TIAA, a leading provider of secure retirements and outcome-focused investment solutions to millions of people and thousands of institutions, has committed to achieving net-zero carbon emissions in its General Account by 2050. The $280 billion insurance investment account that supports the flagship TIAA Traditional annuity will significantly reduce the carbon footprint of its investments and balance any remaining emissions with investments that remove carbon.
“We believe climate risk is an investment risk that we must manage over time, so this pledge is an affirmation of our responsibility to achieve the best possible investment outcomes for our clients,” said TIAA President and CEO Thasunda Brown Duckett. “As an active manager of a diversified investment account, we will get to net-zero over time through investment selection, portfolio repositioning and continued engagement with companies and carbon producers to reduce emissions around the world.”
The General Account will increasingly seek out investments in climate solutions, such as holdings in renewable energy, energy-efficient real estate and other companies making the transition to a low-carbon economy. Nature-based solutions including afforestation, reforestation and sustainable farming will also contribute to achieving net-zero carbon emissions.
“We are making this important change to create a resilient portfolio that will perform better over the long run to meet our obligations to retirement investors, which extend into perpetuity,” said Nick Liolis, Chief Investment Officer of the General Account. “We believe that this new target and strengthened commitment to responsible investing will help us drive better results and reduce risk.”
TIAA’s third-party investment manager, Nuveen, now manages 100% of its client portfolios in accordance with the United Nations Principles for Responsible Investment, and its teams incorporate Environmental, Social and Governance (ESG) factors into their investment processes across all public and private asset classes. Last month, Nuveen Real Estate announced every holding in its $133-billion portfolio would be operationally net-zero carbon by 2040, a full 10 years ahead of the target set by the Paris Agreement. TIAA also endorses the Task Force on Climate-Related Financial Disclosure and plans to release a climate report later this year with more detail on how the General Account anticipates achieving net-zero carbon.
“We engage with the management teams of thousands of companies every year to advocate for managing climate risk and other ESG initiatives,” added Amy O’Brien, Head of Responsible Investing at Nuveen. “Engagement will remain a critical tool that supports the General Account’s efforts as we continue to press carbon-intensive companies and individual assets to align with the goals of the Paris Agreement.”
In line with best practices in the industry, TIAA will implement five-year interim targets leading up to 2050, with the first target set for 2025. The scope and level of emissions reduction for each interim target will be tied to a variety of factors, including climate data availability, results of on-going climate scenario analyses, prevailing market conditions, the current and future regulatory environment and best practices observed among peers with similar net-zero targets. The agenda to meet these interim targets includes direct engagement with issuers and regulators to improve their climate disclosure, target-setting and policies that will advance necessary emission reductions in the real economy and enacting policies that provide clarity to investment teams about the price of carbon.