Zeronomics
With time running out, can large companies reach the Paris Agreement goal of net-zero carbon by 2050?
ZERONOMICS
Financing the transition to a
net-zero world
The transition to net zero carbon emissions is the challenge of our generation. The Paris Agreement – to stave off the worst effects of climate change by keeping global warming below 2°C – requires companies and economies to move at an unprecedented pace.
The challenge is especially evident in Standard Chartered’s footprint markets of Asia, Africa and the Middle East. Many of our markets are amongst the most vulnerable to climate change – and most in need of funding to ensure that economic development can continue while the climate crisis is addressed.
We commissioned Zeronomics to understand how far companies have come on their journey, what’s blocking their path and what might help them move faster.
Our survey of senior business leaders and investors reveals that most companies intend to transition to net-zero by 2050 but have yet to take the action needed to get there. A majority cite funding as an obstacle, saying they need medium to high levels of investment to transition to net zero.
Carbon-intensive industries and emerging-market companies struggle the most with funding. One reason for this might be an unintended consequence of the rise of environmental, social and governance (ESG) investing, which means that carbon-intensive companies are struggling to raise finance for their net-zero transition. Another reason particularly affecting emerging markets is the perceived investment risk. A successful net-zero transition must be just, leaving no nation, region or community behind. The stakes are high. In spite of the hurdles, action needs to be swift. Net carbon emissions must fall by 45 per cent from 2010 levels by 2030 for the world to stay on-track1 but seven in 10 companies plan to defer action on climate change, raising the threat of the 2020s becoming a lost decade.
If businesses fail to take rapid, meaningful action to reduce emissions, we will fail to arrest the very worst effects of climate change. We must act now, and we must act together: companies, consumers, governments, regulators and the finance industry must collaborate to develop sustainable solutions, technologies and infrastructure. Some form of standardised global net-zero transition measurement, an effective global carbon tax and a full functioning carbon market, as recently
proposed by the Taskforce on Scaling Voluntary Carbon Markets, 2 all have a part to play in a successful transition to net zero by 2050.
Decarbonisation is a key focus for Standard Chartered: we are committed to reaching net zero carbon emissions from our operations by 2030, and from our financing by 2050. Our markets are among those most impacted by climate change, but they also represent some of the greatest opportunities to leapfrog to low-carbon business models and renewable power.
Our presence in these markets gives us a unique opportunity to ensure that economic development continues at pace while climate impact is reduced. There are many challenges on the road to net zero, but there are also many reasons for optimism: rapid technological advances, focus from governments, and the positive intentions of many business leaders and investors.
Good intentions are the first step towards sustainable change. Now is the time to translate strong words into bold action.
Bill Winters
Group Chief Executive, Standard Chartered
1 https://www.ipcc.ch/2018/10/08/summary-for-policymakers-of-ipcc-special-report-on-global-warming-of-1-5c-approved-by-governments/
2 https://www.iif.com/tsvcm
Zeronomics
Reaching net zero carbon emissions by 2050 will be a considerable challenge. Every organisation in every sector has a critical role to play in limiting global warming. Commitment to this agenda must be top of mind for all companies – public and private, large and small – and to succeed they must undergo major transformation.
The private sector can move the needle significantly on net zero. To find out where companies (multinationals and large domestic corporates) are in their net-zero transition, we spoke to investors and global senior executives, from both carbon-intensive and less carbon-intensive industries.4
The responses reveal that:
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Companies are moving too slowly: 55 per cent of companies say they are not transitioning fast enough and 78 per cent of investors say most business leaders are failing to take the action needed to transition their company by 2050.
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Their progress is being hampered by a lack of finance: this is the greatest barrier to net-zero transition according to both senior executives and investors. And the need for finance is great: some 85 per cent of companies require medium or high levels of investment to transition to net zero, rising to 91 per cent of carbon-intensive companies.
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Carbon-intensive industries and emerging markets are struggling most: both companies and investors believe that significantly more investment is being directed at developed markets than emerging markets, and that carbon-intensive sectors in emerging markets will experience the most significant capital shortfall.
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Net zero is not seen as commercially viable: 64 per cent of senior executives believe the economics of operating as a net-zero organisation do not stack up for their company.
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Key actions would speed up transition: a majority of companies believe that a standardised global measurement and disclosure framework would help them move faster – as would more evidence of cost savings, pressure from supply chain partners and investors, and an effective global carbon tax.
