Elo commits to achieving net zero portfolio emissions by 2050 or sooner

Paris Aligned Asset Owners group grows and the new joiners to the initiative include Elo Mutual Pension Insurance Company, number of Danish pension funds, Tesco Pension Investment, HESTA and Railpen. Investors commit to achieving net zero portfolio emissions by 2050 or sooner, engaging with this target in mind, and increasing investments in climate solutions.

12 new asset owners have joined the 28 existing signatories to the Paris Aligned Investment Initiative Net Zero Asset Owner Commitment, bringing the total signatories to the initiatives to 40 collectively responsible for more than USD 2.35 trillion in assets.

Among the new signatories include European asset owners Elo Mutual Pension Insurance Company, AP Pension, AP3, AP7, the Church Pension Fund, Ilmarinen, Lægernes Pension and PenSam, and Australian industry superannuation fund HESTA, along with UK-based London Pension Funds Authority, Railpen and Tesco Pension Investment.

“As momentum grows approaching COP26 and the focus on climate-related issues intensifies, we are pleased to see more asset owner investors making net zero commitments. These commitments are incredibly important, and the first step on the path towards investors putting in place a net zero investment strategy. We look forward to working with these asset owners on their net zero strategies and would welcome other climate-conscious asset owners to consider becoming signatories to the Paris Aligned Asset Owners commitment,” says Stephanie Pfeifer, CEO of Institutional Investors Group on Climate Change.

Investors signing up as Paris Aligned Asset Owners will be joining a collaborative investor-led global forum which supports investors in aligning their portfolios and activities with the goals of the Paris Agreement. They will be committing to decarbonise their portfolios by 2050 or sooner, increase investment in climate solutions and will need to set interim targets and undertake advocacy and engagement in line with net zero goals.

“Climate change is a major systematic risk for the global economy and investment environment. The magnitude of the impacts on the economy and humans depend on the degree to which the climate warms and on the success of the climate change mitigation and adaptation measures”, notes Hanna Hiidenpalo, CIO of Elo Mutual Pension Insurance Company.

Asset owners will be using the Net Zero Investment Framework as a blueprint for aligning their portfolios with a 1.5°C net zero emissions future. The framework supports investors in developing a net zero investment strategy built around five core components: governance and strategy, objectives and targets, strategic asset allocation, asset class alignment, policy advocacy and investor engagement. The framework currently covers four asset classes (listed equity and corporate fixed income, real estate, sovereign bonds), and work is being undertaken through the PAII to include new methodologies and approaches for assessing alignment and support the transition of infrastructure, private equity, hedge funds and derivatives.

“As a pension investor managing significant investment assets, we have a vital role to play in the transition to a low-carbon society. IIGCC’s Paris Aligned Investment Initiative Framework was a helpful and practical toolkit when we were updating our climate strategy roadmap. Getting to net zero is much more than decarbonizing the investment portfolio; investors need to take a holistic approach, invest in climate solutions, and engage with the companies. We will continue our work in line with The Net Zero Investment Framework and would encourage other investors to do the same”, says Hiidenpalo.