glossary

Net-Zero Asset Owner Alliance

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What is the Net-Zero Asset Owner Alliance? 

Launched by the United Nations, the Net-Zero Asset Owner Alliance (NZAOA) is an international group of 71 institutional investors committed to transitioning their investment portfolios to net-zero greenhouse gas emissions by 2050. The Alliance is convened by the UNEP’s Finance Initiative and the Principles for Responsible Investment (PRI). 

Why was the NZAOA founded?

The Alliance was founded to advance the engagement of investors and asset owners in the fight against climate change and the achievement of the 1.5 degree target. The Alliance believes that asset owners, through their unique role in the global economy and financial systems, should play a key role in decarbonizing the global economy and investing in climate resilience. In recent years, investor interest and action on climate change has increased dramatically in the following spheres of influence: in their portfolios, in their own transparency, and in the policy frameworks. There are already many investor initiatives focused on these issues, but the Alliance believes that they too can benefit from greater alignment and coordination through a joint and permanent alliance led by asset owners. 

Who is a member of the NZAOA? 

Currently, the alliance consists of 71 different asset owners such as pensions funds or insurance companies. In addition to that, the Alliance strives for working together with a number of other existing initiatives such as the Science-based Targets Initiative, the Climate Action 100+, The Investor Energy & Climate Action Toolkit or the Investor Agenda.

What does the NZAOA do? 

To achieve its goals, the alliance will use state-of-the-art tools and coordinate with various other asset owner initiatives that have taken the lead on climate action. 

In their work, they focus on:

- Investor ambition and setting portfolio-level targets

- Impact on the real economy and emissions 

- Implementation via holistic ESG approach to measure and manage impacts 

- Collaborative engagement and monitoring of this based on authoritative and credible scientific input 

What are the targets of the NZAOA? 

The goal of the Net-Zero Asset Owner Alliance is to contribute to combating climate change and limiting the global temperature increase to a maximum of 1.5 degrees by having all members commit to making their investment portfolios climate neutral by 2050. 

Building on the first edition of the Targeting Protocol, the Net-Zero Asset Owner Alliance has launched a second edition (TSP2), which aligns with the latest IPCC pathways to limit global warming to below 1.5 degrees. Alliance members are asked to set interim targets based on four different pillars: Subportfolio, Sector, Engagement, and Transition Funding.

What is the Net-Zero Asset Owner Commitment?

The members of the Net-Zero Asset Owner Alliance have committed i) to transition their investment portfolios to net-zero GHG emissions by 2050 consistent with a maximum temperature rise of 1.5°C; ii) to establish intermediate targets every five years; and iii) to regularly report on progress. Thereby, they are obligated to take into account the best available scientific knowledge, including the findings of the IPCC.

What’s the Net-Zero Asset Manager Initiative? 

Founded in December 2020, the Net-Zero Asset Manager Initiative is an international group of asset managers that aims to reduce greenhouse gas emissions to zero by 2050 or earlier and support investments that focus on achieving zero emissions by 2050.