The UN-convened Net-Zero Asset Owner Alliance (NZAOA) recently published updates to its target-setting protocol. These updates mark the fifth installment of the NZAOA’s guidelines. In a press release, the NZAOA describes the changes to the fifth edition:
“Recent updates to the NZAOA Target-Setting Protocol introduces regional flexibility to adapt global targets to diverse local markets, reinforced incentivization for asset manager engagement, and updated KPIs to enhance target-setting and stewardship practices.
Version 5 includes a quantitative investment target for climate solutions, focusing on funding green transition technologies, and a new ‘transition target’ category to support high-emitting companies with credible net-zero plans. Additionally, it clarifies methodologies for private assets like infrastructure and real estate, ensuring a consistent approach to sustainable investment across portfolios. These refinements provide a more actionable pathway for investors to drive the transition to meet the goals of the Paris Agreement.”
Signatories to the NZAOA commit to bringing their investment portfolios in line with net-zero targets for 2050. They are expected to do so by engaging the companies they invest in, not stricktly through divestment strategies. While US asset managers have largely fled industry initiatives such as the NZAOA, the new guidance is likely to have international impacts.
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