(Bloomberg) -- A $9.5 trillion investor group that includes Allianz SE, Legal & General Plc and the California Public Employees’ Retirement System reported a modest decline in greenhouse gas emissions enabled by its members’ lending and investment activities, the first time it has disclosed a figure.In its latest annual progress report published Wednesday, the Net-Zero Asset Owner Alliance said total absolute financed greenhouse gas emissions for its 86 members fell 3.5% to 213.4 million tons of carbon dioxide equivalent in 2022 from 221.2 million tons a year earlier.

While the decrease is small—7.8 million tons is equivalent to taking 1.7 million cars off the road for a year—the result “makes us believe our approach works,” NZAOA Chair Günther Thallinger said in an interview. “Real world emissions reduction isn’t only possible, it’s happening.”The decline was partly driven by the pension funds and insurance companies’ push to persuade companies to develop transition plans and lower their carbon footprints, Thallinger said. Another contributor was asset owners prioritizing their allocations to the least carbon-intensive companies that operate in heavy-polluting industries such as steel. Divestment of companies had the smallest impact, and the most progress was recorded by firms that joined NZAOA in the early years of the alliance.The group, which was convened by the United Nations in 2019, started with six members and now has 86. The firms have all committed to eliminate their financed emissions on a net basis by 2050, with the goal of keeping global warming below 1.5C. So far, 69 investors with $8.4 trillion in assets under management have set intermediate climate targets based on a 1.5C scenario, the NZAOA said.

It remains unclear when—or if—those targets will be met. “We need the correct political and economic context to be successful,” Thallinger said.In some countries, for example, political support for the energy transition appears to be waning. Rishi Sunak’s government has said it will delay some green-energy policies, potentially undermining a UK pledge to achieve net zero by 2050. Germany’s governing coalition has watered down policies on home heating, while a Dutch effort to curb farming emissions has been fiercely opposed.

NZAOA, which also counts Aviva Plc and Swiss Re AG among its members, is a sub-group of the broader Glasgow Financial Alliance for Net Zero, which gathers banks, asset managers and insurers committing to phase out financed emissions.

(GFANZ is co-chaired by Mark Carney, who has been named chairman of Bloomberg Inc.'s board and is a former Bank of England governor, and Michael R. Bloomberg, the founder of Bloomberg News parent Bloomberg LP.)

(Corrects story originally published Oct. 18 to say “partly driven” in fourth paragraph.)

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