With the world becoming more committed to environmental protection in recent years, “net zero emissions” has become a big trend in global politics and among businesses, who have demonstrated an unprecedented shift towards a more positive attitude on solving the climate crisis. As of November 2021, more than 140 countries had proposed net zero targets or roadmaps. ¹ The talk on environmental protection and carbon emissions reduction is no longer empty, they are important international obligations that urgently need to be fulfilled.

Inevitable Obstacles on the Road to Net Zero

Although there will be new opportunities on the road to net zero, there will inevitably be obstacles. Some emerging concepts, such as “carbon neutrality” and “net zero carbon emissions”, are quite confusing. Furthermore, when we are considering net zero, should we take cross-border emissions, such as international aviation and shipping, into account? No agreement has been reached so far.

In addition to conceptual discussions, some countries have also encountered various difficulties when cutting their emissions. This is particularly the case for developing economies that lack the capital and technology need to maintain economic development while tackling climate change at the same time and minimizing the potential negative impacts of the transition process.

Enterprises are also facing extensive climate-related risks. Apart from the potential economic losses caused directly by frequent extreme weather events, enterprises must also deal with transitional arrangements related to changes in policies, laws, technology and markets. However, ordinary investors may not be able to understand these technical issues in depth.

Taking the Initiative to Become a Climate Pioneer

Given the transition to net-zero is unavoidable, it is better to take the initiative rather than act reactively. The fund industry has proposed a global “Net Zero Asset Managers Initiative” in recent years, with 236 fund companies with a total of USD 58 trillion in assets under management² having already signed up. The goal is to achieve net zero greenhouse gas emissions by 2050 or sooner, in line with the United Nations’ 1.5°C carbon reduction target.

Allianz Global Investors, which is committed to active asset management, is also a member of this initiative and has several carbon reduction initiatives. The first one is launching various sustainable products to meet investors’ needs.

Second, we integrate ESG factors into the investment process – even for general investment products – to improve overall standards. Third, we actively engage and interact with invested companies through means such as proxy voting at shareholder general meetings, to push for companies to reduce their carbon emissions and closely monitor their progress with the aim of making them industry leaders in climate issues. Fourth, we also fulfil our asset management responsibilities by disclosing important climate risk information, such as how we integrate climate risks and opportunities into our own operations and investment processes.

The net zero carbon goal will not be achieved overnight, but that does not mean we should sit back and do nothing. To create a better tomorrow, we need to formulate flexible and stable strategies while proactively grasping various changes.

1. Source: Climate Action Tracker
2. Source: The Net Zero Asset Managers initiative