Investor climate group eyes assets in private equity, sovereign debt

The world's leading group of asset owners committed to turning their investment portfolios green said on Thursday it had set guidance for private assets for the first time and would also look to improve assessment of emissions tied to sovereign debt holdings.

The Net-Zero Asset Owner Alliance, whose pension fund and insurer signatories manage $9.5 trillion in assets, said the new Target-Setting Protocol was its most ambitious yet to help halve emissions by 2030 and get to net-zero emissions by mid-century.
 

The move to toughen the target setting comes as climate efforts in other financial sectors, including banking, have faced criticism as part of a U.S.-driven political backlash.
 

The Net-Zero Asset Owner Alliance members are being asked to include assets like private debt and equity in their emissions reductions strategy, a move the NZAOA hopes will prevent privately held high emitting companies operating without sufficient oversight.
 

The main way to bring emissions down will be to engage with fund managers and tailor mandates to ensure they buy climate-compliant assets, rather than through "a wave of selling", said NZAOA Chair and Allianz board member Gunther Thallinger .
 

The group has also asked members to assess and report the emissions associated with their sovereign bond holdings, which, along with other government-related assets, makes up between a fifth and a third of NZAOA members' portfolios, said Thallinger.
 

"This asset class is really important ... We need to understand how with governments we as an asset owner alliance can work and engage."