A six-step action plan for net-zero

Compendium paper | Output from the investing for tomorrow working group

Even though many investment organisations have already made a net-zero commitment, it is our belief that:

  • The implications of those commitments are not yet fully understood, and
  • The accompanying actions have not yet all been discovered.

The working group set out to build a framework to help asset owners establish and execute a pathway to achieve their climate ambitions. This plan was created by the investing for tomorrow working group with the aim of being as practical as possible. The working group were guided by the ethos “we do what we can with what we’ve got”.

The working group developed a six-step action plan to guide asset owners on their climate journey and produced a series of six papers, one detailing each step (taking the IIGCC net-zero framework as a starting point). You can read the summary paper on the right hand side of this page.

If you prefer to explore one of the six steps in more detail, click to read the in-depth papers below:

Step 1 | Refresh organisation’s identity – this paper sets out the thinking behind and the structure of a six-step action plan.  Step one in the action plan is to refresh the organisation’s identity, and this starts with purpose and vision.

Step 2 | settle climate beliefs – this paper introduces a set of six ambitious climate beliefs capable of motivating action to change to the climate trajectory. Strong and settled beliefs form the foundation for successful climate action. We recommend a rigorous process is undertaken and documented.

Step 3 | Decide level of climate ambition – when it comes to setting a level of climate ambition, an institutional investor must choose a position somewhere between complying with regulation and aggressively pursuing a decarbonised real-world economy. The working group chose to distinguish between five levels of increasing climate ambition in this paper.

Step 4 | Address internal resources – this paper presents 32 ideas for actions that asset owners can take to implement their climate ambition. The first 16 actions relate to decarbonising an organisation’s own portfolio, but also form a foundation for the second set of 16 actions which target changing the climate trajectory.

Step 5 | address external resources – in this step, we move from an asset owner’s internal focus to looking at their external relationships in the context of the net-zero transition. The working group concentrated on the issue of 3D investing (risk, return and impact), and the management of 3D net-zero mandates comprising return and decarbonisation goals, and limits to risk, into an uncertain future.

Step 6 | Report against ambition – the detailed paper discusses broad principles that lay the foundation of a well-constructed reporting framework, proposes a straw-model reporting template, examines the current state of climate data and analytics, and highlights areas for future development. We believe this provides the necessary tools and insights to build a reporting framework best suited to an organisation’s own context and needs.

“Because we control our portfolios and do not control real-world activity, there will be a constant temptation to decarbonise our portfolio and believe we are making a difference. The uncomfortable truth is that if we fully decarbonise our portfolio but the economy does not, then our decarbonised portfolio will still be exposed to the systemic risk of climate change.”