Net zero is aim for 24% of large asset managers

Research from NN Investment Partners shows that almost a quarter of the largest asset managers has set net zero targets for their investments.

As COP 26 begins, almost a quarter of the largest asset managers has set net zero targets for their investments says NN Investment Partners research. Natural Language Processing analysis of more than 10,000 responsible investing publications shows how climate has increased in importance for the world’s 500 largest asset managers

Sebastiaan Reinders, Head of Investment Science at NN Investment Partners comments: “Asset managers have high expectations for the outcome of the climate change conference in Glasgow. The 150,000 paragraphs contain diverse but optimistic views on the expected real world outcomes from the COP26. The research shows professional investors expect coordinated, meaningful and actionable agreements on climate policy will be reached this time.”

Ambitious climate goals
Asset managers mentioned CO2 emissions in 33% of their ESG-related publications this year compared to 6% in 2016. They mostly focus on setting mid-term goals for the proportion of their investments to be managed in line with a net zero policy, according to the text analysis. They often mention 2025 and 2030 as target dates. Most asset managers say they are working on more detailed net zero goals for their investments.

Growth in ‘green’ securities
Asset managers’ responsible investing publications show a broad consensus on the growth of green securities. A rising supply of new green securities may drive down the price of existing similar securities, such as green bonds and impact equities. However, asset managers expect that the new supply will be absorbed by increasing overall demand as attention on climate change increases.

NN IP currently expects green bond issuance to jump 25% in 2022 to around EUR 500 billion, and the total could be even higher depending on how fast the EU looks to issue more green bonds. Social bonds and sustainability bonds also are expected to see significant increases in issuance next year.

COP 26 creates a shift in sentiment
Many asset managers have already started to announce net zero emission targets. This will accelerate around COP 26. Investors are also increasingly focused on evaluating their portfolios from a climate risk perspective. One result of COP26 could very well be a permanent shift in sentiment towards greenhouse gas intensive sectors.

Adrie Heinsbroek, Chief Sustainability Officer at NN Investment Partner comments: “We hope COP26 will lead to breakthroughs and new commitments on finance goals on climate, higher ambitions from major economies in line with the Paris Agreement and stronger contributions of countries that lag behind. Whatever the outcome, we will remain steadfast in our climate commitments and continue to team up with other market participants.”

“We have a key role to play in financing the transition to a low carbon economy and in combatting global warming. We will shortly announce how much of our assets under management will be aligned with the goal of achieving net zero emissions by 2050 as part of the Net Zero Asset Manager Initiative.”