The Net Zero Financial Service Providers Alliance (NZFSPA) has quietly created an “observer category” because it is “currently not possible” for some of the firms – including one of its founding signatories – to be full members of the initiative, Responsible Investor has learnt.  

The GFANZ alliance was launched in September 2021 with the goal of uniting investment advisers, credit rating agencies, auditors, exchanges, index providers, ESG research and data providers, and proxy research providers to “fill the gap for net zero” in the financial sector.

According to a press release issued at the time, members of the alliance – of which there are currently 26, including Bloomberg, Moody’s, Morningstar, MSCI, PwC, Qontigo, Solactive and S&P Global – committed as part of the initiative to align relevant products and services with net zero, and set “meaningful interim targets” for 2025. 

PRI is serving as secretariat for the alliance.   

Progress towards the initiative’s goals appears to have been fairly slow compared with, for example, the GFANZ asset owner and asset manager alliances, which have published target setting guidance and progress reports. Only one of the NZFSPA’s sub-groups has had its target-setting guidance approved by Race to Zero and published on the alliance’s website. 

RI also understands that in March this year, the NZFSPA quietly created a new “observer” category. This is for financial service providers that are “unable to form a group due to regulatory constraints or due to lack of peers in the industry”, a spokesperson for the initiative confirmed.


Among those in the observer category is ex-signatory – and founding member – Campbell Lutyens, RI has learnt. The investment adviser was reclassified from a signatory to an observer in March because there was no other investment adviser to form a sub-group with. 

A spokesperson for the investment adviser confirmed the move and told RI: “Our work has not changed despite the status moving.” 

Firms in the observer category are not subject to any specific requirements beyond an expectation that they “operate as part of the financial service provider ecosystem”, according to a NZFSPA spokesperson.

Observers are not part of any decision-making at the alliance, but they are able to join plenary meetings, which a number of firms have done. Around five observers attended the May all-member plenary, RI understands. 

NZFSPA would not be drawn on the identity of the five firms that currently hold observer status and whether they do so because of regulatory constraints or due to a lack of peers to form a sub-group with. 

“In future, the initiative may expand its focus to encompass relevant sub-groups for these firms, where possible, but currently our work is focused on establishing the target-setting protocol for the existing four sub-groups,” said the spokesperson.

“The initiative aims to be inclusive of the diverse sector it operates within and as such believes there is significant value in opening up observer status for firms that want to be involved, but for whom status as a full member may not be currently possible or appropriate.”

The spokesperson added that, where the initiative is aware of relevant peers, it will reach out to them to invite them to be involved. 

Moving parts 

At launch, the NZFSPA said it would set targets for six separate sub-groups, but this has reduced to four: index providers, research and data providers, auditors and stock exchanges. 

This means there are no longer separate sub-groups for investment advisers and credit rating agencies. Some references to credit rating agencies and proxy advisers have also been removed from the alliance’s website.

Minerva, the only proxy adviser signatory, belongs to the research and data sub-group, CEO Sarah Wilson confirmed. “There are so few proxy services it didn’t make sense to have a separate group.”  

An alliance spokesperson declined to comment on where credit rating agency signatories belong or why several mentions of them have been removed from the website.

When the NZFSPA was launched, it said the plan was for credit agencies to commit to “consider net-zero alignment when assessing the credit risk of entities and obligations to the extent relevant to the applicable credit rating methodologies”.

Now, most references to credit rating agencies as a sub-group or type of signatory have been removed from the initiative’s website.

A footnote on the website’s commitment page states that the goal to “consistently raise with our key stakeholders the importance and implications of setting net zero targets and strategies across Scopes 1, 2 and 3 emissions and understanding the impact businesses can have to help reduce GHG emissions” does not apply to service providers.

This includes  “without limitation credit rating agencies, whose business model and/or regulatory obligations require them to maintain complete independence, both actual and perceived”.

A person familiar also said they believed “regulatory” concerns were linked to the removal of the mention of credit rating agencies as a group from the website.

Target-setting framework

The only NZFSPA sub-group to have had a target-setting framework approved by Race to Zero so far is the one focused on exchanges, the spokesperson for the initiative confirmed. The framework was published in late June, “so the 12-month timeframe to submit targets has begun for members within this sub-group”, the spokesperson said.

They added: “The process to achieve accreditation for the target-setting protocol for NZFSPA sub-groups is thorough and complex. Our focus is on making sure we get this right and our work will continue to be focused in this area.”

The other three sub-groups have developed targets and are awaiting accreditation, the spokesperson said. “The NZFSPA will be continuing to work with the various parties involved to ensure that the final frameworks are robust, effective and create the foundation for ambitious and credible action.”

RI reached out to all 26 NZFSPA signatories to ask for their views on the initiative and its progress. Most did not respond.

PwC said it has “made a number of commitments” as part of its alliance membership.

STOXX said the alliance “plays an important role in pushing index providers to collaborate and develop best practices” on climate risks, emissions and forward-looking information.

GRESB said it is important to “have a venue to to share our hard-won experiences and best practices”.  

Responsible Alpha, the most recent recruit to the initiative, said: “NZFSPA process is exhaustive, complex and very good. We are finding that many of our commercial clients want to hire us because of net zero service offerings.”

Wilson at Minerva said: “NZFSPA is making progress. It could be faster, but there are a lot of moving parts. Regardless of what the US political shenanigans are trying to stir up, we don’t see any anti-trust issues in being part of a standards-setting body which will help support our European clients with their compliance and investment objectives.”  

Stock exchange targets 

The NZFSPA said in June that the approval of the exchanges sub-group’s target-setting framework “marks a milestone” for the group. Stock exchange members include HKEX, JSE, LSEG, SGX, Bolsa Mexicana, Cboe and the Luxembourg Stock Exchange. The UN Sustainable Stock Exchange initiative is supporting and advising the sub-group.  

The guidance says that exchanges should, among other things, work to raise the visibility of climate-themed products and work towards mandatory climate-related disclosure in their markets. They should also “actively engage with local and global policymakers and standard setters to stay informed of and promote net zero aligned policies”.  

These goals fall into the “baseline category” of targets exchanges should pursue as a minimum starting point.  

“Exchanges that are ready to pursue more progressive targets are welcome to do so,” says the document. It suggests that one such target would be to incorporate climate-related considerations into the development process for products and services within three years from joining the initiative. 

The guidance stresses that “an exchange’s specific and unique circumstances will impact the relevance of certain targets or the extent of implementation. As a result, targets that are being set to fulfil net-zero commitments should be set by each committing exchange with due consideration of its particular context”.  

One exit 

Unlike other GFANZ alliances, most notably the insurance one, the NZFSPA has not seen multiple exits. However, RI understands that in November 2022, one of the founding members, DeVere Group, left the initiative. 

According to an NZFSPA spokesperson: “After an initial exploratory period and taking into account the NZFSPA target setting framework, it was determined that the focus and remit of the NZFSPA was not fully relevant for DeVere’s business model.” 

DeVere has not responded to repeated requests for comment on its exit.