Investing for a World of Change

Net zero portfolios are not the same thing as achieving net zero in the real economy

A panel of Ninety One’s investment professionals discussed how to measure where a company or country is on its net-zero journey. Here are some highlights.

Date published

21 Oct 2021

Watch time

30 minutes

Investing for a World of Change Forum

A panel of Ninety One’s investment professionals discussed how to measure where a company or country is on its net-zero journey. Here are some highlights.

Fast view

It’s not enough to simply say carbon-intensity is an inadequate measure of net-zero transition alignment. Viable alternative metrics need to be developed.
It may be three years before such metrics are available industry-wide. In the meantime, some Ninety One teams are assessing transition strategies by asking three key questions of companies:
- Is your carbon-reduction target ambitious enough?
- Has it been costed for?
- Is it possible to measure progress on an annual basis – not necessarily in terms of the carbon footprint, but perhaps in terms of capital expenditure on the transition strategy?
Ninety One’s Sovereign Fixed Income team has developed a Net Zero Sovereign Index to define a fair transition pathway for individual countries. The index takes into account each country’s starting position, including its level of wealth, and ability to transition.
The index allows investors to measure a country’s progress over time in relation to the fair pathway. The aim is to give the investment team and clients a means of monitoring a country’s net zero policies and actions, and whether it is on the right track.

All investments carry the risk of capital loss.

No representation is being made that any investment will or is likely to achieve profits or losses similar to those achieved in the past, or that significant losses will be avoided.

This is not a buy, sell or hold recommendation for any particular security.

Therese Niklasson

Peter Eerdmans

Portfolio Manager

Nazmeera Moola

Chief Sustainability Officer

Investing for a world of change forum - Session videos

The eye of the storm: how a power company leads the energy transition

According to Ninety One’s Deirdre Cooper, “we are in the eye of the storm. This is a unique moment in time when capital allocators have an enormous role to play in funding the transition”. She discussed with José Sáinz, CFO of renewables-focused utility Iberdrola, how to finance the energy transition while keeping the lights on.

12 minutes

Aligning to net zero from an asset allocator's perspective

The net-zero transition imposes several challenges on asset allocators – not least dealing with inconsistent carbon reporting by asset managers, as well as the difficulty of communicating decarbonisation progress (or otherwise) in a way that is useful for end-investors.

30 minutes

Is the UK leading on net zero?

As the host of COP 26, the UK will be expected to set an example on sustainability. Our panel says the UK has a firm foundation of stewardship as it builds a framework for the future.

39 minutes

How will China’s net zero commitment influence markets?

China may lead the world on carbon emissions, but it also leads the world on carbon reduction. There is significant innovation on renewables, plus a burgeoning green bond market. This creates real opportunities for investors.

38 minutes

Are Quality companies closer to net zero?

Quality and sustainability go hand in hand. Our panel demonstrates that investors focused on quality businesses have a tailwind in the move to net zero but are always thinking about how they can improve.

35 minutes

How can you integrate net zero in multi-asset portfolios?

Equity investors have led the way on incorporating sustainability and engaging with companies to encourage good practice, but it is every bit as important for multi-asset portfolios. Our panel looks at why nuanced, qualitative judgement is essential.

39 minutes

Sustainable investing - latest insights

Why corporates must act

Written by independent researchers from Imperial College London and Reading University through Imperial Consultants, this paper looks at the physical risks of climate change and its potential impact on corporates and financial markets.

A disorderly transition

Evidence suggests the transition to a low-carbon economy will be disorderly. By allocating to ‘transition assets’, investors can mitigate some of the disorder, while potentially generating positive outcomes for their portfolios. This paper makes the case for transition investing, and explains how to identify a true ‘transition asset’.

Tailwinds strengthen for climate-solutions providers

A turbulent year has increased the opportunities for companies that are helping the world transition away from fossil fuels and use energy more efficiently.

Investors need to read the ‘ESG’ label carefully

Assets are flowing into ESG funds, but investors need to choose carefully because the ‘sustainable’ label still covers a very wide range of investment approaches.

Notes from the road: investing in climate solutions

The fund industry talks a lot about investing in climate-solutions providers. But who are these businesses? And what do they actually do? Join the Global Environment team’s analysts on in-person tours of three companies that, in very different ways, are contributing to decarbonisation – and that the team believes are well placed to ride the structural-growth trends arising from the energy transition.

What Ukraine means for energy markets and the net-zero transition

The Russia-Ukraine conflict has triggered the largest structural shift in global energy markets for decades. This seismic change coincides with a key phase in the transition away from fossil fuels. Tom Nelson discusses why the conflict will force policymakers, regulators, and consumers to expedite the energy transition – with impacts on many commodity-linked sectors.

A disorderly transition

Notes from the road: investing in climate solutions

What Ukraine means for energy markets and the net-zero transition

Important Information

This communication is provided for general information only should not be construed as advice.

All the information in is believed to be reliable but may be inaccurate or incomplete. The views are those of the contributor at the time of publication and do not necessary reflect those of Ninety One.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon.

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