Net-Zero Asset Owner Alliance( NZAOA) established

These targets cover not just direct emissions( Scope 1 and 2), but also financed emissions( Scope 3), reflecting the indirect climate impact of investment activities.

The NZAOA’ s Target-Setting Protocol( TSP) provides a robust methodology for members to calculate and report their progress, but flexibility is maintained to allow for evolving best practices and standards, such as those from the Science-Based Targets initiative( SBTi). Transparency and accountability are central – members must report annually on their progress, ideally following the recommendations of the Task Force on Climate-Related Financial Disclosures( TCFD), now part of the International Sustainability Standards Board( ISSB).

Beyond portfolio management, the Alliance is a vocal advocate for systemic change. It actively engages with investee companies to promote stronger climate governance and disclosure, and lobbies policymakers for measures such as carbon pricing and the elimination of fossil fuel subsidies. Through collaboration with other initiatives under the Glasgow Financial Alliance for Net Zero( GFANZ), the NZAOA helps set industry standards and catalyse broader market transformation.

Navigating ESG risks Effective risk management is at the heart of sustainable asset management. ESG risks – ranging from environmental disasters and regulatory changes to social unrest and governance failures – can have significant impacts on financial performance and reputation. Asset managers must embed ESG risks into their risk management frameworks, using scenario analysis, forward-looking metrics and active engagement with investee companies.

Similarly, social risks – such as poor labour practices or community opposition – can disrupt operations and erode value.

146 August 2025