Choosing assets that tackle climate change

As an investor looking to choose assets that have a net zero strategy, there are several factors to consider.
Here are some key steps and criteria you can use in your decision-making process.

Understand the Net Zero commitment

Look for companies or assets that have made a clear and credible commitment to achieving net zero emissions. This includes assessing their targets, timelines, and strategies for reducing emissions and transitioning to renewable energy sources.

Evaluate emission reduction plans

Assess the company's or asset's emission reduction plans and initiatives. Look for concrete actions they are taking to reduce their carbon footprint, such as investing in renewable energy projects, improving energy efficiency, implementing sustainable practices, and adopting clean technologies.

Analyse carbon accounting and reporting

Consider how the company or asset tracks and reports its emissions. Transparent and accurate carbon accounting is crucial for measuring progress towards net zero goals. Look for organizations that follow recognized reporting frameworks, such as the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.

Consider climate risk and resilience

Evaluate how well the company or asset is prepared to manage climate-related risks and adapt to a changing climate. This includes assessing their resilience plans, risk management strategies, and their ability to capitalize on emerging opportunities related to the transition to a low-carbon economy.

Engage with company management

Engage with company management and ask questions about their net zero commitments and plans. Seek clarity on their strategies, timelines, and how they are integrating sustainability into their business models. A proactive and transparent approach to engagement can provide valuable insights into their commitment and progress towards net zero.

Collaborate with peers

Consider joining collaborative initiatives or investor networks focused on climate change and net zero goals. Engaging with like-minded investors can provide access to resources, best practices, and collective influence to drive change and encourage companies to prioritize net zero strategies.

Seek third-party verification

Look for independent verification or certifications of a company's net zero claims. Third-party verification can provide additional assurance that the organization is taking credible steps towards achieving net zero emissions.

Remember that investing in net zero assets is a dynamic and evolving field. Stay informed about emerging trends, regulations, and technologies related to climate change mitigation. Regularly review and reassess your investment strategy to ensure alignment with evolving best practices and the most up-to-date net zero standards.