Most Spanish managers are outside the net zero alliance

The global network Net Zero Asset Managers, which will be two years old in December, has 292 signatories, but few are Spanish: BBVA AM, Ibercaja Gestión and Santander AM. The same as twelve months ago.

The Spanish asset management industry continues to reflect on how far to get involved in the fight against climate change. Although sustainable funds are gaining weight in the Spanish market, there are still few national managers integrated into the international network ‘Net Zero Asset Managers’ (NZAM). With 292 signatories as of October 27, the members of this group commit to align their portfolios with the Paris Agreement, so that they reach net zero emissions by 2050. To achieve this, intermediate objectives must be established.

Two years after its launch – it will celebrate its second anniversary in December – the presence of Spanish firms is still scarce. Only BBVA AM, Ibercaja AM and Santander AM are part of the alliance. In addition, since the autumn of last year there have been no new registrations of signatures with national passports. As has happened with the climate commitments of companies, the war in Russia and the changes in energy that Europe is facing, would have stopped the boom of public commitments towards net zero that occurred in the run-up to COP 26, held in the United Kingdom in 2021. In fact, the bulk of NZAM’s growth occurred before Russia’s invasion of Ukraine. If it saw the light in the last month of 2020 with 30 signatures, on February 1 it announced that it had 236 members and now with 292. However, the volume of assets they jointly control is very significant: 68 trillion euros.

Institutional investors are considered key to forcing the companies in which they participate – listed and unlisted – to adopt strategies focused on reducing emissions. The member firms in the NZAM must be proactive in this because, otherwise, they would be forced to make divestments to reduce the environmental impact of their portfolios and the spirit of the industry is more focused on that turn than on excluding assets, although they see it as a tool of ‘punishment’ in the event that portfolio companies do not adopt pro-decarbonization strategies.

Climate change and the financial sector

One of the big headlines left by COP 26 was the financial industry’s commitment to the fight against climate change. Beyond asset managers, banks, insurers and other asset owners publicly pledged to align their portfolios and investments with the goal of achieving the Paris Agreement, which would limit global warming to 1.5º by 2050.

In contrast to the low presence of asset managers, Spanish banks, however, are very present in its specific alliance on climate change, the Net Zero Banking Alliance (NZBA). All Ibex banks are signatories -Banco Santander, BBVA, Caixabank, Bankinter and Banco Sabadell- and also other entities such as Ibercaja or Abanca. The last to join – and the only one that has done so in 2022 – has been Cajamar, which would have been integrated in June, according to the NZBA.

Currently, up to 122 banks with 41 nationalities, equivalent to 40% of banking assets in the world, would have been integrated into this network. Like asset managers, the signatory banking groups commit to decarbonizing their portfolios to be net zero by 2050. The adjustment plan must be aligned with scientific criteria, so financial institutions are obliged to present specific emission reduction targets for certain sectors. The first ones that have been demanded are linked to the industries that emit polluting gases, such as those that generate electricity with coal or mining specialized in this fossil. But it is also intended to establish objectives for oil companies and for those issuing sectors that are relevant in the portfolio of each bank.

Within the Ibex, Caixabank has been the latest to publish initial objectives (Banco Santander and BBVA have already given guidelines for coal and other industries). “The financial institution has proposed to reduce by 30% the average intensity of its loan portfolio in the electricity sector, and by 23% the absolute emissions financed to the oil and gas sector before 2030,” it announced at the end of October. “Currently, these two sectors together concentrate 70% of global emissions and, in addition, due to their position in the economy, they act as levers for decarbonization of the rest of the sectors,” explained the bank led by Gonzalo Gortázar.

The European Central Bank (ECB), which included the fight against climate change within the monetary policy objectives last year, has put as an example of good practices in measuring this type of risks to the entities integrated in the NZBA. This wink makes it clear where the supervisor wants European banking to move, which is already very present in the banking ‘net zero’ network.

The insurance sector also has its own platform, although the presence of Spanish companies is also small and would be limited to Mapfre and Catalana Occidente. The insurer chaired by Antonio Huertas announced its incorporation into the Net-Zero Insurance Alliance (NZIA) last April with “the objective of achieving greenhouse effect emissions neutrality by 2050, that is, zero net emissions in its insurance and reinsurance underwriting portfolios,” it advanced. As with banks, the insurance sector must also offer clear guidance on how it will implement its net-zero roadmap. The group has already advanced that, by 2024, “it will neutralize Mapfre’s carbon footprint in eight countries.” By 2030, “the challenge is to reduce the Group’s carbon footprint by 50% (compared to 2019) and neutralize the remaining carbon footprint for the Group as a whole,” he lists.

Vidacaixa has also joined one of these alliances under the UN umbrella, although it has done so in the league of asset owners.

Source: La Información