Net-zero Asset Alliance session at the World Economic Forum, Davos 2020May 09, 2020
This was the first, but certainly not the last, dialogue between institutional investors and
assetowners who make up the growing association of
assetowners and the companies they are privately or partially owned, and it was a very interesting conversation. The first thing I can take away is that there is an extraordinary willingness to have that conversation because there is a fundamental understanding that neither party can effectively decarbonize at the elusive speed and scale that we need and that it really has to be the result of a good understanding between both parties. What I took is that there were very impressive calls for more rigor for more central coordination so that not all companies have to invent cold water again it was a very optimistic recession I am the CEO of Pension Denmark one of the founding sponsor funds in the
zeroacetone half a year ago we were only six pension funds now we are more than 12 and more in let's say in the pipeline of social assets in approximately 2000 billion u.s. dollar now we have more than 4000 and by the end of the year we will probably have pension funds with more than 10,000 trillion dollars. dollars in the Alliance, this means that in the coming years you will really see the asset owner industry move on the climate agenda and engage with the companies in which we are shareholders to help them define their business models in a more climate-friendly way. friendly I got three key takeaways from today's
sessionin Davos on the UN Net Zero Asset Owners Alliance and those three takeaways have to do with the key role that asset owners need to play in this transition by encouraging companies portfolio managers and their asset managers to transition to Net Zero by 2050, the second key takeaway is about timing and speed is very important, it's not just about 2050, it's also about the short term, and the third key takeaway it is about the sectoral transitions that are needed, this means the sectors that are difficult to reduce. like aviation and cement, but it means that all sectors work together with asset owners.
First off, I have three takeaways from the SR Owners Alliance meeting here today. asset owners must behave as such, we must own the assets that we have in our portfolios and make sure that the people we choose to represent our interests, that the CEO, the president, know exactly what it is that we we are demanding from a climate change perspective, we also need to make sure as owners of Sur that our asset managers behave as we would like them to, so we also need to help companies make scenario plans that make sure that your business follow the Paris agreement and the third opportunity we had from this meeting was to create at COP 26 an intergovernmental panel on climate finance something that allows negotiators to understand what is happening in the markets and inform negotiators about how the money is flowing and whether it is aligned with Paris or not, there is a small clause in the agreement d e Paris called article 2 1 C and that clause says that all governments have already signed prepared to make the financing flows compatible with article 2 1 a, which is about one and a half to two degrees, so already is in the Paris agreement, a very important meeting, this is the first time that this group of very important investors, both insurance companies and pension funds have met with the other two key stakeholders, one of whom is their owned companies that need to influence the terms of making the transitions to NetZero and also interesting in the room are some messages from the government side on the subject. the relationship between capital flows the roles of investors and policy makers, so this was a very important meeting that we just had of the owners of acid Net Zero, an
alliancethat's still early days, but they're really coming into their own a leading role in helping push the financial sector forward the kinds of changes that are required if you are going to have a global transition of the economy and society to deal with the climate crisis that I think is coming from the meeting, the points Key to me were the need for more attention to what it means to be Net Zero and I know they're stretching, they're not recommending that the emphasis now should be on defining that and coming up with the appropriate metrics and not expecting this 2050 target, but really putting strong pressure for early action.
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net zero asset alliance session at the world economic forum davos 2020...
I think what was really very well received by all the people who spoke here was that the companies are really looking forward to long-term investors joining them. its long-term development, but also from the policy makers side, equally clearly there was almost respect in the sense that now the owners are going ahead and aligning their overall goals with what governments have already committed to and in terms of the targets, people were also very welcoming that it's not just something like Net Zero in 2050 but they understood and discussed with us it's clear that there will be targets intermediate targets like 2025 and it's alrea very, very clear how we're going to move towards these networks here in this approach gradually, so it's a very concrete initiative that we have here now with an ever-growing network between asset owners and corporations and policymakers, it was a very promising
To say that it is very clear that we need long-term investors like Allianz switch three and hopefully many others who will come together to finance the great transition towards a more sustainable but also lower carbon
worldand knowing that it is a very expensive transition, you need funds like money from long-term investors that ultimately managed over $80 billion and just across that bridge I think we can make it viable but it's also a great opportunity I think it's very important that we not only talk to each other as a donor but also be the company that really needs To make the decision more important is that the public sector also needs to be involved because through a discussion through the cooperation that is urgently needed, wi I will agree with the standards and the means standard that we need to know what the reports look like, but we also need to know how we want to measure success and that's why the ID alliance acetone holds great promise because they are so tangible.
That's my very credible goal, which is net
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