Net-Zero Alliance Outlines Requests for Asset Managers in Private Markets

Recognising that decarbonisation of private assets is crucial for the fulfilment of members’ net-zero commitments, the UN-convened Net-Zero Asset Owner Alliance has released a Call to Action to Private Market Asset Managers, outlining its recommendations for addressing climate risk.

While unmitigated climate change presents an existential risk to the core business of asset owners, private markets are well-positioned to contribute to risk management. Therefore, this latest call to action is meant to encourage all asset managers (and especially those that are yet to sufficiently address climate risk) to raise their level of climate ambition.

The Net-Zero Asset Owner Alliance is a member-led initiative of 82 institutional investors, with over US$11 trillion in assets under management, committed to transitioning their investment portfolios to net-zero GHG emissions by 2050.

The Alliance members were the first in financial industry to set intermediate targets (aligned with the Paris Agreement schedule) and they report on their progress annually. The Alliance is convened by UNEP FI and PRI and is supported by WWF and Global Optimism.

“Among private asset managers, there is diversity of approaches to climate change that reflects their varied organisations—this is positive. However, each of these approaches should have the interests of their asset owner clients at the core and should meet their clients’ minimum expectations,” said Patrick Peura, Engagement Track Co-Lead, NZAOA and ESG Engagement Manager, Allianz SE.

“For Net-Zero Asset Owner Alliance members, this is the only way to drive change in investee businesses, to secure sustainable and climate resilient portfolios, and to meet the Alliance’s Commitment,” Peura added.

For asset managers in private markets to robustly represent their clients’ long-term interests, they should integrate climate change considerations across all their business activities, including investment decisions.

The Alliance sets requests for all private asset managers, but also provides more specific actions for each asset class. These cover topics from asset managers’ governance structure and disclosure on portfolio greenhouse gas emissions, to financing the transition by seeking investments aligned with climate taxonomies.

Importantly, the paper builds on and highlights the work of the ongoing initiatives and organisations in this field and invites asset managers to consider supporting and/or joining them.

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