What is the NZAM initiative?
Source: Intergovernmental Panel on Climate Change (IPCC) 1.5°C scenarios, Institutional Investors Group on Climate Change (IIGCC)
IN ITS OWN WORDS
“The Net Zero Asset Managers initiative (NZAM) is an international group of asset managers committed to supporting the goal of net zero greenhouse gas emissions by 2050 or sooner, in line with global efforts to limit warming to 1.5°C, and to supporting investing aligned with net zero emissions by 2050 or sooner.”
As of January 2023, there are over 300 signatories, with $60 trillion in assets under management.
Signatories commit to targeting Net Zero portfolio emissions by 2050 or sooner, supported by interim targets consistent with a fair share of the 50% reduction in emissions required by 2030. Signatories work with their clients to achieve real economy emissions reductions.
WHY HAS RUFFER BECOME A SIGNATORY?
Our assessment of the ESG risks facing investors concludes that climate risk presents the greatest challenge to meeting our investment objectives. In order to protect and grow capital we are deepening our understanding of, and engagement with, the energy transition.
Figure 1 highlights the scale of the challenge – and the pace of emissions reduction required for different pathways around the 2050 target. The drive to decarbonise will have profound implications for the investment universe. This disruption will create numerous risks and opportunities as asset prices respond to the pressures of a carbon-constrained world and an increasingly inhospitable environment.
NZAM provides a framework for managing these risks and capturing these opportunities that is well aligned with Ruffer’s approach. It also gives a clear set of targets which we can use to communicate our approach to Net Zero investing and that our clients can use to assess our progress.