Paris Aligned Asset Owners is an outcome of the Paris Aligned Investment Initiative (PAII), which was established in May 2019 as a collaborative investor-led forum (coordinated by AIGCC, Ceres, IGCC and IIGCC) to support investors to align their portfolios and investment activities to the goals of the Paris Agreement. For more information on Governance, please click here.

The PAII’s core publication is the Net Zero Investment Framework (NZIF), the most widely used resource to develop net zero strategies and transition plans by investors. As per Point 2 of the PAAO Commitment Statement, signatories are expected to draw on the Net Zero Investment Framework.

NZIF 2.0 was published in June 2024. Additional supplementary guidance has since been released, providing further considerations for emerging markets and just transition and a dedicated addendum on externally managed funds.

The Net Zero Investment Framework

The Net Zero Investment Framework outlines key components of a net zero strategy and transition plan for investors, with two key objectives:

  • Transitioning investment portfolios in a way that is consistent with the mitigation goals of the Paris Agreement, focusing on real economy decarbonisation.
  • Increasing investment in the range of climate solutions to enable the transition.

The ‘NZIF 2.0: Summary Guide’, released in June 2024, aims to make life easier for investors by bringing together the wide range of resources available to them all in one place.

It provides an overview of what is necessary to understand NZIF at a high-level and is the first resource that investors should refer to when considering implementing their net zero commitments and addressing climate-related risks and opportunities. Investors should view this guide as a gateway to other resources, guidance and latest thinking hosted and convened by the supporting Network Partners.

The NZIF wheel highlights the interconnected nature of the different NZIF components. Each core area is equally important, with no hierarchical structure. The wheel illustrates that net zero strategies are more likely to be more effective when they simultaneously address the external environment, which can either facilitate or inhibit investor activities. This dynamic interaction among all elements highlights the necessity of a comprehensive and integrated approach to achieving net zero goals.

 

NZIF 2.0 includes updates to guidance on several asset classes, as well as some revised target terminology and criteria. Several key outputs (including components for infrastructure, private equity and private debt) were integrated into NZIF 2.0. PAII has continued to develop supplementary guidance, including:

NZIF 2.0 represents an evolution of the previous version and remains firmly aligned with the PAAO Commitment Statement. Existing targets remain valid, obviating the need for revisions, though signatories are expected to align their 5-year target updates with the latest guidance provided in this iteration.

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For more signatory resources, reach out to your Network Partners: AIGCC, Ceres, IGCC, IIGCC.