Rethink net zero: do existing solutions solve the challenge?

Seeking reduced carbon exposures in portfolios is nothing new. But does the range of existing approaches on the market – from low-carbon strategies to reliance on offsets or following EU decarbonisation benchmarks – achieve this goal? Do they reduce the risk of exposure to stranded assets, identify opportunities created by the shift to a net-zero economy, and accelerate the transition?

Not in our view. We believe they either fail to look forward and identify decarbonisation risks and opportunities across the entire economy or analyse the all scopes of emissions from today onwards, and can create concentration risks in portfolios. We do not think they align investors with the growth opportunities generated by the transition and can delay, rather than accelerate, its progress.

The flaws in existing approaches provide one reason why we believe investors must rethink net zero.

To learn more, watch the video below.

At LOIM, net zero is an investment imperative. We believe investors must look forward – into the transition and across all economic sectors – and aim to achieve:

• Climate growth opportunities by targeting companies with credible decarbonisation trajectories and whose business models should be profitable in the shift to a net-zero economy

• Disciplined decarbonisation: 50% and 100% reductions in scope 1, 2 and 3 emissions by 2030 and 2050 respectively

• Diversification through investment in all sectors of the economy

• Transition acceleration by including decarbonising companies in high-emission sectors – where investment and progress is vital

For us, net zero means investing in the transition.

This document has been issued by Lombard Odier Funds (Europe) S.A. a Luxembourg based public limited company (SA), having its registered office at 291, route d’Arlon, 1150 Luxembourg, authorised and regulated by the CSSF as a Management Company within the meaning of EU Directive 2009/65/EC, as amended; and within the meaning of the EU Directive 2011/61/EU on Alternative Investment Fund Managers (AIFMD). The purpose of the Management Company is the creation, promotion, administration, management and the marketing of Luxembourg and foreign UCITS, alternative investment funds ("AIFs") and other regulated funds, collective investment vehicles or other investment vehicles, as well as the offering of portfolio management and investment advisory services.
Lombard Odier Investment Managers (“LOIM”) is a trade name.
This document is provided for information purposes only and does not constitute an offer or a recommendation to purchase or sell any security or service. It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful. This material does not contain personalized recommendations or advice and is not intended to substitute any professional advice on investment in financial products. Before entering into any transaction, an investor should consider carefully the suitability of a transaction to his/her particular circumstances and, where necessary, obtain independent professional advice in respect of risks, as well as any legal, regulatory, credit, tax, and accounting consequences. This document is the property of LOIM and is addressed to its recipient exclusively for their personal use. It may not be reproduced (in whole or in part), transmitted, modified, or used for any other purpose without the prior written permission of LOIM. This material contains the opinions of LOIM, as at the date of issue.
Neither this document  nor any copy thereof may be sent, taken into, or distributed in the United States of America, any of its territories or possessions or areas subject to its jurisdiction, or to or for the benefit of a United States Person. For this purpose, the term "United States Person" shall mean any citizen, national or resident of the United States of America, partnership organized or existing in any state, territory or possession of the United States of America, a corporation organized under the laws of the United States or of any state, territory or possession thereof, or any estate or trust that is subject to United States Federal income tax regardless of the source of its income.
Source of the figures: Unless otherwise stated, figures are prepared by LOIM.
Although certain information has been obtained from public sources believed to be reliable, without independent verification, we cannot guarantee its accuracy or the completeness of all information available from public sources.
Views and opinions expressed are for informational purposes only and do not constitute a recommendation by LOIM to buy, sell or hold any security. Views and opinions are current as of the date of this presentation and may be subject to change. They should not be construed as investment advice.
No part of this material may be (i) copied, photocopied or duplicated in any form, by any means, or (ii) distributed to any person that is not an employee, officer, director, or authorised agent of the recipient, without Lombard Odier Funds (Europe) S.A prior consent. ©2021 Lombard Odier IM. All rights reserved.