Climate finance activist body ShareAction has issued fresh guidance for asset managers in setting interim net zero targets, while criticising the current state of play in this area of sustainable finance.
The guidance, also intended for asset owner clients, calls for a common approach to emission reporting and standardised target setting, as the group claimed that the current net zero ambitions of asset managers are “falling short of what is needed.”
According to ShareAction, asset owners and investment consultants can use the report and its recommendations to challenge asset managers on whether their interim net zero targets actually correlate with their Net Zero Asset Managers initiative (NZAMI) or other commitments to a net zero goal.
The group also assessed whether targets set by 65 asset manager signatories to NZAMI were in line with the 1.5°C transition pathway.
The NGO found that asset managers vary greatly in their approach to target setting, and allegedly this lack of standardisation makes it difficult for clients, regulators and the public to track and compare progress and hold asset managers to account while “increasing the scope for greenwashing.”
The guidance also stressed that giving flexibility on methodological approaches to net zero risks undermining confidence in the sincerity of asset managers’ intent and hinders accountability.
The absence of methodological standardisation also weakens the potential of asset managers within initiatives such as NZAMI in pursuing the decarbonisation goal, according to ShareAction.
Last year it was reported that NZAMI is “unfit for purpose” and requires a “major overhaul” claims made in a report published by the Universal Owner think tank.
