Net-Zero Asset Owner Alliance demonstrates tangible climate action in latest Progress Report

The UN-Convened Net-Zero Asset Owner Alliance releases its third annual Progress Report, demonstrating increased climate action and calling on governments to implement and accelerate policies that will unlock the flow of capital towards the net-zero transition.     

Total membership has grown by 12 to 86 over the past year, now with over US$ 9.5 trillion AuM . Through the 2023 reporting cycle, 69 members with US$ 8.4 trillion AuM  in assets under management have set intermediate climate targets in line with the Alliance’s Target-Setting Protocol, up from 44 members with $7.1 trillion in AuM last year.  

The Alliance’s target-setting requirements are based on the IPCC’s no and low overshoot 1.5°C scenarios and include defining targets on engagement and at least two of three other target types—sub-portfolio, sector, and climate solution investments—12 months after joining.  

Members increased ambition across sector targets for several hard-to-abate sectors, expanded coverage of AuM under target, and saw total absolute financed greenhouse gas emissions fall 3.5% to 213.4 million tons of carbon dioxide equivalent in 2022, from 221.2 in 2021. This reduction comes despite membership growing in this period. Other potential drivers of the change, such as real-world emissions reductions, allocation changes, and divestment, are discussed in the report and on the FAQ page.  

The Alliance sees engagement as a critical method for asset owners to transform corporate action and drive real-world emissions reduction. In 2021 and 2022, the proportion of members with intermediate targets on engagement was 93% and 95%, respectively. Showing the effectiveness of the Alliance’s Accountability Mechanism, 27 members set engagement targets for the first time in 2023, increasing the coverage of members with engagement targets to 100%.   

Moreover, the number of members setting sub-portfolio targets (which encompass corporate debt, listed equity, and directly held real estate) grew from 41 in 2022 to 67 in 2023. Members set sub-portfolio targets within the carbon dioxide equivalent reduction ranges defined by the Alliance’s protocol: 22%-32% for 2025 and 40%-60% for 2030.   

Almost all members setting intermediate targets defined one for climate solution investments. The absolute value invested in climate solutions reached $380.6 billion in 2023, with most investments going towards the buildings and energy sectors.   

However, the Alliance also discusses persisting barriers to mobilising private capital at scale. and reminds that effective climate action should be enabled by strong political commitments, backed up by clear action plans across multilevel policy domains. 

Find out more here.