Net-zero is only meaningful emissions target for ESG funds

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Fund managers need to push companies much harder to achieve net-zero goals, but investors do have access to realistic and achievable targets to help.

Despite the 2015 United Nations Framework Convention on Climate Change Paris Agreement, current global warming is heading for at least 3°C by 2100. This is well above the 1.5°C to 2.0°C goal set out by the international accord. Emissions reductions of at least 40% by 2030 are needed, scientists say, with net-zero emissions necessary for global warming to stabilise.

Many investors are aware of the likelihood of extreme weather events associated with global warming.  While we can invest in adaptation measures, the primary focus must be on reducing greenhouse gas emissions, particularly carbon dioxide (CO2).  That is where the net-zero carbon 10 (NZC10) target comes in, with its ambitious goal to promote carbon-neutrality by 2030.

Q G Rayer and P Walton (2020), Net-zero is only a meaningful emissions target for ESG funds, Citywire New Model Adviser®, issue 672, p32-33, 16 March 2020.

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