NZAOA Members Commit \$175 Billion to Climate Solutions, Call for Policy Alignment

Investment in climate solutions surged to \$175 billion in 2023, a 38% increase from \$127 billion in 2022, according to a report from the Net-Zero Asset Owner Alliance (NZAOA). Eighty-one of the Alliance’s 88 members have committed to intermediate net-zero targets, aiming for a 26% emissions reduction in key assets by 2025, covering about \$4.3 trillion of the group’s total \$9.5 trillion assets under management (AUM). Despite the increase in climate-focused investments, the Alliance urged a “decisive shift in policy” to align government actions with net-zero goals, citing a slow global transition.

The UN-backed Net-Zero Asset Owner Alliance, which represents 88 of the world’s leading asset owners, including the California Public Employees’ Retirement System and Allianz SE, reported a record \$175 billion investment in climate-focused solutions by its members in 2023. This represents a nearly 38% jump from the previous year’s \$127 billion. In total, \$555 billion—or 6% of the Alliance’s \$9.5 trillion in assets—were allocated to climate solutions, such as corporate bonds and real estate investments, through 2023.

Günther Thallinger, Board Member at Allianz SE and Chair of the Net-Zero Asset Owner Alliance, said: “The Alliance sets a powerful example for meaningful progress. To maintain momentum, governments must implement bold climate policies and define concrete sector-based and investible transition plans with short-term targets to meet their Paris commitments.”

The Alliance highlighted that 81 members have now committed to intermediate targets aimed at achieving net-zero emissions by 2025—a significant increase from 69 members last year. Of these members, 79 have also set sub-portfolio decarbonization targets, targeting a 26% average emissions reduction across bonds, equities, real estate, and infrastructure. These targets cover \$4.3 trillion in assets, aligned with the Paris Agreement and the IPCC’s 1.5°C pathway.

Wendy Walford, Head of Climate Risk at The Legal & General, and Policy track co-lead for the Net-Zero Asset Owner Alliance, commented: “As long-term investors, we see the difference between governments’ climate commitments and current policies as unsustainable, and a decisive shift in policy is required to align policy frameworks with the net-zero transition more widely. Governments have the tools—such as carbon pricing—to meet their Nationally Determined Contributions (NDCs), as highlighted in the Alliance’s white paper earlier this year.”

Walford further noted: “Despite significant advances in asset owner portfolio decarbonization, the pace of transition in the real economy remains insufficient, with global emissions continuing to rise each year.”

The 12 new members that have set their targets for the first time in 2024 have all established both sub-portfolio and climate solution investment targets, along with mandatory engagement targets. With the addition of these new members, a total of 79 asset owners have set sub-portfolio targets. On average, members are targeting a 26% reduction by 2025 for bonds, equities, real estate, and infrastructure—reductions aligned with the Paris Agreement and the IPCC Sixth Assessment Report pathways for achieving net zero greenhouse gas (GHG) emissions by 2050.

While the Alliance’s membership grew to 88 from 86 last year, the Danish pension fund PKA withdrew in August. Despite the Alliance’s substantial investments and expanded membership, the report noted that the remainder of the Alliance’s assets are not yet covered by sub-portfolio targets. These include certain asset classes, such as sovereign debt, that fall outside the Alliance’s target-setting framework.

As the COP29 climate change summit approaches on November 11 in Baku, Azerbaijan, the Alliance’s annual progress report signals both progress and the pressing need for policy shifts to match climate investment momentum.