4 The carbon-intensive companies included in this study were from the following sectors: energy, oil and gas; metals and mining; transport and logistics; and infrastructure
The state of play:
Where are companies on their net-zero journey?
Despite the urgent need to cut carbon emissions, companies are not taking the action needed to transition.
Companies must move faster
Given the scale of the challenge, now is the time to take action. The next 10 years will be critical in reaching the Paris Agreement target of net-zero carbon emissions by
2050. Governments across the world have made ambitious commitments to reduce emissions (see appendix 1). However, more than half of senior executives (55 per cent) acknowledge that their organisation is not transitioning to net zero fast enough, while seven in 10 investors believe that companies are transitioning too slowly.
Without decisive action now the chances of reaching net zero by 2050 are slim; it is estimated that net carbon emissions need to fall by about 45 per cent from 2010 levels by 2030 to hit that target.5 However, despite the urgency, many companies are deferring action by at least a decade: 71 per cent plan to make the most progress towards net zero between 2030 and 2050.
Why are corporates delaying action? Business leaders appear to be overwhelmed by the scale of the challenge, with most companies requiring extensive transformation.
The Paris Agreement
The Paris Agreement is a landmark global pact on climate change, drafted in 2015 and signed by more than 190 nations. The aim of the agreement is to keep the global temperature rise this century well below 2°C (above pre-industrial levels) and to try to limit the temperature increase to 1.5°C. Scientists estimate that global greenhouse gas emissions will need to be reduced to net zero by around 2050 to meet the 1.5°C target.
The world needs corporate leaders to be climate leaders. Governments, investors, companies, and consumers need to rapidly scale renewables as a source of power, put ESG at the heart of their business and investment plans, and develop low carbon alternatives for emission intensive businesses.
We need to catalyse, standardise and democratise access to sustainable finance to drive greater capital to those facing the greatest risk from climate change and the regions where there is the greatest opportunity to leapfrog to low carbon technology and business models.
Daniel Hanna, Global Head of Sustainable Finance,
Standard Chartered
POLL
When will your organisation
make the most progress in transitioning to net zero?
- Early action - 2020-2030
- Medium-term action - 2030-2040
- Late action - 2040-2050
- Action spread evenly
- No action
By delaying their transition journey companies are risking much more than missing net-zero targets – the longer action is deferred, the greater the disruption. This will play out in the form of the more obvious physical risks brought by climate change, but also the effects of a more disorderly transition, which could impact financial markets and the provision of capital at a time when companies need it most. It’s never been more important to act now; the consequences of inaction could be dire.
Adityadeb Mukherjee
Head of Climate Risk Management,
Standard Chartered
Business leaders are failing to act
Investors view leadership as crucial to progress, but more than three-quarters (78 per cent) believe most business leaders are failing to take sufficiently bold action to transition their company to net zero by 2050.
Fewer than half of companies (47 per cent) fully support the aims of the Paris Agreement, falling to 41 per cent of emerging market companies.
Where are companies on their transition journey?
Investors view leadership as crucial to progress, but more than three-quarters (78 per cent) believe most business leaders are failing to take sufficiently bold action to transition their company to net zero by 2050.
Fewer than half of companies (47 per cent) fully support the aims of the Paris Agreement, falling to 41 per cent of emerging market companies.
5 https://www.ipcc.ch/2018/10/08/summary-for-policymakers-of-ipcc-special-report-on-global-warming-of-1-5c-approved-by-governments/
The size of the task:
What are the barriers to net-zero transition?
A lack of finance is the biggest barrier to
reaching net zero by 2050 but raising the
investment needed will be a significant
challenge.
The critical need for net-zero finance
What is standing in the way of a net-zero future? The answer is the scale of the finance needed and the challenge of raising it. Most companies (85 per cent) require medium or high levels of investment to transition to net zero, rising to 91 per cent of carbon-intensive companies. Yet more than two-thirds of senior executives (67 per cent) say that lack of capital is a significant barrier to net-zero transition. The issue is even more pressing for emerging market companies: three-quarters (73 per cent) cite a lack of capital as a significant barrier.
Investors agree that finance is an issue: 85 per cent say that lack of capital is a significant barrier to corporate net-zero transition and the investment community readily admits that attitude is part of the problem: 82 per cent of investors surveyed believe there is a lack of support for net-zero transition among the investment community.
What are the main barriers
to transition?
The transition finance gap is the biggest obstacle to achieving net zero by 2050.
Corporates (67%) and investors (85%) agree that a lack of capital is the biggest barrier to corporate net-zero transition. The other biggest issues are lack of...
