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.
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.
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.
