Sustainability Insights: Climate Change - risks and opportunities of 'net zero'

The 2015 Paris Agreement was a turning point in the world's commitment to tackle climate change. Five years on, the risks and opportunities arising from global warming are materializing.

Sustainability Insights: Climate Change - risks and opportunities of 'net zero'

However, the investment community does not yet seem to fully grasp the extent of the changes needed. The more we wait, the more drastic the measures taken will have to be. Our report  discusses why it is so important for investors to both consider the climate risks, and explore climate-related opportunities.

  • An increasing number of countries and companies commit to becoming 'net zero', meaning achieve a neutral balance between their greenhouse gas emissions produced and the emissions taken out of the atmosphere.
  • The cost of not acting on climate change is growing: more countries are setting up carbon permit trading schemes thereby putting a price on CO2 emissions and the financial cost of extreme weather events is impacting valuations
  • The transition to a low carbon business and economic model will require substantial investments from both countries and companies
  • While some sectors are at risk of lower valuations and write offs, others investing in renewables, electrification, hydrogen, carbon capture and other newly emerging solutions will come out on top and benefit from the transition
  • While some investors prefer to divest from carbon intensive companies and industries, others choose to step in, engage and incentivise businesses to transition to a low carbon business model
  • Transition financing must tackle the transition of all sectors and countries as new investment opportunities like transition bonds are starting to emerge
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