The newly launched, updated Net Zero Investment Framework (NZIF), dubbed ‘NZIF 2.0’, provides a comprehensive guide to net zero investing and reflects three years of practical experience and consultation with over 200 investors.
The NZIF is a widely adopted tool for investors developing net zero strategies.
This updated framework aims to streamline the process for investors to implement their net zero commitments and manage the attendant climate-related risks and opportunities. To help investors navigate the extensive new advice, the Institutional Investors Group on Climate Change (IIGCC) has produced its ‘NZIF 2.0: Summary Guide’.
“The Net Zero Investment Framework has been incredibly valuable for any investors wanting to develop and implement their individual net zero strategy and transition plans,” said Nathalie Van Toren, head of responsible investment at NN Group, “NZIF 2.0 will undoubtedly continue to play an important role in our net zero journey and I congratulate everyone involved in its development.”
With the growing demand for sustainable investments, NZIF 2.0 provides a much-needed guide for investors looking to navigate the complexities of the energy transition. The updated guidance allows for greater transparency and accountability in climate-related financial reporting.
A key focus of NZIF 2.0 is its revised approach to “financed emissions”. The updated framework emphasises “financing reduced emissions” rather than simply “reducing financed emissions”. Investor feedback led to the change, with the original NZIF criticised in some quarters for encouraging what has been described as “perverse outcomes,” actively dissuading investment in climate solutions.
Adam Matthews, chief responsible investment officer for the Church of England Pensions Board and co-chair of the steering group for the Paris Aligned Investment Initiative, said: “The Net Zero Investment Framework provides an essential framework that is credible and rigorous to practically operationalise investors’ climate commitments.”
Additional takeaways from the new investor advice include asset class, and thematic guidance for sovereign bonds, real estate and private debt, which includes guidance for infrastructure and equity published post-NZIF’s original publication date. Other improvements cover new performance criteria for listed equities and corporate fixed income, plus new certificate deposits guidance.
The IIGCC’s ‘NZIF 2.0: Summary Guide’ gives an overview of the new advice.
The UK’s net zero plans suffered earlier this year when the Environment Agency announced it was delaying its proposed 2030 targets to between 2045 and 2050. According to a DNV report, that means the UK will miss not only its 2030 commitment but also likely the ‘Net Zero by 2050′ target under the Paris Agreement.
