IIGCC updates its net zero framework to “reposition” wording

March 27th, 2024

The Institutional Investors Group on Climate Change (IIGCC) has updated its Net Zero Investment Framework (NZIF) to “reposition” objectives and add asset classes.

The group published NZIF 2.0 to replace the original version, which was published in April 2021. The new framework is designed to help investors who have made net zero commitments set targets and produce related net zero strategies and transition plans.

The group said the “most substantial” changes in the updated version were to the ‘Portfolio Decarbonisation Reference Target’. This has been repositioned as the ‘Portfolio Decarbonisation Reference Objective’.

It said this repositioning did not alter the original purpose of the objective, which was “always orientated towards performance assessment and not reducing financed emissions year-on-year as a form of target setting, operationalised through divestment”.

The updated version of the framework also includes recently released guidance on private equity, infrastructure and private credit investing, as well as changes to the sovereign bond guidance to align with improved analysis tools and stewardship practices and updates to its real estate guidance.

Additionally, agriculture, forestry and fishing have been reclassified as material, high impact sectors. This means increased criteria must be met along NZIF’s maturity scale, which emphasises the importance of nature impacts and dependencies on net zero ambition.

The NZIF has two key objectives for businesses: transitioning investment portfolios in a way that is consistent with the mitigation goals of the Paris Agreement – focusing on real economy decarbonisation – and increasing investment in the range of climate solutions to enable the transition.

The consultation on the updated framework is open until 24 April 2024.