GMO Declares Initial Net Zero Asset Targets

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by KnowESG
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Global investment manager Grantham, Mayo, Van Otterloo LLC (GMO) has announced its first net-zero goals and transition strategy.

GMO signed the Net Zero Asset Managers initiative (NZAM) in October 2021, committing to decreasing GMO investment portfolio net emissions to zero by 2050 or sooner, under goals to limit global warming to 1.5 degrees Celsius.

GMO thinks that climate change poses significant risks to the companies and countries in which it invests and that the net zero pledge will help GMO customers achieve better long-term investment outcomes.

As part of its promise to NZAM, GMO has sent in its initial net-zero goals and transition plan, which includes:

  • Reducing the carbon intensity of included investment portfolios by 65% by 2030, compared to levels in GMO’s baseline year of 2019, and

  • Increasing the percentage of GMO assets covered under this target from 53.5% to 60% by 2025.

To reach these goals, GMO will increase its investments in companies that have set science-based targets that are in line with net zero, work with issuers on net zero targets, improve its measurement tools to include Scope 3 emissions in addition to Scope 1 and 2, create a new climate and net zero-aligned strategies, and work with the Grantham Foundation to find climate solutions.

Deborah Ng, Head of ESG and Sustainability, said:

"There are stark differences between how the world will be impacted by warming of 1.5 degrees Celsius and warming of 2 degrees Celsius, or more, which we believe would pose challenges to our ability to earn returns for our clients. So, we think it's important for our future investment success to support the goal of net zero emissions by 2050 or sooner so that warming stays below 1.5 degrees Celsius. Setting initial net zero targets is an important step in our efforts to aid the fight against climate change and demonstrates our commitment to leading on this issue within the investment industry."

Jeremy Grantham, Co-Founder and Long-Term Investment Strategist, and a leading global advocate for climate change efforts and investment, said:

"Climate change is the greatest challenge humanity has ever faced. It is the race of our lives. Investing in sustainability means investing in our grandchildren, in our civilisation, and our survival as a species. Initiatives that work toward net zero are important ways for our industry to show the kind of leadership that will be needed to deal with these problems. All of us need to make sustainability integral to what we do. It is the fight for our very existence on this planet."

The Net Zero Asset Managers initiative started in December 2020. Its goal is to give asset managers a way to help reach the goals of the Paris Agreement. It is now signed by 291 asset managers who are in charge of $66 trillion in assets. This is more than half of all the money that the asset management industry manages around the world.

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Source: GMO