Sustainable investing

China: from coal to carbon free in 40 years

China’s pledge to reach carbon neutrality by 2060 is a significant step in the fight against climate change. Where are the potential winners of this structural transition?

2020 M11 11

9 minutes

Wenchang Ma
Leo Lin
China’s pledge to reach carbon neutrality by 2060 is a significant step in the fight against climate change. Where are the potential winners of this structural transition?

The fast view

  • China’s surprise pledge in September to cut its net carbon emissions to zero within forty years has reignited hopes of limiting global climate change to tolerable levels. These hopes were reinforced a month later at China's fifth plenum, which revealed the government's long-term development plan for the country — its 2035 vision.
  • Achieving net zero would require a radical reconfiguration of China's economy, with significant investment implications.
  • On the one hand, there are growth opportunities as enablers of carbon neutrality become increasingly important. On the other, companies that don’t adapt to a greener world could be left behind.
  • We’re excited by these developments as they show how serious China is about reinvigorating action on climate change. This structural shift means huge potential across China’s equity universe – the key will be knowing how to pick the winners, and how to ride this wave of change.
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Authored by

Wenchang Ma
Portfoliomanager
Leo Lin
Analyst, 4Factor

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