funds and insurers said they would rebalance their portfolios to ensure their investments were carbon neutral by 2050, with intermediate targets set for 2025, 2030 and 2040. They also pledged to make regular public progress reports.
The members of the new alliance also warned they might also have to divest from heavily-polluting industries as a last resort if they proved unwilling to change their business models so they no longer pose a danger to the stability of the climate, according to CNBC News.
Michael Sabia, the chief executive of Caisse de dépôt et placement du Québec (CDPQ), one of Canada’s biggest pension funds, said this is a huge opportunity for investors willing to finance a fast transition to clean energy.
“There’s a lot of people who don’t get it, but I do think it’s moving – the issue is whether it’s moving fast enough,” Sabia told Reuters. “It’s the speed that matters here.”
The Alliance was initiated by Allianz, Caisse des Dépôts, La Caisse de dépôt et placement du Québec (CDPQ), Folksam Group, PensionDanmark, and Swiss Re at the beginning of 2019. Since then, Alecta, AMF, CalPERS, Nordea Life and Pension, Storebrand, and Zurich have joined as founding members.
