• All reporting signatories demonstrate progress on achieving real economy emissions reductions through mixture of climate solutions, engagement and policy advocacy
• Strong engagement with asset managers on climate-related financial issues reinforces the importance of engagement and stewardship to asset owners to help achieve net zero goals
• Paris aligned policy advocacy demonstrates asset owners are walking the talk on asking governments for a supportive policy environment

Wednesday 29 May 2024: Signatories to the Paris Aligned Asset Owners (PAAO) initiative, a global group of 57 asset owners with over $3.3 trillion in assets under management, have reported progress towards meeting their voluntary net zero commitments.

The full report – Paris Aligned Asset Owners 2023 Progress Report – can be viewed here.

Signatories to the initiative were asked to report their individual progress towards the initiative’s 10-point commitment statement in a new survey trialled in 2023. 100% of signatories who responded to the survey[1] said they had made progress on achieving real economy emissions reductions through investments in climate solutions and engagement and stewardship with their asset managers.

Key survey highlights include:

• Investment in climate solutions (commitment 3): 71% of PAAO signatories have set quantitative targets to increase their allocation to climate solutions, whilst 33% of signatories identified climate solutions as being the most impactful actions and a key driver of decarbonisation.
• Stewardship and engagement (commitment 6): 95% of PAAO signatories reported to have engaged with their asset managers on climate-related financial issues, indicating strong progress on using this lever effectively.
• Policy advocacy (commitment 5): 95% of PAAO signatories reported to have undertaken policy advocacy aligned with meeting the goals of the Paris Agreement.

In addition, all PAAO signatories have set 2030 reduction targets which include scopes 1, 2, and 3 emissions.

Asset owners are particularly exposed to the financial risks of climate change, with growing pools of assets invested for the long-term interests of millions of beneficiaries. PAAO is distinctive from other investor initiatives, with the majority of signatories being pension funds and superannuation funds.

Consistent with their fiduciary obligations to clients and beneficiaries to avoid financial risk and to maximise long-term value of assets, PAAO signatories have made individual commitments to transition their investments to achieve net zero portfolio greenhouse gas emissions by 2050, or sooner, drawing on the Net Zero Investment Framework to deliver these commitments.

Members of the PAII Executive Committee said:

“It’s positive to see this level of progress from asset owners, particularly the increasing investment in climate solutions. The results demonstrate that signatory net zero commitments are not just words but are underpinned by tangible actions. The strong signatory response rate demonstrates real credibility and commitment from asset owners.” Stephanie Pfeifer, CEO of IIGCC and chair of the PAII Executive Committee.

“Asset owners occupy a systemically crucial position in aligning financial flows to a net zero emissions economy by 2050. The progress showed here is a positive reinforcement that signatories are working towards delivering on their climate commitments with actions today and are already demonstrating a significant contribution to reducing real economy emissions through their investment strategies,” Rebecca Mikula-Wright, CEO of AIGCC and IGCC.

“It’s fantastic to see that almost all signatories have engaged with their asset managers on climate-related financial issues. Stewardship and engagement are a significant lever to drive real economy emissions reductions and therefore this communication to asset managers, that climate action is part of their mandate, is absolutely crucial to asset owners delivering on their net zero commitments.” The Rev. Kirsten Spalding, Vice President of the Ceres Investor Network.

Robust and consensus methodologies are emerging for an increasing number of asset classes. PAAO signatories draw on the Net Zero Investment Framework, the most widely used resource to develop net zero strategies and transition plans by investors. The diversity of signatory responses and actions reinforces the benefits of using the Net Zero Investment Framework and the flexibility it provides to deploy different levers.

In 2023, 46 out of the 56 signatories were asked to report, and 42 signatories submitted their survey within the reporting window, setting a 91% response rate for the first year of reporting.

ENDS

[1] 42 signatories reported via the 2023 survey.

Media contacts

For more information or further comment, contact:

IIGCC: Ross Gillam, Head of Communications – rgillam@iigcc.org

Ceres: Vivan Melody – vmelody@ceres.org

IGCC and AIGCC: Fergus Pitt, Director of Media and Communications – fergus.pitt@igcc.org.au

Editor’s Note:

An enhanced Net Zero Investment Framework set to be released by the end of June, will better support signatories in including more of their portfolio and further asset classes within their net zero investment strategies.

About Paris Aligned Asset Owners

Paris Aligned Asset Owners is an international group of asset owners committed to supporting the goal of net zero greenhouse gas emissions by 2050 or sooner, in line with global efforts to limit temperature warming to 1.5⁰C above pre-industrial levels, with low- or no-overshoot. As of May 2024, there are 57 Paris Aligned Asset Owners from Europe, North America, and Oceania.

The group is an outcome of the Paris Aligned Investment Initiative, which was established in May 2019 as a collaborative investor-led forum to support investors in aligning their portfolios and investment activities to the goals of the Paris Agreement. Paris Aligned Asset Owners is governed by a steering group of nine asset owners, supported by four regional investor networks.

The initiative is delivered by four investor networks (AIGCC, Ceres, IGCC and IIGCC), which provide specialist support to signatories in implementing the Net Zero Investment Framework. This includes one-to-one guidance, as well as tailored technical assistance from in-house experts.