In brief: IIGCC’s Net Zero Investment Framework to revise target criteria and terminology

The Institutional Investors Group on Climate Change is releasing an updated version of the NZIF, ‘the most widely used guidance by investors’ setting net zero commitments.

The Institutional Investors Group on Climate Change’s Investor Strategies plans to release an update to its popular Net Zero Investment Framework (NZIF) that IIGCC says will give a more balanced picture of investors’ decarbonization progress.

Under the current framework, investors with net zero targets are andvised to rely on either financed or absolute emissions data to track their progress, but Mahesh Roy, IIGCC strategies programme director, says using those metrics alone or primarily can cause “inadvertent issues” and “unintended consequences”, such as causing investors to avoid “investment in climate solutions, transition sectors and emerging markets”, according to Roy.

Such investment themes would show higher upfront financed emissions figures under the metrics recommended by the existing framework, but are “nonetheless vital to reaching net zero by 2050”, he adds.

The NZIF is used by the Net Zero Asset Managers initiative to set its criteria and recommended pathways for members and is the “most widely used guidance by investors that have set voluntary net zero commitments”, according to Roy.

NZIF “2.0” is under consultation until 24 April 2024. The updated framework will include asset class-specific guidance for private equity, infrastructure, real estate and private debt that has been released in the past three years.

Read more on NZIF’s guidance for private equity and infrastructure.