Second US exit confirmed from Net Zero Investment Consultants Initiative

The $1.3trn US consultancy Wilshire dropped membership of GFANZ-linked consultants group in protest over 'governance changes'.

Illustration of concept of running for the exit.

The Net Zero Investment Consultants Initiative (NZICI) lost a second member last year after US consultancy Wilshire quit in protest at governance changes, Responsible Investor can reveal.

NZICI, the GFANZ alliance for investment consultants, launched in September 2021 with 12 members. Most were UK-based but signatories also included US and Australian firms.

With $1.3 trillion in assets under advice, including $83 billion directly managed, Wilshire was one of NZICI’s largest members.

Signatories to the group committed to integrate net zero advice into services within two years, work with asset owner clients on net zero and climate risk, support real economy decarbonisation, and assess and monitor asset managers on climate risk integration and stewardship.

Capital Monitor reported in September last year that consultancy Meketa had left, but Wilshire also quit around the same time, a move that has previously gone unreported.

A spokesperson for Wilshire confirmed its exit from the initiative in September and blamed the departure on governance changes.

“When Wilshire agreed to sign the NZICI, we did so as part of a voluntary, industry-led group where we would have a critical say about its future,” the spokesperson said.

“While Wilshire remains committed in its support for the push to net zero, we reassessed our involvement in the NZICI due to the change in its governance. These changes have resulted in conditions requiring that all default advice will be net-zero aligned, which may not be consistent with the specific objectives of all of Wilshire’s clients.”

When Wilshire signed up at the initiative’s launch, one of the commitments it agreed to was to “integrate advice on net-zero alignment into all our investment consulting services as soon as practically possible and within two years of making this commitment”.

The firm declined to provide further detail on the governance changes referenced or whether the commitment to integrate net zero into advice had been strengthened or changed.

A person with knowledge of the matter told RI that, when NZICI became a partner with the Race to Zero campaign, the approval was contingent on the initiative confirming that “default advice would be net-zero aligned”. NZICI viewed this requirement as having no real meaning, and as a misunderstanding of consultants’ business models and the nature of the sector.

The group engaged with Race to Zero and GFANZ to explain this and the requirement was subsequently dropped without having at any stage been formalised. The person was unable to say at what point in this process Wilshire decided to leave.

The only remaining US consultancy in NZICI, Cambridge Associates, declined to comment on its membership.

NZICI’s press release at launch said the group “hoped to welcome additional members soon”; however, no new signatories have been added. Two of the UK’s largest consultancies – Mercer and Aon – did not join the initiative at launch.

Investment consultants have a separate sustainability industry body in the larger Investment Consultants Sustainability Working Group. Wilshire and Meketa are both still members of its US wing.

GFANZ alliances have seen a steady drip of departures in recent months. The Net Zero Insurance Alliance saw the departure of Zurich and Munich Re in recent weeks, while in September the Net Zero Asset Owner Alliance (NZAOA) witnessed the exit of Australian pension fund Cbus Super.

The most notable departure from any of the alliances was Vanguard, which left the Net Zero Asset Managers Initiative in December. US responsible mutual fund manager Green Century followed suit in March.

The Net Zero Banking Alliance has seen the departure of Germany’s GLS Bank, and two other banks have threatened to leave if the level of ambition is not raised.

A spokesperson for NZICI declined to comment.