Universal Owner says that even the 20% estimated reduction in emissions “vastly over-states the ambition” of the fund managers, since it assumes that the assets covered by the net-zero targets are representative of the emissions profile of their entire holdings, which isn’t the case. In fact, money managers can choose which subset of their assets to include in their target, and portfolio emissions “are far from evenly distributed,” the nonprofit said.
Stephanie Pfeifer, chief executive officer of the Institutional Investors Group on Climate Change, which co-founded the Net Zero Asset Managers initiative, said asset managers have set their initial interim targets “based on the methodologies and data that is currently available to them” and that the percentage of assets committed varies depending on the business model, asset class mix, client mandate and maturity of strategies, data and tools available to managers. Firms who commit to the initiative’s goals are required to review and increase the share of their assets that are managed in line with the net-zero target and report annually on progress, Pfeifer said.
Last week, the Net Zero alliance said a first set of net-zero targets from 43 of its members indicated that 35% of total assets were being managed in a manner consistent with achieving carbon neutrality by 2050. Universal Owner found that for the largest asset managers, 10% of their holdings were responsible for 85% of all their portfolio emissions, meaning that even a target covering 90% of total assets might fail to address up to 85% of all emissions, it said.
This article was provided by Bloomberg News.