Encouragement for Investors to Set Interim Targets Achievable in the Pursuit of Net Zero
Today, ShareAction advises enabling asset managers to establish "appropriate" interim net zero goals to synchronize their portfolios with a 1.5C trajectory.
The financial non-profit announced they had created the initial document of a series of responsible investment instructions, which will be released in the upcoming weeks. These instructions are meant to enhance the accountability of institutional investors when considering the effects their portfolios may have in actuality.
ShareAction unveiled a new understanding of 'responsible investment' last week, proclaiming investors' need for a "great increase in ambition" to prevent more serious climate degradation.
Today, the Responsible Investment Standards and Expectations (RISE) manuals have been released, and they provide detailed standards and expectations for asset managers to ensure their portfolios align with strong net zero objectives.
The RISE series of directives are meant to be followed throughout the journey of responsible investing, prompting asset owners, investment advisors, and other related parties to interact with their asset managers to accomplish their goals of being a conscientious investors, according to ShareAction. These actions "can and should be taken in the present investment climate," they added.
Today's advice outlines five primary requirements for asset managers striving to achieve net zero emissions.
To begin with, it is necessary to have a unified strategy for monitoring emissions and setting short-term objectives to enhance reliability and responsibility. Additionally, investors should include all applicable assets in their goals for decarbonization to ensure their actions are transparent.
The document also stresses that investors should strive to reduce the actual amount of emissions from their investments and operations and assess their progress in this direction. At the same time, it cautions against using intensity-based goals, which could be accomplished even if the CO2 levels were to rise.
In conclusion, it is recommended that investors make sustainability the primary focus of their net zero goals by revealing their portfolio companies' contribution to reducing emissions. Additionally, strategies should consider regional disparities when promoting more aggressive objectives for corporations in the Global North.
ShareAction's Chief of Investor Engagement, Niall Considine, emphasized the critical role of investors in achieving a climate-friendly, carbon-neutral economy. He further stressed the importance of having better standards and uniform goals when setting targets.
He warned that there is not much time left to come up with solutions to combat the immense threats posed by the climate crisis, both socially, environmentally, and financially. According to him, asset managers could play a critical role in this effort by pushing the companies in their portfolios to lower their emissions so that global warming can be restricted to 1.5C.
Acknowledging the difficulty of reaching a net zero target, we celebrate the initial steps taken by certain investors. To build upon this progress, asset managers must set more ambitious interim targets, and we provide a practical method through which they can openly do this.
We desire that those in the investment sector who embrace our perspective on a responsibly regulated economic framework will utilize this advice to promote the decisive action essential to avert the worsening of the climate predicament.