Climate change is increasingly being recognised as an existential crisis for the planet and its people. The surge in droughts, floods, and other climate-related natural disasters brings home in a tragically powerful way the truth of what climate scientists have long been saying. In the second part of the Sixth Assessment Report, released in February of this year, the Intergovernmental Panel on Climate Change (IPCC) warns that: “global warming, reaching 1.5°C in the near-term, would cause unavoidable increases in multiple climate hazards and present multiple risks to ecosystems and humans”.

Nevertheless, the IPCC also asserts, with high confidence, that although not all threats can be eliminated, “near-term actions that limit global warming to close to 1.5°C would substantially reduce projected losses and damages related to climate change in human systems and ecosystems”.

This is both an opportunity to be seized and a responsibility to be assumed. The very future of the financial system depends precisely on it taking responsibility for emissions facilitated through investment, underwriting, and lending.

As providers of capital to enterprises, asset owners are uniquely placed to influence company behaviour and create momentum for the decarbonisation of the real economy.

Unleashing this potential for ambitious, macro-level change has been the goal of the UN-convened Net-Zero Asset Owner Alliance since its inception in 2019—and it remains its driving mission to this day.

The Alliance’s members not only recognise this responsibility but are also seizing the opportunity to transform the finance industry in order to build a net-zero economy. The Alliance has exercised leadership by advocating for scaling blended finance for investment into climate solutions,by clarifying the ‘rules of the game’ in stewardship, and by introducing new layers of accountability. The latter relies extensively on the Alliance’s robust target-setting approach.