Why invest in the transition to Net Zero?
Climate change brings three key risks for investors.
Changes in our environment have the potential to cause unpredictable and irreparable harm to a huge array of industries.
Physical
Companies heavily reliant on
high-carbon businesses – for example in the energy sector or transport – could find their business models under pressure from regulation aimed at curbing emissions and falling demand.
Transition
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The environmental impact of high-carbon companies could cause reputational damage and open companies up to legal threats.
Liability
In the fixed income world, this could lead to volatility, credit rating downgrades, and in the worst instances, defaults – all potentially affecting financial outcomes.
Investment strategies aligned with Net Zero have the potential to both reduce exposure to the risks associated with climate change while making a positive contribution to the shift to a Net Zero world.