• The Net-Zero Asset Owner Alliance expects members to develop and align individual oil and gas policies with this position and cover portfolio allocation, stewardship programmes, and policy engagement
  • Oil and gas producers and their customers expected to set science-based, absolute- and intensity-oriented emissions targets covering Scope 1, 2, and 3 GHG emissions that are aligned with 1.5°C no or limited overshoot scenarios
  • The Alliance calls for increased policy ambition to rapidly reduce oil and gas demand and increase the supply and availability of renewable alternatives

29 March 2023, Geneva – The UN-Convened Net-Zero Asset Owner Alliance today outlines new guidance for members regarding their approach to the oil and gas sector, calling on consumers and suppliers of oil and gas to set Scope 1, 2, and 3 greenhouse gas emission reduction targets while aligning their operations activities, including capital expenditure, with established 1.5°C pathways.

This Position on the Oil and Gas Sector underscores the Alliance’s recognition that unabated climate change poses significant economic and investment risks. Members are committed to mitigating these systemic risks on behalf of their clients and beneficiaries and, as such, should consider how economies can transition away from dependency on activities that contribute to climate change, including the combustion of oil and gas.

The Alliance’s view on this essential transition away from oil and gas dependency is guided by the Intergovernmental Panel on Climate Change’s (IPCC’s) 1.5°C no or limited overshoot scenarios, as well as on the One Earth Climate Model (OECM) and the International Energy Agency (IEA) Net Zero by 2050 Roadmap (NZE 2050).

The numerous challenges of transitioning to a low-carbon economy are best mitigated by a position that considers all available options for concurrently reducing the supply and demand of oil and gas and in overall economic systems. Thus, the Alliance’s Position on the Oil and Gas Sector is expressed in the form of expectations for producers, consumers, policymakers, and investors.

Günther Thallinger, Allianz SE Board Member and Chair UN convened Net-Zero Asset Owner Alliance, says:

“The world must achieve a net-zero economy by 2050, with a maximum 1.5°C of temperature rise. This is necessary to avoid the most extreme effects of climate change. How energy is provided and consumed must therefore dramatically change. This includes the need to phase out non-renewable sources like oil and gas in many, if not most, of its current uses.


This challenge must be tackled while balancing the supply of oil and gas on the one hand, and society’s demand for affordable and reliable energy on the other. Investors want to support this transition and the Alliance Position on the Oil and Gas Sector describes how our members wil do that.”

Expectations of investors

On private asset investment in new unabated oil and gas infrastructure, investors, including Alliance members, shall align with credible 1.5°C net zero scenarios. This cannot be achieved if there are new upstream insfrastructure investments in new oil and gas fields.

Alliance members are expected to adopt policies that align with these positions on infrastructure investments, or show how existing policies already align. The Alliance does recognise that some net-zero committed investors have already put in place policies to cease financing of all oil and gas infrastructure. Others may choose to continue to invest in new oil and gas infrastructure in exceptional circumstances, where alternatives for affordable and reliable alternatives are not yet viable or where government-issued regional/national 1.5°C pathways and/other regional specificities may influence portfolio decisions. In all cases, the Alliance strongly advises against investment in long-lived assets that are likely to be stranded in a 1.5°C -aligned transition.

Other specific guidelines for investors listed in the paper focus on direct stewardship for action—aligning science-based portfolio allocation and stewardship decisions with individual climate ambitions—as well as indirect options like supporting policy and regulatory efforts that address climate change. For asset owners in particular, the Alliance emphasises the need for engagement with the asset manager community so that climate action is recognised as supporting the best interests of managers’ clients.

Expectations of oil and gas companies

According to the Alliance’s position, oil and gas producers and companies in intensive fossil fuel-using sectors are expected to set science-based, absolute- and intensity-based emissions targets that cover Scope 1, 2, and 3 emissions, in line with science-based, no- or limited-overshoot, 1.5°C-aligned pathways established by IPCC, OECM or IEA NZE 2050 roadmaps.

As these scenarios make clear, a rapid scaling of zero-carbon energy, as well as the development of enabling technologies and policies, is needed to deliver a significant reduction in oil and gas demand. These scenarios also note that no new oil and gas fields must be developed to meet this declining demand.

When engaging and setting expectations for these companies, the majority of Alliance members will take into consideration that the current oil and gas demand level is not yet in line with these scenarios, while other members will expect more immediate action, including no new oil and gas fields.

Therefore, Alliance members should continue to set clearer expectations for them to set targets in line with the 1.5°C pathways, aligning their strategies and activities to be congruent with these targets. Alliance members should also pursue their own engagement strategies and other corporate activities to support reduced demand of oil and gas and increased supply of zero-carbon alternatives.

Expectations of policymakers and regulators

For policymakers, the Alliance focuses on systemic interventions that can facilitate oil and gas demand reductions and increase alternative energy supply through economy-wide actions, such as implementing well designed and just carbon-pricing mechanisms and funding innovative technologies. These actions can help to incentivise decarbonisation, to unlock much-needed innovation, and to effectively harness the power of the capital markets by pricing externalities into the system and facilitating a transition to net zero.

About the UN-convened Net-Zero Asset Owner Alliance

The Net-Zero Asset Owner Alliance is a member-led initiative of 85 institutional investors, with over US$11 trillion in assets under management, committed to transitioning their investment portfolios to net-zero greenhouse gas emissions by 2050. The Alliance members were the first in financial industry to set intermediate targets (aligned with the Paris Agreement schedule) and they report on their progress annually. The Alliance is convened by UNEP FI and PRI and is supported by WWF and Global Optimism.