An investor group committed to climate change and controlling $11 trillion in assets has banned members from counting carbon removal schemes towards their emissions reduction targets before 2030, amid increasing scrutiny of the fast-growing market for carbon offsets.
The Net Zero Asset Owner Alliance (NZAOA) said on Tuesday it wanted its members to focus in the first instance on encouraging investee companies to reduce emissions across all sectors, rather than removing carbon that has already been emitted by, for example, planting large numbers of trees.
The move reflects broad concerns about the quality of some carbon removal schemes and criticism of companies that buy carbon credits instead of improving their own carbon footprints, however the United Nations has said that carbon removal will be required to slow or stop climate change by 2050. (Editor’s note: Reuters corrected this sentence to remove an original reference that the initiative runs counter to the U.N.)
The new policy applies to NZAOA members and the companies in which they invest, after a previous version prohibiting carbon offsets generated questions from members.
For the longer term, the NZAOA still wants members to invest in and support the development of a liquid and fully accountable market for carbon removal certificates.
“Investments in high quality carbon removals will encourage demand and the development of the market,” said Jessica Andrews, UNEP FI investment lead and senior project manager for NZAOA.
“However … we expect members to prioritize real world abatement (decarbonization) at least until 2030.”
Not all investors back the prescriptive approach.
Maria Nazarova-Doyle, head of pensions investments and responsible investments at Scottish Widows, said that while offsets were not a substitute for climate action, she could see benefits of taking early action to direct capital to conservation and nature projects, especially as oversight of such projects improves.
“If it’s about protecting forests, it may be that you get to 2040/2050, and there’s no forest to protect anymore.”
(Reporting by Virginia Furness; editing by Mark Potter)
Photograph: The Department of Water and Power (DWP) San Fernando Valley Generating Station is seen Dec. 11, 2008 in Sun Valley, California. Photo credit: David McNew/Getty Images North America
Related:
- Insurance Industry Support of Carbon Removal Needed in Drive to Net Zero
- The Global Urgency of Building the Carbon Removal Industry
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