The Net Zero Asset Manager initiative (NZAM), which gathers asset managers with over $66 trillion of assets, is known as an ugly duckling of the net-zero alliances. Yet,\u00a0 it still requires that its members publish 2030 decarbonization targets a year after they join. A<\/b> batch of new targets were released <\/b>yesterday<\/b><\/a><\/span>, including one by Europe\u2019s and France\u2019s biggest investor Amundi. <\/b>Reclaim Finance sounds the alarm about a flawed exercise that is becoming a smokescreen, and about the urgent need for clear guidelines from NZAM.<\/b><\/p>\n<\/div><\/div><\/div> Asset managers committing to net zero is a useful exercise only if it fosters action to reduce the climate impact of their investments. But the <\/b>NZAM guidelines<\/b><\/a><\/span> for their members are extremely short and vague<\/b> (compared to the NZAOA guidelines<\/a><\/span> for example). What this means is that asset managers that commit to net zero are given a lot more leeway than other financial institutions in defining how they plan to reach their commitment. A recent Morningstar study<\/a><\/span> underlines the huge difficulty in comparing asset manager targets<\/b> (and the huge variance in their levels of ambition) leads to investor confusion and raises \u201cquestions about the reliability of any of the commitments and decarbonization targets\u201d<\/b>.<\/p>\n<\/div> The NZAM\u2019s overall approach to target setting requires new rules to make these targets useful. First<\/b>, most NZAM members who have set targets have done so based on the emissions intensity of their portfolios \u2014 the emissions per invested dollar. This means that as the size of portfolios grows their emission intensity goes down without requiring any drop in actual emissions (1). Most targets also leave aside Scope 3 emissions, with very vague statements about including them once data is of good quality, which is an extremely problematic approach (2). Second<\/b>, NZAM members\u2019 headline targets are not based on actual reductions to their financed emissions (as is the case with the other alliances); instead they are based on the percentage of their assets under management (AUM) which is supposedly aligned to net zero. This percentage is supposed to reach 100% of assets by 2050 \u2014 but NZAM sets no interim requirements for the percentage of AUM that should be net-zero aligned in 2030 or any other year. Currently, the average percentage is at the low level of 39% (3). Finally<\/b>, another problem is the ambiguity over the issue of when these \u201cnet-zero aligned\u201d assets will actually lead to real-world emission reductions (4).<\/p>\n Among the 86 targets that were released yesterday:\u00a0<\/b><\/p>\n The NZAM requires its members to publish information on their fossil fuel policies – and says as of today 71% of its members have such policies in place<\/b>. But this information is a smokescreen<\/b>: our analysis shows that most of these policies are not worth the paper they are written on.<\/p>\n Overall, because of the lack of any real guidelines, members\u2019 current disclosures give little or no information on what they are doing now to start cutting the emissions they finance.<\/b> Meanwhile climate science is clear what needs to be done to reach a 1.5\u00b0C objective: concrete actions must start with the fossil fuel sector to ensure no new projects are being developed.<\/b> The UN\u2019s High-Level Expert Group on Net Zero just confirmed again that net zero means no investments in new fossil fuels<\/a><\/span>. But very few asset managers describe publicly what steps they are taking to stop supporting fossil fuel expansion<\/b> and invest in a way compatible with an overall decrease in fossil fuel production (5). For example, Vanguard, one of NZAM\u2019s biggest members, is still lacking any kind of fossil fuel policy, even for the coal sector.<\/b> Its complete lack of real climate action raises questions on NZAM\u2019s credibility.<\/p>\n Among the 86 targets that were released yesterday: <\/b><\/p>\n For the NZAM to remain credible, it must urgently publish detailed guidelines on the minimum transparency and content requirements for fossil fuel policies. Or its members will keep being accused of what the UN\u2019s net-zero standards report calls <\/b>\u201cusing bogus \u2018net-zero\u2019 pledges to cover up massive fossil fuel expansion\u201d<\/b><\/a><\/span><\/p>\n<\/div>Unreliable targets that urgently need to be fixed<\/h1><\/span>
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Lack of concrete action to cut financed emissions<\/h1><\/span>
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The\u00a0 targets for 2025 only cover a part of eligible assets, only a small share of Scope 3 emissions are included.<\/td>\n![](\"https:\/\/reclaimfinance.org\/site\/wp-content\/uploads\/2022\/05\/rond_rouge.png\")
Amundi has a commitment to halve portfolio emissions by 2030 but only on a small subset of its portfolio. It does not describe how it will achieve implementation.<\/td>\n