Macquarie Asset Management sets sights on net zero portfolio by 2040

James Murray
clock • 3 min read

Australian banking giant becomes latest major investor to announce plans to decarbonise its portfolio

Australian banking giant Macquarie Group this week moved to mark the fifth anniversary of the Paris Agreement by announcing its asset management arm will work to deliver a net zero emission portfolio by 2040.

In a letter to investors released yesterday, Martin Stanley, head of Macquarie Asset Management (MAM), set out a series of steps designed to put the company on track to decarbonise its portfolio in line with the goals of the Paris Agreement.

"As long-term investors in companies that underpin economies and communities, we take our responsibility to address climate risks seriously," he said. "As stewards of these vital businesses, we have a duty to ensure they play their part in global efforts to address our warming planet.

"Today we are announcing a range of commitments that will reduce emissions across our portfolio and build sustainable long-term value for the benefit of our portfolio companies, our clients and the communities in which we operate."

Specifically, the company said that in alternative investment portfolios where MAM exercises control or significant influence over the underlying investments, its goal is to have Paris-aligned net zero business plans in place by the end of 2022.

As such, MAM pledged to measure greenhouse gas emissions of all portfolio companies, identify pathways to reduce emissions, and develop business plans that contribute to a net zero economy by 2040, or sooner.

It also confirmed that for new investments it would target completion of these steps within 24 months of acquisition while working with existing portfolio companies with the aim that they are on Paris-aligned or net zero emission reduction pathways by 2030.

It added that it would report on progress against the new goals annually.

And the company stressed that for managed portfolios of public securities and alternative investments where MAM does not have significant influence, it would "support the goals of the Paris Agreement in a manner consistent with our client-guided fiduciary and regulatory responsibilities".  

The company said the new policy would complement the bank's role as a leading investor in clean energy infrastructure, which was bolstered in 2017 by its acquisition of the UK's Green Investment Bank, which was subsequently rebranded as Green Investment Group.

Macquarie said the GIG is now working across 25 markets to help companies and countries achieve their decarbonisation objectives and has already invested or arranged over $A36 bn of investment in green energy projects, providing clients with power purchase agreements for over 3GW of renewable energy capacity, and enabling a 30GW global pipeline of new projects.

The move makes MAM the latest in a string of major asset managers and banks to announce new goals to deliver net zero emissions across both their operations and portfolios. The Net Zero Asset Owners Alliance now totals 30 members with $5tr of assets under management who have set various targets designed to move their portfolios into line with the goals of the Paris Agreement.

In other green finance news this week, French banking giant BNP Paribas announced it has launched the first property fund that sets out to be compliant with the Paris Agreement through its BNP Paribas Real Estate Investment Management arm. The European Impact Property Fund has secured €160m of equity capital commitments secured to date, including €100m from a leading European Insurance company and another French institutional investor also backing the fund at its first close.

The fund is now targeting a 40 per cent reduction in greenhouse gas emissions within 10 years across its whole European portfolio.

Separately, BNP Paribas also this week announced it has has agreed a £50m sustainability-linked revolving credit facility with Metropolitan Thames Valley (MTVH), one of the UK's largest housing associations

The facility's interest margin is tied to MTVH achieving environmental targets that reduce greenhouse gas emissions linked to energy consumption from both its offices and transport, as well as its residential portfolio.

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