The Net-Zero Asset Owners Alliance (NZAOA), a coalition of investors representing $11 trillion in AUM, has announced tougher restrictions on how members assess their environmental impact in the third edition of its Target Setting Protocol.
The NZAOA expanded the list of assets subject to emission targets, with sovereign debt and private equity now also included. Additionally, members will not be allowed to purchase carbon credits to meet immediate shortfalls in emissions reductions. By doing this, the NZAOA is encouraging members to make substantive changes to their carbon footprint in line with scientific projections.
Gunther Tallinger, chair of the NZAOA said in a press release that this measure “increases expectations for its members and calls on policymakers and corporates to move in line with science.”
BP’s latest annual energy outlook predicted a slump in demand for oil and gas over the next decade, due in part to the war in Ukraine that has pressured countries to seek greater energy security by investing in renewables. Under these new projections, oil demand will be 5% lower than predicted last year and natural gas 6%. The report warns, however, that the energy transition is at a pace too slow to reach net zero by 2050.
For net zero to be achieved, global oil demand would have to reach 20 million barrels a day by 2050 (a fifth of today’s total). Currently, BP predicts that oil demand will slowly decline to just above 70 million barrels a day by that time.
These sobering statistics reveal that there is very little space for inaction and complacency in efforts to spur the transition towards renewable energy.
A survey has claimed that a majority of companies have boosted sustainability spending despite engaging in cost-saving measures elsewhere including layoffs. According to the survey, 70% of the 753 companies surveyed were planning to increase sustainability spending on measures such as energy efficiency or recycling, with only 2% saying they were planning to reduce it.
In 2022, companies have become increasingly motivated to put their environmental targets into practice as climate change becomes a greater priority for corporations and investors.
Additionally, government spending and investment into green tech and sustainable measures has increased this year, most notably with the US’s Inflation Reduction Act. This policy, in addition to directly investing in American technology manufacturers, also introduced tax credits for businesses implementing sustainability measures, such as improving the insulation of their offices or installing solar panels, for instance.
Following the Investor Coalition on Mining 2030, industry experts and financial stakeholders have argued the mining industry is vital to the net zero transition. As governments and private businesses scale solutions to the climate crisis, the need for rare metals that are vital for electronics and sustainable technology will grow exponentially. To meet this demand, the mining industry that extracts them must accelerate its activity.
Adam Matthews, chair of the Church of England Pensions Board and a leader on this issue, has argued that the expansion of the mining sector is a key factor in how the world meets its environmental aims. Speaking to the Telegraph, he argued that complacency around the need to expand mining risks becoming the “achilles heel of the transition”.
Matthews and other figures have sought to solve an urgent need for mining corporations to improve their environmental standards in order to earn the public’s trust and meet stated emissions goals. Just last week, Rio Tinto made headlines for misplacing a highly radioactive substance while transporting it in Australia, one of many examples in a mining industry that has often not prioritised their environmental impact.
Bodies like the Investor Coalition on Mining 2030 are seeking to meet both issues by highlighting the need for investment and the responsible expansion of mining, while also holding those companies accountable to rigorous and substantive standards.