The United Nations’ Net-Zero Asset Owner Alliance, which includes Canada’s Caisse de dépôt et placement du Québec (CDPQ), is implementing intermediate environmental targets as part of its comprehensive plan to achieve net-zero emissions by 2050.
Expanding Environmental Reporting to Private Assets
In addition to setting new environmental reporting targets for asset owners, the Alliance’s updated guidance now includes private assets such as private debt funds, directly held private debt, directly held real estate debt funds, and residential mortgage loans. This expansion ensures that a broader spectrum of financial activities is aligned with the Alliance’s environmental objectives.
New Protocols for Target-Setting
Earlier this year, the Alliance established a new target-setting protocol to guide asset owners over the next five years. Under this protocol, organizations are expected to aim for a reduction in greenhouse gas emissions of between 40% and 60% by 2030. Despite these intermediate targets, the ultimate goal remains achieving net-zero greenhouse gas emissions by 2050 and adhering to pathways that limit global temperature rise to 1.5 degrees Celsius.
Statements and Commitments
Kate Monfette, a spokesperson for CDPQ, highlighted the importance of these shorter-term milestones in achieving the ultimate net-zero goal by 2050. She emphasized that these intermediate targets offer essential benchmarks for tracking progress and ensuring accountability.
Background and Launch of the Alliance
The Net-Zero Asset Owner Alliance was initiated in early 2019 by Allianz, Caisse des Dépôts, CDPQ, Folksam Group, PensionDanmark, and Swiss Re. The Alliance was officially launched at the UN Secretary-General’s Climate Ambition Summit in September 2019. This coalition of financial organizations is committed to aligning their investment portfolios with the Paris Agreement’s objectives, striving for net-zero emissions by mid-century.
Forum for Insurance Transition to Net Zero (FIT)
The United Nations Environment Programme (UNEP) has introduced a new platform, the Forum for Insurance Transition to Net Zero (FIT), to support and accelerate voluntary climate actions within the insurance sector. Chaired by UNEP, the FIT aims to unite insurance market participants—including insurers, reinsurers, and brokers—to collaborate with regulators, net-zero standard-setters, scientists, academics, civil society, and other stakeholders.
Objectives and Priorities of FIT
The FIT represents a significant opportunity for the insurance industry to advance net-zero insurance practices. Its initial priorities include:
- Developing Net-Zero Insurance Metrics and Voluntary Targets: Establishing frameworks to guide the insurance industry towards net-zero emissions.
- Creating a Net-Zero Transition Plan Framework: Providing a structured plan for insurance market participants to transition to net-zero emissions.
- Engaging with the Real Economy: Collaborating with corporate entities across various sectors to develop comprehensive net-zero transition plans.
- Developing Insurance Solutions and Taxonomies: Addressing challenges and opportunities in creating insurance solutions that support the net-zero transition.
The primary aim is to ensure the availability of insurance and finance for projects, technologies, and activities aligned with net-zero goals.
Commitment to Global Climate Action
Through the FIT, UNEP aims to deepen its commitment to the global insurance industry, working collaboratively to accelerate and scale up the transition to a net-zero economy. This effort is crucial in addressing the global climate crisis and moving towards a resilient, sustainable, and prosperous future for all.
Consultative Groups for FIT
To enhance FIT’s effectiveness, UNEP will seek input from two independent consultative groups:
- FIT Consultative Group of Insurance Regulators & Supervisors: Providing regulatory insights and guidance to align FIT’s initiatives with existing and emerging regulations.
- FIT Consultative Group on Science, Research & Civil Society: Bringing together scientific and academic expertise alongside civil society perspectives to inform FIT’s activities and ensure they are grounded in the latest research and community needs.
Progress and Future Plans
Since its inception, the Net-Zero Asset Owner Alliance has made significant strides in setting ambitious environmental targets. The inclusion of intermediate targets underscores the Alliance’s commitment to continuous progress and accountability. These targets serve as milestones, guiding members in their efforts to decarbonize their investment portfolios and support the global transition to a sustainable economy.
The Alliance’s work goes beyond reducing emissions; it also fosters innovation and resilience within the financial and insurance sectors. By integrating sustainability into investment decisions, Alliance members are paving the way for a more resilient financial system that can withstand the impacts of climate change.
Conclusion
The UN’s Net-Zero Asset Owner Alliance, with members like CDPQ, is leading the charge towards a net-zero future. Through initiatives such as the Forum for Insurance Transition to Net Zero, the Alliance is setting the stage for significant advancements in climate action within the insurance industry. By establishing intermediate environmental targets, the Alliance reaffirms its dedication to achieving net-zero emissions by 2050, showcasing a strong commitment to global climate goals and sustainable development.
As the world grapples with the realities of climate change, the efforts of the Net-Zero Asset Owner Alliance and the FIT represent crucial steps towards a sustainable and resilient future. Continued collaboration and innovation will make the path to net-zero emissions more attainable, promising a healthier planet for future generations.