Magazine Issues » July-August 2020

Association column: Towards net-zero

Charlene CrannyThe year 2020 will ultimately be defined by Covid-19. But it’s also the year the European transition to net-zero became unstoppable. But where is finance in all this?

2019 was an extraordinary year for net-zero emissions commitments. The UK became the first major economy to embed a net-zero target into its legislature and staggering first-mover commitments were made in aviation (International Airlines Group) and oil and gas (Repsol). Other ‘hard-to-abate’ sectors joined from mining (Vale), steel (Thyssenkrupp) and cement (HeidelbergCement) to really challenge what we thought possible. Even so, 2020 will take the title.

This year we have had commitments from three of the seven oil majors: Total, BP and Royal Dutch Shell. Educators Oxford and Harvard made theirs and the European Commission’s European climate law committing the EU27 to net-zero by 2050 has been proposed for approval. The signal that net-zero is inevitable couldn’t be stronger. But where is the finance sector? 

A private finance agenda was launched in February by the UK COP26 climate change conference presidency to help ensure every professional financial decision takes climate change into account and moves us toward net-zero. Back in 2015, many financial firms expressed a commitment to the Paris Agreement by signing the COP21 Paris Pledge for Action. This new agenda provides specific and measurable ways for firms to make good on that. And they are. 

The UN-convened Net-Zero Asset Owner Alliance (UN AOA) is up to $4.6 trillion AuM with members including Allianz, Aviva, Axa and Zurich. Asset manager P1 Investment recently created the NZC10 (Net Zero Carbon 10) Standard to help align funds with net-zero and have commitments from Montanaro, Janus Henderson, WHEB and Liontrust. Highest-profile are the commitments made by banks RBS, Barclays and Lloyds. Yet the best is to come. The COP26 team has coordinated finance coalitions to help press for high-ambition “consistent, transparent, and accountable” net-zero commitments. Eurosif SIF members are in touch with their country coalitions to support others such as the PRI, UNEP-FI and WWF.

It’s true commitments so far aren’t all perfect in their coverage of a firm’s direct and indirect emissions. It is also true that we don’t have a commonly agreed framework for what a net-zero commitment should look like. Add to that the differences between banking and investment and you might not blame firms for waiting to see what others do. But the end goal is clear and plenty is happening to ensure commitments evolve thanks to organisations like ShareAction, ClimateAction 100+, Institutional Investors Group on Climate Change (IIGCC), UN AOA and others. It is also likely Mark Carney’s role as the UK prime minister’s finance adviser for COP26 will include offering clarity as well.

Set against the backdrop of a European climate law and consultation on a renewed sustainable finance strategy - and mobilisation around a green and fair recovery from Covid - now might be a good time for firms to think about their own net-zero transition. Perhaps to announce ahead of the COP26 climate change conference in November next year? In any case, the transition to a healthier economy is wonderfully underway. Together, we are building back better.

Charlene Cranny is interim chief of operations at the European Sustainable Investment Forum (Eurosif)

© 2020 funds europe

Thought leadership

SPS1-PhysRisk-EmailSig-01_native_image

As the damage from extreme weather events becomes more apparent, this research from S&P Global seeks to measure the financial costs of climate hazards on corporate assets in different sectors & geographies.

FIND OUT MORE »
Eastspring_native_image_Nov_2023_400

2024 will be a year of multiple transitions in the global economy and markets. Find out how to seize the opportunities and manage risks.

DOWNLOAD NOW »

AXA_IM_native_image

What should investors expect in 2024?

For the year ahead we expect lower growth, lower inflation and limited interest rate easing. Find out more in AXA IM’s Outlook 2024.

DOWNLOAD THE FULL OUTLOOK »
Ocorian switching admins native

Why are managers switching fund administrator?

13% of alternative fund managers are looking to switch their fund administrator over the next 18 months. Find out why.

DOWNLOAD NOW »

Euroclear_PM_white_paper_native_image_400x103

This whitepaper outlines key challenges impeding the growth of private markets and explores how technological innovation, when bolstered by the operational experience and global reach of FMIs, can provide solutions to unlock access to private market funds for a growing investor base.

DOWNLOAD NOW »
UBS_commodities_native_image_Nov_2023

Transporting goods by sea is the lowest carbon way of transporting goods. That said, the shipping sector contribute 3% of global carbon emissions, so we need it to get to net zero. Breakthrough technologies have the power to reshape the industry and drastically reduce its environmental footprint.

LEARN MORE »

Executive Video Interviews

Why fund admin tech is a key competitive advantage

Cian Hyland, Strategic Client Relationship Director at Deep Pool Financial Solutions spoke to us about how technology enables efficient data management, reporting automation and secure data access.

Insights from State Street

Cuan Coulter, Global Head of Asset Managers and Head of UK and Ireland at State Street, discusses how fund managers decide between the two cross-border fund domiciles, namely Ireland and Luxembourg, and why asset managers find managing data so difficult.

Unlocking access to private markets

Vincent Clause, who heads the global funds strategy at Euroclear and David Genn, CEO of Goji, sit down with Funds Europe to explain how technological innovation, bolstered by operational experience and global reach, can provide solutions that unlock access to private markets.

Sustainable investing in the DC world

Claire Felgate, a specialist in UK defined contribution pension schemes at asset manager BlackRock, talks with Funds Europe editor Nick Fitzpatrick about how - and the pace at which - DC pension schemes are adapting to the requirements of sustainable investment.

arrows

Webinars

Watch our webinar for a deep dive into the findings of the fresh-off-the-press EU Taxonomy 2023 Insights Report, based on Clarity AI's best-in-class coverage of EU Taxonomy reported data and CDP industry-leading environmental datasets. 

In this webinar, we discuss tools for optimising fund data management and distribution, the role of global fund classifications and ratings, and how technology and automation enhance data integrity and insights.