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29% Reduction In Portfolio Carbon Emission Targeted By Investor Group With $5 Trillion Assets

29% Reduction In Portfolio Carbon Emission Targeted By Investor Group With $5 Trillion Assets
A plan to reduce their portfolio of high carbon emission assets by as much as 29 per cent within the next five years was announced by thirty of the largest investors of the world who together managing a combined $5 trillion of assets.
The group of investors is called the Net-Zero Asset Owner Alliance which comprises of the largest pension scheme of the United States CalPERs and German insurer Allianz. The group aims to bring in changes in their portfolio so that it is aligned with the 2015 Paris Agreement on climate change.
This is the most ambitious target set by the group so far and assumes importance because of the ownership of its members of sizeable stakes in many of the top companies of the world. This change in policy comes at a time when there is increasing pressure on asset owners to make use of their financial power to push for quicker change.
Despite the number of investors, companies and governments who are committing to net zero carbon emissions by 2050 is increasing by the day, there are some who have been criticized for not yet setting the clear nearer-term targets needed so that the goal is met.
It is likely that the latest move by the Net-Zero Asset Owner Alliance will also be seen as a challenge for other leading investors to act for preventing climate change with the global policy makers slated to meet up for the next round of global climate talks in Scotland next year.
Cuts of between 16 per cent and 29 per cent in greenhouse gas emissions from their portfolios would be implemented by the members of the group with each of the members confirming their own targets for emission reduction by the first quarter of 2021, the group said in a statement.
According to the plan of the group that has been named the 2025 Target Setting Protocol, here would be an increase in their investment in firms and companies that are contributors to the transition to a low-carbon economy and those that are able to influence both markets and government policies.
By this action, a message would be sent to the thousands of companies owned by the investors that "deep emissions cuts are required", the group said and added that the group would coordinate with boards of companies that are eager or willing to make changes to their business models to address the issue of climate change.
The Protocol has been made available for comment by the public, academics, government and business until November 13.
"Reaching net-zero is not simply reducing emissions and carrying on with the business models of today," said Günther Thallinger, Alliance Chair and Member of the Board of Management, Allianz SE.
"There are profound changes and opportunities that will come from the net-zero economy, we see new business opportunities and strong wins for those who are ready to lead," he added.

Christopher J. Mitchell

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