The zero that every investment portfolio needs

SourceWorld Economic Forum
CountryMiddle east

To address climate change effectively, investors must steer their entire portfolios towards climate neutrality. Portfolios that do not evolve in the right direction risk becoming unattractive to beneficiaries in the long run. Sustainability, especially climate change impact, must be considered in investment decision-making. Investors have to change their objectives and decision processes. The UN-convened Net-Zero Asset Owner Alliance (AOA) has set its first defined target of reducing emissions in its own portfolios in the range of 16-29% by 2025. Climate change is the defining risk of the 21st century. Changes in economies, and consequently in the behaviour of individuals, need to be driven through concerted efforts. One such effort is the Net-Zero Asset Owner Alliance (AOA), a United Nations-convened alliance of large institutional investors, established in 2019.

Back then, the 12 founding members, including Allianz, had taken a bold pledge to facilitate the decarbonization of the world economy, by making their own portfolios carbon-neutral by 2050. The AOA, which has now expanded to 33 members managing more than US$5 trillion of assets in total, took a definitive step last year towards this goal by setting up its first defined target of reducing greenhouse gas emissions in own portfolios more...