Should Ethical Investors Target Carbon-Neutrality?

Carbon emissions play a major role in climate change. Current approaches to limiting global average temperature rises have focused on encouraging companies to report and reduce their carbon emissions. However, due to factors such as slow uptake of initiatives by governments, population growth and desirable economic growth in less-developed countries, reduction of carbon emissions is unlikely to prove sufficient to meet aims of limiting increases in global average temperatures to 1.5°C (or well below 2°C) above pre-industrial levels. To achieve this companies need to move towards zero net-carbon emissions (ZNCE), putting in place implementation strategies as a first step. In financial markets, ethical and sustainable investors are already familiar with carbon emission reductions as an environmental factor. However, now ethical investors need to appreciate the importance of zero net-carbon emissions as a factor in the selection of their investments, to stimulate companies to adopt strategies to achieve this. If such a development to ethical and sustainable investment is to become widely adopted it will require the involvement of underlying investors, wealth managers and fund providers.