The Church of England Pensions Board is to leave the Net Zero Asset Owners Alliance (NZAOA), due to thematic overlap with other climate alliances.
The UN-convened NZAOA is an initiative of institutional investors committed to transitioning their investment portfolios to net-zero by 2050.
In the reasoning for the departure, Adam Matthews explained that the pensions board remained committed to the net zero target, but had difficulty working within the NZAOA and acting as a member of the Net Zero Investment Framework (NZIF), while also continuing to co-chair the Paris Aligned Asset Owners Steering Committee.
“Although supportive of both initiatives, given the size of the organisation, it was not tangible to maintain two reporting frameworks and a clear focus on one net zero initiative was needed”, said Matthews.
However, the NZAOA has faced criticism for not being strong enough in commitment to the fight against climate change. The alliance has released an updated guidance to its members earlier this year, which encourages them to refrain from further oil and gas investments. But it also continues to refrain from calling for a clear commitment to phase out fossil fuels and even said that NZAOA members may continue to invest in new oil and gas projects in "exceptional circumstances.
Responding to a March paper in which the NZAOA only advised against investing in those oil and gas majors which may become ‘stranded assets’, Lucie Pinson, director of pressure group Reclaim Finance, said: “This paper makes the NZAOA look more aligned with Big Oil than it is with net zero.”
The campaign group also criticises NZAOA for failing to provide effective guidance on engagement strategies.
The Church of England held back from directly criticising the alliance, stressing instead that it continues to support it.
But reflecting on the London Climate Action Week, Laura Hillis, director Climate and Environment commented on the state of collaboration on climate change: "Several people said 'if you want to go fast go alone and if you want to go far, go together' as evidence for the need to collaborate. The problem is we need to go far AND fast."
Other net zero bodies have seen high profile departures in the last year, notably Vanguard from the Net Zero Asset Managers initiative in the wake of the ‘anti-ESG’ movement in the US. Moreover, the Net Zero Insurance Alliance has recently faced an exodus of members, also due to pressures by the anti-ESG movement.
The Church of England's recent departure from NZAOA highlights the growing polarisation that networks to tackle climate change are facing. While some members, under pressure by predominantly-US based anti-ESG groups feel they are going too far, asset owners in Europe appear to take the stance that they are not going far enough.
UPDATE 14/7/23:
Responding to the news of the Church of England leaving the NZAOA and criticisms from Reclaim Finance, Oliver Wagg, communications lead for the NZAOA, said: “We are adding new members on a continuous basis.“Noting while we take the criticism from Reclaim Finance extremely seriously, and indeed we engage with them on a regular basis, you would be hard pushed to find a more ambitious stance on fossil fuels in any institutional investor group.”
Wagg also noted that while the CofE Pensions Board has left the organisation, the sister body the Church Commissioners for England remains a member.