POLL
What is the biggest challenge
your organisation faces in its
transition mission?
- Lack of capital
- Lack of available affordable alternative technology
- Lack of support for net-zero transition from investors
- Lack of support for net-zero transition from companies’ boards
- Lack of regulatory certainty
- Lack of consensus on net-zero definition and targets
Carbon-intensive sectors are struggling to access capital
For the world to reach net zero, all industries need to find new ways of operating, making investment a critical requirement, especially for sectors with high carbon emissions. Almost nine in 10 investors (89 per cent) agree that if the investment community does not finance the transition of carbon-intensive industries, the world will not reach net zero by 2050. Yet more than two-thirds of senior executives (69 per cent) say investors are reducing their exposure to carbon-intensive assets, making it harder for companies to pivot to low-carbon business models. This could be an unintended consequence of increased environmental, social and governance (ESG) investment; Standard Chartered’s report The $50 Trillion Question found that investors are increasingly considering ESG issues when making decisions, and that trillions of dollars are expected to flow into ESG funds over the next three years. This could result in divestment from carbon-intensive companies at a time when investment is needed most.
To reach net zero, investors cannot just walk away from carbon-intensive sectors. Financing these companies helps them invest in the research and development critical for developing clean technologies and pivoting their business models. Many of these companies are actively engaged in the net-zero challenge and their involvement will be key to transitioning global infrastructure, energy supplies and consumer products. Strategic investment into these industries can help to drive a more sustainable future. Divestment is not the answer; engagement is.
Amit Puri
Global Head, Environmental & Social Risk
Management, Standard Chartered
Emerging markets urgently need more capital
To reach net zero by 2050, a global approach is needed, and emerging markets need investment the most. The majority of the world’s population lives in emerging markets, and if economies with vast populations like India and China do not transition to net zero, efforts in the developed world will have a limited impact.
However, both companies and investors believe that emerging markets are currently being overlooked. Eighty per cent of companies and 79 per cent of investors say there is a significant gap between net-zero transition investment directed at developed and emerging markets. This is despite widespread acknowledgement of the focus needed, and the amount of private-sector capital that will need to flow to emerging markets.6
Eighty-one per cent of senior executives and 77 per cent of investors believe that significantly more capital must be invested in emerging markets to reach net zero by 2050.
Concerns about risk are blocking capital: 84 per cent of investors state that the high level of investment risk posed by emerging markets is a barrier to financing net-zero transition in these regions. The $50 Trillion Question revealed that concerns about emerging market risk persist despite evidence of strong returns: more than two-thirds of investors believe emerging markets are high-risk, yet only 7 per cent of investors say that these investments have performed worse than their developed market investments over the past three years.
Funding is not flowing to the markets at the greatest risk from climate change. We must decarbonise in a way that accounts for the communities at most risk, both from climate change and from the transformation of carbon-intensive industries.
While failing to act is not an option, the wrong
kind of action, including withholding transition
finance to incumbents, can also do harm. Our
aim must be a just transition, leaving no one
behind, enabled by the widespread benefits of
sustainable finance.
Simon Connell,
Global Head of Sustainability Strategy,
Standard Chartered
Short-termism is hindering net-zero transition
Despite the need for immediate action, the transition to net-zero carbon is a long-term project with long-term benefits. However, companies are not set up to take the long view. Ninety-three per cent of investors believe that short CEO tenure makes it hard for leaders to tackle net-zero transition; 79 per cent of senior executives agree. And almost two-thirds of investors (65 per cent) believe that most business leaders are focused on short-term performance and profitability rather than long-term value creation. However, a leader’s net-zero transition strategy is in fact key to accessing investment. Nine in 10 investors say the net-zero transition story communicated by a company’s CEO is critically important to investment appeal and two-thirds believe that a company’s net-zero transition strategy and leadership is now a better predictor of future corporate success than its past financial performance. If CEOs become climate leaders, this may pave the way to net zero.
But under pressure to deliver here and now and with COVID-19 forcing many businesses to focus on immediate survival, 52 per cent of senior executives say their organisation is postponing net-zero transition in order to maximise revenues in the short to medium term. Although they need to take urgent action, companies are struggling to prioritise and make a business case for their net-zero transition.
COVID 19 has, understandably, caused companies worldwide to prioritise their short-term viability and survival. As we emerge from the emergency phase of the crisis and begin to look towards recovery, we need companies to take up the longer-term challenge of tackling something just as existential: climate change. To support private sector action, governments should integrate environmental objectives throughout their pandemic response measures and wider policy framework.
