An alliance of major investors overseeing $2.4 trillion has committed to making portfolios entirely carbon-neutral by 2050

FILE PHOTO: Young people protest outside of the San Francisco Federal Building during a Climate Strike march in San Francisco, U.S. September 20, 2019. REUTERS/Kate Munsch/File PhotoFILE PHOTO: Young people protest outside of the San Francisco Federal Building during a Climate Strike march in San FranciscoReuters

  • A group of pension funds and insurers responsible for $2.4 trillion in investments committed on Monday to making their portfolios carbon-neutral by 2050.
  • The group, called the United Nations-convened Net-Zero Asset Owner Alliance, was organized by the UN and coincides with its Climate Action Summit.
  • A number of companies have made environmental pledges recently, including Amazon and Nike.
  • Read more on Markets Insider.

The push for climate-focused investing has reached a new level.

On Monday, an alliance of pension funds and insurers responsible for a total of $2.4 trillion in investments announced a commitment to carbon-neutral investment portfolios by 2050. The group will be called the United Nations-convened Net-Zero Asset Owner Alliance.

"As long-term investors who must look far into the future to fund their liabilities, asset owners are keen to ensure that the global economy prospers, that climate-related risks are addressed, and that opportunities to invest in a cleaner tomorrow are captured," the group said in a statement released Monday.

The group will immediately begin to engage with the companies they are investing in to make sure that they also work to be carbon-neutral. To hold themselves accountable, the members of the alliance will set targets and publicly report their progress, in accordance with part of the Paris Agreement.

In addition, the group will be closely aligned with other UN initiatives. Their pledge to slash emissions from their portfolios is in line with limiting the global temperature rise to 1.5 degrees Celsius. The group will also work with the Investor Agenda, Science Based Targets initiative, and more.

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Sustainable investing - also called impact or ESG investing - is hot right now, according to a recent paper from the Sloan School of Management at MIT. Investing in companies dedicated to helping solve global issues is good for financial returns, and wins brownie points, the paper said.

It's also become a more popular and sought after method of investing for retail investors as well, and companies aligned with environmental, social and governance policy can also outperform the rest of the market.

Business leaders have taken notice - in August, 181 top CEOs announced at the Business Roundtable that the purpose of a company is for all stakeholders, not just shareholders. That means that employees, customers, and communities should also be considered in business decisions.

Companies have become more involved in fighting climate change, and a slew of them announced or reiterated sustainability plans recently. On Thursday, Amazon announced a pledge to be carbon neutral by 2040. Nike unveiled a comprehensive "Move to Zero" campaign last week, which includes goals such as powering facilities with 100% renewable energy by 2025 and operate with net-zero carbon emissions.

The Chairman of Mars, the company known for candy and more, wrote an opinion piece for Business Insider that the fundamental responsibility to help fix issues such as climate change lies with business and political leaders. He also wrote that those leaders need to be doing more.

The announcement comes during the week of the UN Climate Action Summit, where world leaders meet in New York to meet and take action against global warming. It also coincides with the first day of Climate Week NYC, an even run by The Climate Group in coordination with the UN and the City of New York.

The week runs September 23 through September 27 and includes programming throughout the city. Other climate week events are happening across the country.

The alliance was brought together by the UN Secretary-General's Climate Action Summit. It includes Allianz, Caisse des Dépôts, La Caisse de dépôt et placement du Québec (CDPQ), Folksam Group, PensionDanmark and Swiss Re, who joined when the group was initiated in the beginning of 2019. Since, Alecta, AMF, CalPERS, Nordea Life and Pension, Storebrand, and Zurich have joined as founding members.

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