Net Zero Endowments

Net Zero Portfolios are an effective and powerful way for investors to reduce risks associated with climate change and the transition to a low-carbon economy.  They also accelerate corporate climate action to reduce systemic risk for all investors and to protect current and future generations from climate impacts. 

A commitment to Net Zero means committing to transition the investment portfolio to net-zero GHG emissions by 2050 consistent with a maximum temperature rise of 1.5°C above pre-industrial temperatures, taking into account the best available scientific knowledge including the findings of the IPCC, and regularly reporting on progress, including establishing intermediate targets every five years in line with Paris Agreement Article 4.9. 

Social equity is central to the need to address the climate crisis.  Marginalized communities, disproportionately Communities of Color, are often the most vulnerable to climate impacts.  To ensure an equitable and just transition, climate solutions must be viewed from a holistic perspective to ensure all communities are protected and have opportunities to benefit from the wealth generated in creating a new economy.   

Investors committing to net zero are proactively positioning their portfolios for a rapid transition to a low-carbon economy.  As the cost of clean alternatives to fossil fuels declines and consumers increasingly recognize the need to shift, carbon-intensive companies risk losing value, and fossil fuel companies that are not leading a just transition risk stranding assets.  Further, research from the Principles for Responsible Investment (PRI) on the Inevitable Policy Response forecasts that governments will implement a climate-policy response by 2025 that will be “forceful, abrupt, and disorderly because of the delay.” 

The September 2020 report from the Commodity Futures Trading Commissions (CFTC) titled Managing Climate Risks to the US Financial System underscored the risks associated with climate change to the financial system, the economy, and investors.  Its top recommendation was for Congress to establish a price on carbon. It also found that:

“the financial system can itself be a catalyst for investments that accelerate economic resilience and the transition to a net-zero emissions economy. Financial innovations, in the form of new financial products, services, and technologies, can help the U.S. economy better manage climate risk and help channel more capital into technologies essential for the transition.” 

Endowments and other asset owners have a critical role to play by proactively pursuing net zero portfolio -- to protect their capital, reduce systemic risk, and minimize the damage and suffering of climate impacts.  

IEN is convening and supporting endowments in learning about Net Zero Portfolios, making commitments, and participating in shareholder engagement efforts to get portfolio companies onto decarbonization pathways aligned with the 1.5 degree C warming target of the Paris Climate Agreement.  

We have partnered with the UN-supported Net Zero Asset Owner Alliance (NZAOA) as a supporting partner: 

 

Net Zero Commitments by Endowments: 

 

Sampling of IEN's Net Zero Endowment activities: 

  • Webinar with the Net Zero Asset Owners Alliance and Alliance member Zurich Insurance (October 2020) 

  • Introductory roundtable conversation on Harvard’s Net Zero Commitment with endowments totaling over $95 billion in assets (July 2020) 
    (held under Chatham House Rule, no recording available) 

 

Net Zero Resources 



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