Carbon footprint and net-zero commitment
Environmental issues, such as climate change, represent both risks and opportunities for a long-term investor like NN Group. To better understand investment risks associated with climate change and the transition to a low-carbon economy, we measure the carbon emissions connected with a large part of our proprietary investment portfolio. The results of the annual carbon footprint analysis are included in the NN Group Annual Report.
The 2022 Annual Report also includes climate-related scenario analyses that we performed for our proprietary investment portfolio. Climate-related disclosures and risk and opportunity analysis as recommended in the Task force Climate-related Financial Disclosures (TCFD) are important cornerstones as part of our strategy to address climate change. For NN's reporting in line with the TCFD recommendations, please also refer to the table in the 2022 NN Annual Report, page 322.
Our net-zero ambition and intermediate targets
We have a clear ambition to support the global transition towards net-zero greenhouse gas (GHG) emissions by 2050, in line with efforts to limit global warming to 1.5°C. NN’s strategy for transitioning our proprietary investment portfolio towards the global goal of net-zero emissions has two dimensions: i) decarbonisation of the investment portfolio and ii) increasing investments in climate solutions. Drawing on the Institutional Investors Group on Climate Change (IIGCC) Net-Zero Investment Framework, we have been developing asset-class-specific strategies for sovereign bonds, corporate investments and real estate. A key principle in this framework is to utilise a comprehensive set of levers available to investors for accelerating decarbonisation in the real world.
To help us determine the direction and ambition, and monitor the effectiveness, of our net-zero investment strategy, we have set intermediate targets for different portfolios. This includes intermediate reference targets for GHG emissions reduction for the corporate investment portfolio (listed equity and corporate fixed income). By 2025, we aim to reduce the GHG emissions of our corporate investment portfolio by 25%, and by 45% by 2030, compared to 2019 underlying emission levels. NN also defined intermediate goals for the (non-listed) real estate portfolio.
Furthermore, we set a target to increase our investments in climate solutions by at least EUR 6 billion by 2030, which would more than double our current investments in renewable infrastructure investments, green bonds and energy-efficient real estate.
In recent years, NN has taken important steps to make its investment portfolio more aligned with the 1.5°C pathway of the Paris agreement on climate change, with investment restrictions focusing on unconventional oil and gas, such as oil sands, Arctic oil and gas, and shale oil and gas. NN Group acknowledges that urgent action is required to reduce dependency on fossil fuels and facilitate the transition to a low carbon renewable economy. We have therefore combined the unconventional and conventional oil and gas policies, resulting in NN’s first comprehensive oil and gas policy for proprietary assets. The policy applies strict criteria built upon NN’s existing Paris alignment strategy. All new investments in the oil and gas supply chain will be directed to best-in-class companies committed and willing to lower their emissions to net-zero by 2050, aligned with Paris Agreement 1.5°C pathway.