Journey to Net Zero

The 2016 Paris Agreement makes it imperative for investors to plan their journey to net zero.

A number of frameworks exist to help asset owners and managers reach net zero, providing guidelines on decarbonizing portfolios, increasing investments in climate solutions and green technologies, and improving reporting. For asset owners, the most important step is likely to be Portfolio Construction.

Let’s walk this road together and discover how to undertake your Journey to Net Zero.


Targets and Objectives


The types of target you'll set will depend on your book of business or capital pool and targets should be set in line with science-based pathways that align with achieving net zero global emissions by 2050 or sooner.

Come back soon to see how we implemented this on our own path to become a net zero asset manager.


Asset Class Alignment

Asset class alignment is a key factor for aligning your investment to appropriate net zero pathways within each asset class.

There are 4 key elements in this critical part of implementation.

There are a number of potential steps that investors may take here, including positively weighting towards good alignment-criteria performers for existing assets, applying screening criteria for new active assets, using the right indexes or solutions, as well as allocating to green bonds etc. There are many effective new ways to construct your portfolio to meet your goals.

State Street Global Advisors offers a range of investment strategies that may tie in with your vision, mission and investment goals. Some approaches to consider:

Investment strategies should prioritise engagement and stewardship as a mechanism to drive alignment. For asset owners such engagement is often implemented by their asset manager.

Read more about State Street is a leader in climate engagement aligned with net zero efforts.

Engagement and stewardship actions are recommended as the main tool to achieve alignment. However, divestment and exclusion may be considered where there is climate-related financial risk; to escalate after unsuccessful engagement or where the company's primary activity is no longer considered permissable in terms of credible net zero pathways.

Read more about engagement and divestment here.

Relevant reporting can help investors meet regulatory and reporting obligations to beneficiaries, trustees and other stakeholders. Our climate reporting solutions are designed to help clients understand how their strategies perform against their investment objectives, including climate-focused objectives.

Come back soon to discover more about our ESG reporting and how it can help you on the path to net zero.


Policy Advocacy


Investors should consider whether their policy advocacy supports policy and regulation supportive of net zero alignment, and encourage their asset managers to provide strategies and products that help them meet their alignment goals.

You should also plan to inform your stakeholders of the actions that you’ve taken along your journey to net zero.


Q&A


Contact SSGAAustralia@ssga.com for more information.