Brunel pilots Net Zero Investment Framework ahead of consultation

At Brunel, our aim is to help build a financial system fit for a low-carbon future. In setting out that goal in January, we committed to support and pilot new tools that enable us to assess our portfolios’ alignment with climate goals.

Last week, we delivered on that commitment by supporting the launch of the IIGCC Net Zero Investment Framework, the first practical framework to guide asset owners and managers seeking to become net zero investors.

However, for the framework to realise its potential, it needs to become an increasingly shared enterprise across the industry. That is why the consultation process, which has just opened, is so important. At Brunel, we are now actively asking people in the industry to respond to the consultation.

Paris-aligned

Our own responsible investment ethos has always stressed the need for holistic approaches. Our Climate Policy identified five areas in which seek to make a difference, from portfolio construction to policy advocacy. As key supporters of the IIGCC, we have championed this approach in developing the framework, resulting in a holistic guide to meeting the net zero challenge across multiple asset classes.

The framework therefore presents five components of a net zero investment strategy. It sets out recommended approaches in governance and strategy, portfolio targets, strategic asset allocation, asset class alignment, and external engagement. Sovereign and corporate bonds, real estate and listed equities are all covered by the framework.

Next steps

The initial framework has been published this week for consultation and Brunel will now put it to the test for our clients by modelling its impact on our real-world portfolios. In the interests of collaboration and transparency, we will publish the results of this analysis with the final framework, before the end of 2020.

For Brunel, the Net Zero Investment Framework is a core component in how we seek to deliver on the Paris-aligned ambitions we laid out earlier this year. As Laura Chappell, our CEO, recently told the FT, it answers the fundamental question of what a Paris-aligned portfolio looks like in practice. This is a major step forward for the industry and will help us to evaluate our portfolios and those of our clients.

We look forward to continuing our collaboration with IIGCC and others, and to sharing our experiences with new tools and methodologies that help the investment system transition to a low carbon future.

Most immediately, however, we hope that as many investment practitioners as possible across the industry will recognise the urgency of applying this framework, and take part in the consultation.

To participate in the IIGCC consultation, please visit the IIGCC website.