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Rethink net zero: do existing solutions solve the challenge?

Rethink net zero: do existing solutions solve the challenge?
Hubert Keller - Managing Partner

Hubert Keller

Managing Partner

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.

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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.

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