Ashley Dorrington,
Executive Director, Group Public and Regulatory
Affairs, Standard Chartered
Transition is not commercially viable
With a focus on the short term, more than three-quarters of companies (77 per cent) say they struggle to justify sacrificing reliable revenue from a proven business model today, for uncertain revenue tomorrow.
Companies also doubt whether the work needed to transition their organisations will be worth it: 62 per cent of senior executives believe the expected benefits of net-zero transition do not outweigh the cost.
Moving from intention to action is tough
Corporates are struggling with the scale of the net-zero challenge, finding it difficult to take decisive action. Two-thirds of companies (66 per cent) are relying mainly on carbon offset rather than carbon reduction. While carbon offsetting has an important role to play alongside carbon removals and decarbonisation in the transition to a net-zero state, this high proportion may indicate an over-reliance on offset rather than more impactful but more complex routes to net zero.
However, moving beyond this approach will be difficult without affordable technology. Almost two-thirds of senior executives (64 per cent) say the lack of available alternative technology at a commercially viable cost is a significant barrier to transition.
Until this technology is available, some emissions are almost impossible to eliminate. On average, companies say 32 per cent of their Scope 1 emissions (i.e. their direct emissions) are difficult or impossible to transition.
One of the greatest challenges, however, is building a net-zero supply chain. Almost two-thirds of senior executives (64 per cent) say a significant proportion of their organisation’s emissions are in their supply chain where they have little visibility or control.
Could COVID-19 prove fatal to the fight against climate change?
Added to this, the COVID-19 pandemic has forced many organisations to put net-zero action on the backburner. Eighty-five per cent of senior executives say that COVID-19 has delayed their transition.
North Asia
Japan and South Korea
Sign-up is high but there is a long way to go
Seven in 10 North Asian companies support the Paris Agreement, substantially higher than the global average of 47 per cent. However, 57 per cent of North Asian senior executives believe their company is not transitioning fast enough, and companies in this region need the highest level of financial investment to get to net zero: 77 per cent of senior executives say they require high levels of investment to transition, compared to 60 per cent across all markets.
Greater China
Mainland China, Taiwan, Hong Kong
Leadership challenges
Of the private sector companies surveyed, 50 per cent of senior executives in Greater China say their company is not transitioning to net zero fast enough; 55 per cent believe their company requires high levels of investment to transition.
The biggest barrier faced by companies in Greater China is lack of support from their leadership, cited by 72 per cent of senior executives. Another major transition challenge, according to 88 per cent of senior executives, is short CEO tenure making it hard for leaders to tackle long-term issues like net zero transition.
ASEAN
Singapore, Malaysia, Thailand, Vietnam
Increased investor support needed
The biggest barrier to net-zero transition faced by ASEAN companies is a lack of support from their organisation’s investors (73 per cent of senior executives cite this challenge, 13 percentage points above the global average). ASEAN companies are also facing serious net-zero transition delays caused by COVID: 97 per cent of senior executives say the pandemic has delayed their company’s net-zero transition, compared to 85 per cent globally. Companies in ASEAN view increased operational efficiency and cost savings from sustainable practices as the most important factor that would accelerate their transition (cited by 90 per cent of senior executives).
South Asia
India
Held back by lack of finance
Fifty-seven per cent of Indian senior executives believe their company isn’t transitioning to net zero fast enough. Support for the Paris Agreement is consistent with the global average: 47 per cent of senior executives say that their organisation supports the Paris agreement.
Sixty per cent of Indian companies say they require high levels of investment to transition.
6 Opportunity 2030: The Standard Chartered Investment Map found an almost USD10 trillion private-sector investment opportunity in contributing to three of the most tangible, infrastructure-focused goals – SDG 6: Clean Water and Sanitation, SDG 7: Affordable and Clean Energy and SDG 9: Industry, Innovation and Infrastructure.
Meeting the challenge: How do we overcome the obstacles to a net-zero world?
More capital, transition frameworks and
shareholder activism crucial to achieving
net zero by 2050.
Closing the transition finance gap
Our research reveals that investors are placing more emphasis on net-zero strategy in their investment decisions.Increasingly, companies must show their commitment to net zero to access capital. More than two-thirds of investors (68 per cent) were either already considering net-zero transition as part of their investment decision-making or intended to do so by the end of the year (2020).
