With this release, the Net-Zero Asset Owner Alliance has published four editions of its Target-Setting Protocol. Governing how Alliance members set their intermediate climate targets, the protocol set members on a path to achieving net zero greenhouse gas emissions in their investment portfolios by 2050, as per the Alliance’s Commitment. 

The annual revisions to the protocol were aimed at consistently improving and expanding Alliance’s target-setting methodologies. The methodological updates in the fourth edition include:

  • Sub-portfolio reduction ranges for 2030: The latest edition introduces requirements for all 89 members to set 2030 targets (covering the period 2025-2030) and demarcates the sub-portfolio GHG emissions reductions range as 40-60 per cent by 2030 compared to a 2019 baseline year.
  • Expansion of portfolio coverage to all private asset classes: The newly-introduced asset classes include private debt funds, directly held private debt, directly held real estate debt funds and residential mortgage loans. With this expansion, the protocol now covers most major asset classes.
  • Advancement on the sovereign debt asset class from carbon accounting to assessment: Since it is useful for asset owners to go beyond country-level emissions metrics and assess the climate action and alignment of sovereign bond issuers, the Alliance advises using the ASCOR scorecard.

The aforementioned updates make this edition the most comprehensive form of the protocol to-date, which is why it will be now be turned into a “standing document”, whose core will remain stable, while additional updates can be made (no more frequently than every 12 months).

The new format now also includes a Background Document, which provides additional information, rationale, and context to the target-setting requirements spelled out in the main protocol 

The protocol lead authors have expanded on the updates in a launch webinar, which you can watch here.