investment viewpoints

Cool as ice? Why hard-to-abate sectors can be net-zero investment opportunities

Cool as ice? Why hard-to-abate sectors can be net-zero investment opportunities

Steel, cement and shipping will continue to be fundamental to the economy as efforts to achieve a net-zero world progress. They will also be critical to the success of the transition itself.

Such ‘hard-to-abate’ sectors currently account for about 30% of global greenhouse gas emissions. To achieve the Paris Agreement target of limiting climate change to 1.5°C by 2050, technological solutions and resolute strategies must be applied for these industries to significantly decarbonise.


Transition proponents

Why are emissions in these sectors hard to abate? Costs, complications or technological challenges can impede progress. But there are businesses in these industries that are executing credible plans, reinforced by science-based targets, to cut emissions to levels aligned with a net-zero trajectory.

We call these companies ice cubes: by reducing emissions from today’s high levels to meet the target set by the Paris Agreement, they are helping to cool the economy and drive the transition forward.

By adapting their business models and product offering, they aim to mitigate the physical, transitional and liability risks generated by economy-wide decarbonisation, and capture the commercial opportunities it is creating.


Exclusive analysis

Lombard Odier’s recent Sustainable Finance Leadership Course, delivered in partnership with the University of Oxford, educated investors on the merits of looking beyond current carbon footprints to assess temperature trajectories when analysing companies in hard-to-abate sectors.

In this report, which is based on sessions form the event, we provide:

  • An overview of hard-to-abate sectors and ways businesses within them can decarbonise
  • Why only forward-looking metrics, like Implied Temperature Rise, can help investors identify companies mitigating climate risk and preparing for a fundamentally different economy.

To read the report, please use the download button provided.


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