On average, companies are investing just over 2 per cent of annual turnover in net-zero transition. However, almost all senior executives (97 per cent) admit this will need to
increase. Globally, senior executives believe that an average of 60 per cent of the finance they need to transition will have to come from internal sources, such as retained earnings and reserves, and 40 per cent from external sources (of this, they expect 55 per cent to be equity financing and 45 per cent to be debt financing).
Current investment approaches to net zero
Although investors acknowledge there is more to be done, there are signs that individual investment management firms are using companies’ pace of
decarbonisation to guide their investment decisions. Almost eight in 10 investment firms (79 per cent) are now actively assessing the impact of their portfolio on climate change and six in 10 (61 per cent) say that supporting transition to net zero is now an important factor in every investment decision they make.
How do we tackle sort-termism?
More than three-quarters of senior executives (78 per cent) say that increased shareholder activism and investor scrutiny would be an important accelerator for net-zero transition – and so too the inclusion of net zero as a key part of company directors’ duties.
Making net-zero transition commercially viable
Net zero could be made more commercially viable by a combination of incentives and penalties alongside changes in demand and standardised frameworks. More than three-quarters of senior executives (77 per cent) say that an effective global carbon tax, based on a carbon price that reflects the true cost of climate change, would be an important factor in accelerating their transition.
Navigating the current matrix of definitions, measurement and reporting requirements is a major challenge for companies. The desire for globally consistent standards is understandable, but a silver bullet is unlikely and global alignment takes time. In the meantime, governments are taking policy decisions that support the mobilisation of private finance to help companies to transition. Over the coming years, we expect to see policies that price in carbon, such as a carbon tax. While this will be effective in motivating some companies towards transition, the potential exists for others to get caught by unintended consequences, making it harder for them to access transition finance or make net zero commercially viable. This is even more relevant as policymakers consider measures in the context of the economic impact of the COVID pandemic, working towards a common goal of a sustained and sustainable recovery. Our goal at Standard Chartered is to work with the policy-making community and our clients to ensure that transition occurs but does so on a smoothed pathway.
Farisa Zarin,
Global Head - Regulatory and Public Affairs,
Standard Chartered
Almost two-thirds of senior executives (62 per cent) believe the financial sector could help by providing incentives in the form of margin discount on loans and bonds linked to net-zero transition.
Senior executives believe that if they could demonstrate the business case for transition, companies would be able to transition faster: 81 per cent believe that increased efficiency and cost savings would be a significant driver. They also believe that pressure from their supply-chain partners would help, with 79 per cent of senior executives citing this as a key accelerator.
How Standard Chartered is helping companies to reach net zero
Climate change is one of the greatest challenges facing the world today and we want to support our clients achieve a low-carbon just transition aligned to the Paris
Agreement.
We are engaging with all clients to understand their role in transitioning to low carbon in order to help them measure, manage and reduce their emissions. We are also developing sector-specific transition pathways for the most carbon-intensive industries within our portfolio.
We want to play our part by balancing our lending – providing more funds to climate-positive companies and helping carbon intensive firms better manage their
emissions.
Collaboration is crucial and it is our hope that partnerships with the 2 Degrees Investing Initiative and Imperial College, as well as our work on the Collective Commitment to Climate Action will play an important role in helping the world achieve net zero by 2050.
Supporting sustainable growth
We provide financial products and services to people and businesses to help drive sustainable development, economic growth and job creation. Our Sustainability Aspirations set out how we aim to promote social and economic development through our core business of banking.
Find out about our Sustainability Aspirations
Our product frameworks
We are creating sustainable finance products to support sustainable development. Our frameworks, developed in collaboration with Sustainalytics, the leading provider of ESG and corporate governance research, set out what qualifies as ‘sustainable’ and ‘green’ products.
Our green and sustainable product framework
Sustainable finance impact
While we are a leading international bank, 91 per cent of our sustainable finance assets are located in emerging markets where the need for finance to be a positive catalyst is greatest. Our sustainable finance impact report highlights Standard Chartered’s unique contribution to tackling climate change and the financing of the UN’s Sustainable Development Goals.
Our latest Sustainable Finance Impact Report
Reducing our emissions
Our climate impacts are primarily from the clients we finance and support. We measure, manage and ultimately reduce the emissions related to our operations and the financing of our clients. For example, by 2030 we will only provide financial services to clients who are less than 5 per cent dependent on thermal coal. Meanwhile, we are committed to reaching net zero carbon emissions from our operations by 2030, and from our financing by 2050. We have targets in place to reduce our energy use and report our progress every year and have done for more than a decade.
