ENGINEERING SUSTAINABILITY SCIENCE
CLIMATE FINANCE ARCHITECTURE INDIA AND GLOBAL
NET-ZERO INVESTMENT FRAMEWORK.
In November 2020, a coalition of institutional investors with more than $16trn (£12trn) in assets under management initiated the first-ever practical blueprint to help investors deliver net-zero emissions globally by 2050. This Global Net-Zero Investment Framework provides a comprehensive set of recommended actions, metrics, and methodologies to decarbonize investment portfolios and increase funding for climate solutions developed by 70 global investors and contained initially four different asset classes:
1. Sovereign Bonds.
2. Listed Equities.
3. Corporate Fixed Income. and
4. Real Estate.
The focus on real-world decarbonization overcomes limitations of other approaches, which leave room for investors to meet targets while selling the problem to someone else technically. More than 25 methodologies and tools to support alignment with the Paris Agreement and Net Zero emissions have been analyzed and reviewed in the Blueprint's Formulation. Five core components help define its investment strategy, covering objectives and targets:
1. Strategic Asset Allocation.
2. Asset Class Alignment.
3. Policy Advocacy.
4. Investor Engagement Activity.
Nonetheless, the framework highlights a range of unique sectoral challenges and complexities. It will seek input from a wide range of stakeholders to help validate and strengthen the work to date by investors. Investors must play a central role if the world meets the Paris commitment of limiting climate change to below two degrees. Thus, the Global Net-Zero Investment Framework signals what a Paris Agreement-aligned portfolio looks like and is crucial because it answers fundamental and urgent questions.