Earth Summit 2021: Global funds sign on to turn trillions of dollars of investments into muscle to push for action to avert climate change

Fourteen firms including State Street Global Advisors, with almost US$5 trillion in combined assets under management, have signed up to the “net zero asset manager initiative”

The latest inclusion swells the list of signatories to 73, with US$37 trillion in combined assets

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Smoke billows from a large steel plant as a Chinese labourer works at an unauthorized steel factory, foreground, on November 4, 2016 in China’s Inner Mongolia region. Photo: Getty Images

Published: 6:00pm, 21 Apr 2021Updated: 11:16am, 26 Apr 2021

A dozen of the world’s largest money managers have joined a growing list of professional investors in converting their trillions of dollars of investments into the kind of financial muscle that can lead to positive change to avert climate change.

Fourteen firms with almost US$5 trillion in combined assets under management, including the world’s third-largest manager State Street Global Advisors, said they have signed up to the Net-Zero Asset Managers Initiative launched last December. The new signatories will have to submit a voluntary interim target within a year on the proportion of assets to be managed in line with reaching  net-zero emissions by 2050 or sooner, and report their  progress annually.

The inclusion of the 14 expands the list of signatories to 73, with US$37 trillion of combined assets under management. The kind of financial muscle – roughly equivalent to the combined economy of the United States and China, or 40 per cent of worldwide money under management – is a crucial adjunct to this week’s Earth Day summit, where scores of world leaders including the Chinese President Xi Jinping are scheduled to join US President Joe Biden in coming up with action plans to stem climate change.

“Sustainability and clean energy are secular megatrends, and the US-China relationship in the context of climate change will significantly impact the landscape and markets for sustainable investing in the years ahead,” said Alex Wolf, JP Morgan Private Bank’s head of investment strategy.

Corporate participation is a critical part of the joint effort for the world to release less carbon dioxide and other greenhouse gases. By exercising the voting powers that come with shareholdings, environmentally conscious investors can compel their portfolio companies to adopt business practices that adhere to guidelines of sustainability and governance (ESG).

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