ZEROING IN: MIDDLE EAST & AFRICA
Middle East
UAE and Saudi Arabia
Limited support for Paris Agreement
Support for the Paris agreement is lower among companies in the Middle East, with just 35 per cent fully supporting the aims of the agreement. More than half (55 per cent) of companies require high levels of investment to transition. A major challenge for Middle East corporates is the economic impact of COVID-19 in delaying their net-zero transition (85% of senior executives).
ZEROING IN: MIDDLE EAST & AFRICA
Africa
Ghana, Kenya, Nigeria, Uganda, Zambia and South Africa
More investment required for transition
The biggest barrier faced by African companies is lack of finance (cited by 78 per cent of senior executives; 11 percentage points above the global average).
Ninety per cent of senior executives believe short CEO tenure in their industry makes it hard for leaders to tackle net-zero transition, and 90 per cent believe effective global carbon tax would be an important factor in accelerating their net-zero transition.
Opinion research
This study of the corporate transition to net zero is based on in-depth interviews with senior executives & investors, conducted between September and October 2020.
Senior executives
We surveyed the senior leadership or management teams (C-suite level minus one) in 250 companies. Companies were MNCs (defined as having a genuinely global reach) headquartered in developed markets, and MNCs and large domestic companies headquartered in emerging markets. Companies were headquartered in the following markets / regions: US, Western Europe, Middle East, Africa, North Asia, South Asia, ASEAN and Greater China.
Investors
We surveyed 100 fund managers, strategists and emerging market specialists within the asset management investment profession, identified as having a global perspective. Half were from tier one firms (the top 50 global asset management firms) and half were from tier two firms (the top 300 global asset management firms outside of the top 50).
Company performance against four dimensions
To gauge where companies are right now on their transition journey, we scored them against four key dimensions of transition: measurement and reporting; appropriate investment; strategy and leadership; and organisational transition. Some of the survey questions asked the senior executives to score their companies against factors that pertained to these four dimensions of transition. We created an overall score per dimension and then made this a score out of 100 so that each dimension was comparable. We calculated the maximum possible score for each dimension, and then calculated the percentage that companies scored out of the possible maximum or ‘perfect’ score. In each instance, the closer a dimension is to 100, the closer it is to the ideal or perfect possible approach that can be conceivably taken, within the realms of our survey questioning.
Appendix 1:
Government commitments
Accurate as of November 2020
Governments across the world are taking steps to transition to net-zero, with many markets making commitments in line with international climate goals like the Paris Agreement.
Some economies, including the UK, Sweden, France, Denmark and New Zealand, have enshrined their net-zero targets in law.
Despite these pledges, emissions remain unsustainably high. To meet our goals, emissions need to peak as soon as possible and then decline rapidly. Global CO2 emissions have fallen due to the COVID-19 crisis, but this decline is likely to be temporary.
There are two different routes to achieving net zero, which work in tandem: reducing existing emissions and actively removing greenhouse gases using methods such as offsetting. The rapid growth of renewable energy and electric vehicles has demonstrated the potential of new clean-energy technologies to reduce emissions. However, we will need to deploy these technologies much more widely and simultaneously scale up other clean energy solutions, such as applications of hydrogen and carbon capture.
The challenge ahead is immense. Reaching these targets will be tough, and will require a concerted global effort by citizens, governments, regulators, companies and the finance industry.
Appendix 2:
The role of retail investors
Retail investors can also play an important role in the journey to net zero. The Standard Chartered Sustainable Investing Review surveyed affluent and high net worth individuals in Hong Kong, Singapore, the United Arab Emirates and the United Kingdom in early 2020 to discover how COVID-19 had impacted their sustainable investment plans.
It found that the pandemic has accelerated retail investors’ focus on sustainability issues. Over the next three years, 42 per cent of investors are considering investing 5 to 15 per cent of their funds in sustainable investment while 9 per cent of investors indicated they would like to have 25 per cent or more of their funds allocated to this area. Climate Action was cited as the third most important SDG, behind Clean Water and Sanitation and Good Health and Well-being.
Appendix 3:
Performance against key net-zero transition dimensions by region and by sector
Performance by region
Based on their responses, companies headquartered in developed markets are marginally ahead of their emerging market counterparts across all dimensions. Emerging market companies are having the most difficulty with appropriate investment, ranking lowest on this dimension and lagging several points behind developed market companies.
Performance by sector
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Zeronomics is based on in-depth research commissioned by Standard Chartered, designed by Standard Chartered and Man Bites Dog.
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