For net zero to succeed we need more critical engagement

Martin Currie head of stewardship says commitments are just the first step

In the run-up to COP27 later this year, businesses are beginning to reflect on their commitments to net zero as part of efforts to limit global warming and support investing aligned with net-zero emissions by 2050 or sooner.

However, commitment is merely the first step towards net zero and myriad challenges face companies in achieving this goal.

A complex challenge therefore requires collaboration and shared insight. Delivering a net-zero target across a full portfolio is a complex process that involves quantifying disclosure, target setting, monitoring delivery of emissions reductions, as well as understanding different regional starting points.

Regional reality

Achieving net zero globally will require the whole world to pull in the same direction, but Asia may be the most important and difficult obstacle to overcome.

One key challenge when engaging with companies is there is not a universal commitment towards net zero. Fossil fuels – particularly coal – have been instrumental in supplying the surge in electricity demand across emerging markets, including in the biggest countries China and India.

Trying to restrict total energy demand is neither equitable nor inclusive. This creates a clear conflict between economic development and net-zero goals in the short term, one which is extremely tricky for governments to navigate.

Read the full comment in ESG Clarity’s September 2022 digital magazine.