Investment consultants with USD10tn in assets under advice launch global 'net zero' initiative
Twelve investment consulting firms, responsible for advising institutional asset owners on assets of approximately USD10 trillion, have today launched the Net Zero Investment Consultants Initiative (NZICI). Through nine specific action points, they commit to supporting the goal of global net zero greenhouse gas emissions by 2050 or sooner.
The initiative, which has been led by some members of the Investment Consultants Sustainability Working Groups in the UK (ICSWG-UK) and US (ICSWG-US), is endorsed by the United Nations Race to Zero campaign and supported by the Principles for Responsible Investment (PRI). The twelve investment consultants are: Barnett Waddingham, bfinance, Cambridge Associates, Cardano, Frontier, Hymans Robertson, JANA, LCP, Meketa, Redington, Willis Towers Watson and Wilshire.
Investment consultants play a crucial role within the savings and investment ecosystem. They provide strategic advice to asset owners, such as pension funds, sovereign funds, endowments, insurers, foundations and family offices in areas, such as investment beliefs and strategy, asset allocation, asset manager selection. They also provide broader education on the long-term investment risks and opportunities related to climate change, such as transition risk, physical risk and stranded assets risk. These firms are often the critical link between asset owners and asset managers, determining which firms and strategies are favoured for selection. Consultants also provide guidance to asset managers about ESG capabilities and climate competence, as well as advising on the development of new investment solutions.
The commitments developed for the NZICI have been designed to facilitate alignment with the UN-convened Net-Zero Asset Owner Alliance, the Net Zero Asset Managers Initiative and other signatories of the Race to Zero campaign. They will work together with other signatories of net zero initiatives as a member of the Glasgow Financial Alliance for Net Zero (GFANZ).
The NZICI sets out nine actions that investment consultants will take to support the goal of global net zero greenhouse gas emissions by 2050 or sooner, in the context of legal and fiduciary duties and specific client mandates. First among these actions: integrating advice on net zero alignment into investment consulting services as soon as possible, and within two years of making this commitment.
The commitments apply to investment advisory service and business operations. For those consultants which offer discretionary asset management services, the commitments include a pledge to align with the Net Zero Asset Managers Initiative within two years.
Alex Pocock, Head of Investment Consulting at Barnett Waddingham, says: ‘A systemic change like net zero can only be achieved by working together with other organisations - to go further and faster to build a sustainable future. For Barnett Waddingham, sustainability is about moving forward and meeting the needs of the present without jeopardising future generations. Joining this initiative means cementing our commitment to working with others across our industry and beyond to solve the complex, systemic problems of climate change. Collaboration is absolutely key and this initiative demonstrates our collective commitment for the future; none of us can be ‘net zero’ alone.
David Vafai, CEO at bfinance, says: “We believe that global investment consultants, working closely with our asset owner clients, have a vital part to play in the transition towards a resilient Net Zero economy and we are committed as a firm to making a difference. This initiative is an important milestone for us: we are making some significant changes to policies and processes as we look to deliver on commitments. A number of our clients are already very advanced in addressing issues such as portfolio carbon intensity, temperature alignment and investment opportunities relating to the energy transition.”
David Druley, CEO at Cambridge Associates, says: “Earlier this year, Cambridge Associates proudly announced its global carbon neutral accreditation. As investors and stewards of long-term capital, it is also essential that our commitment to sustainability reach beyond the walls of our firm and permeate directly across our work with clients. We are lucky to already be working with several clients that are leading on the full spectrum of what needs to be done from decarbonisation to investing in real world solutions and are looking forward to utilising this expertise across our broader client base.”