Investment and insurance group Old Mutual has joined the United Nations-convened Net-Zero Asset Owner Alliance (AOA) to help accelerate the global drive to net-zero carbon emissions by 2050. 

AOA brings together like-minded asset owners whose ambition it is to drive the net-zero goal. It has 70 institutional investors holding $10.4-trillion in assets under management.

Old Mutual is one of the first asset owners in Africa to join the alliance and hopes to signal its strong commitment to transition its proprietary investment portfolios to net-zero greenhouse-gas (GHG) emissions by 2050, as well as show the group’s support of worldwide efforts to limit global warming to 1.5 ˚C above preindustrial levels.

“We share the conviction of the alliance that containing the global climate crisis requires commitment and collective effort from every sector, both public and private. We are committed to positively contributing to the global transition by decarbonising our proprietary investment holdings in a responsible and fair manner, aligned to improving real world outcomes.

“We understand the fundamental role that we must play as an asset owner through influence, capital allocation and collaboration, and we pledge to further our efforts in all of these areas in pursuit of real-world emissions reduction aligning with the 1.5 °C Paris Agreement goal,” notes Old Mutual CEO Iain Williamson.

The company believes climate change action needs to be prioritised by all, to avoid endangering the future of economies, businesses and the wellbeing of people.

BALANCING ACT

Williamson cautions that, given South Africa’s current high carbon intensity, amid the challenges of high unemployment, poverty and inequality, Old Mutual’s commitment to phase out thermal coal within its proprietary investment holdings over time requires the balancing of environmental priorities with economic and social considerations – a Just Transition.   

A major challenge in this regard will be finding opportunities to minimise the potentially negative impacts of the transition throughout Africa, ensuring that it is socially just and inclusive.

Old Mutual views its historic investment in green economy assets, especially related to renewable energy and low-carbon technologies, as a key investment lever in navigating a path towards achieving the global net-zero emissions objective.

The group has committed to actively investing in further green economy assets aimed at progressing the transition, mitigating the adverse effects of climate change, as well as contributing towards employment opportunities.”

“Old Mutual has established itself as an early innovator of investments, products and services that support the acceleration to global net-zero GHG emissions. In June 2020, for example, we launched the Old Mutual SA ESG Fund that is 40% less carbon-intensive than the Capped SWIX,” Williamson states.

He adds that Old Mutual will be striving to make a positive contribution to achieving the net-zero goal primarily through conscientious capital allocation, proactive stewardship, influence and collaboration.

“Responding with agility to a changing world and making a clear and measurable positive impact is now a key aspect of our overall strategy to sustain, grow and protect our stakeholders’ long-term wellbeing,” Williamson says.

Old Mutual plans to release its inaugural Climate Report, incorporating the Task Force on Climate-related Financial Disclosures in April and will be disclosing its interim investment portfolio decarbonisation targets within the next 12 months.