What is the Net Zero Financial Service Providers Alliance?
The Net Zero Financial Service Providers Alliance (NZFSPA) is a global group of service providers committed to supporting the goal of global net zero greenhouse gas emissions by 2050 or sooner, in line with the ambition to limit the global temperature increase to 1.5°C above pre-industrial levels.
We recognise the significant risks associated with climate change and delaying the transition to a net zero economy. This includes financial risks, such as the risk of stranded assets and loss of earnings for organizations with operations not aligned with this transition. By signing the Net Zero Financial Service Providers Commitment (the Commitment) we commit to aligning with a net-zero economy and support our clients’ transition to net zero. Service Providers may include organisations that offer products or services to asset owners and/or investment managers. Service Providers include index, research and data providers, credit rating agencies, stock exchanges, accounting firms, investment advisers and proxy voting providers.
Who are the signatories?
The signatories are a range of service providers from around the world who are committed to raise the urgency of net zero alignment and integrate net zero alignment into the products and services we offer capital market participants. These signatories are representatives from credit ratings agencies, index providers, auditors, stock exchanges, ESG, data and proxy research advisers.
Why do we need the Net Zero Financial Service Providers Alliance?
The NZFSPA is designed to enable and accelerate the role that service providers play in providing clients, including institutional investors and their managers, with products and services that recognise their need to align their assets, products, services and investment strategies with a just transition to a net zero and resilient economy.
How is the Net Zero Financial Service Providers Alliance different from other net zero investment alliances?
We are the only global alliance specifically focused on service providers. The NZFSPA is endorsed by the Race to Zero Campaign and supported by the Principles for Responsible Investment (PRI). We will collaborate with each other and other stakeholders via such alliances so that capital market participants have access to best practice, robust science-based approaches and methodologies, and improved data and research, through which to deliver on these commitments.
How does this go beyond what Service Providers are already doing?
Several service providers have already taken actions that relate to this commitment. Service providers will have to report on their actions bringing transparency and accountability for following through on their commitments.
Shouldn’t governments be leading on this type of Alliance?
Our commitment is made in the expectation that governments will follow through on their commitments to ensure the objectives of the Paris Agreement are fulfilled. In addition, the private sector needs to play its part in driving forward the transition to net zero.
How is this Alliance connected with other net zero alliances?
The Net Zero Financial Service Providers share an ambition with the Net Zero Asset Owner Alliance, Paris Aligned Investment Initiative and the Net Zero Asset Managers Initiative. We expect to work in partnership with signatories of other net zero Alliances. The Net Zero Service Providers Alliance is accredited by the UN Race to Zero campaign and is a member of the Glasgow Financial Alliance for Net Zero (GFANZ). In line with the GFANZ requirements, our products and services will be based on TCFD and/or science-based net zero guidelines, we will cover all emissions scopes in our reporting, include 2030 interim targets and commit to transparent reporting in line with the UN Race to Zero criteria.
How will the Net Zero Financial Service Providers Alliance effect change?
The NZFSPA sets out a range of actions that service providers will take to support the goal of net zero greenhouse gas emissions by 2050 or sooner, with a maximum average global temperature rise of 1.5°C above pre-industrial levels.
These actions will aim to effect change when carried out at the scale by the Alliance signatories.
How are you going to support the global transition to net zero if you do not have the final say on the products and services your clients buy?
The Commitment recognises the vital role of financial service providers in supporting the transition to net-zero emissions, but we will only succeed in achieving this objective if our clients and other stakeholders commit to, and help facilitate, these objectives. With this union of service providers, it is a joint commitment to do the utmost in their individual responsibility to integrate net zero aligned advice, recommendations, research, solutions and data in order for the market participants, which are companies and investors, to make informed decisions on net zero.
Isn’t 2050 too far away?
Signatories are required to support efforts to decarbonize the global economy by ensuring our services and products are aligned with our clients’ commitments to prioritize real economy emission reductions, reflecting a fair share of the 50% of the global emissions reduction target from 2010 levels by 2030 or sooner, as identified by the IPCC special report on global warming of 1.5°C.
What scope of emissions should the Service Providers account for in their product and services to clients on net zero?
Products and services must cover all greenhouse gas emissions, including Scope 1, 2, and 3 where data availability allows them to be measured sufficiently.
Implementation & Monitoring
Are you going to increase the level of resources dedicated to this area as part of your commitment?
Service provider signatories should set measurable targets and report regularly on progress to invest in the level of specialist resources dedicated to this area, including expansion of products and services where applicable, and with regular and appropriate climate-specific training for staff.
How will this Alliance ensure that its signatories comply with the commitments made?
Signatories will commit to report publicly on actions being taken and their progress against interim and long-term targets, at least annually.
How are you going to reconcile this commitment with conflicting obligations?
The commitment recognises the vital role of service providers in supporting the transition to net-zero emissions, but we will only succeed in achieving this objective if our clients and other stakeholders commit to, and help facilitate, these objectives.
The commitment recognises that service providers are subject to legal, regulatory, professional and ethical standards in their respective industries; the commitment does not exempt those providers from meeting those obligations.
What about other ESG/sustainability issues?
We remain committed to integrating and reporting on a range of environmental, social and governance issues. This pledge specifically addresses our commitment to net zero emissions. This is not at the expense of our other ESG/sustainability commitments. Indeed, good governance and the social factors for a just transition are integral to the successful achievement of net zero.