ISS ESG, the responsible investment arm of Institutional Shareholder Services Inc. (ISS), today released a timely new report, Seeing Past the Blind Spots in Climate Finance, which comes on the heels of the recently published International Energy Agency’s landmark report Net Zero by 2050 (dubbed ‘IEA NZE Roadmap’), in which no new oil and gas fields are required and a new clean energy transformation must be accelerated.
The new ISS ESG report addresses three critical areas for investors where uncertainty persists: the consequences of a world shifting from mitigating climate change to adapting to it; the meaning of a true Net Zero transition; and legal and other issues surrounding companies viewed as obstructing climate protection. Investors are currently focused on complex methodology debates regarding the calculation of Net Zero pledges and identifying portfolio companies failing to adhere to emerging climate norms, and the new report provides insight into ‘blind spots’ hitherto absent from most climate discussions.
The report highlights that most investors and companies are yet to confront the reality of Net Zero targets requiring not just offsets, but genuine atmospheric carbon removals. A true Net Zero transition requires bringing down emissions much more than current policies require to date, according to the report, while at the same time investing to remove greenhouse gas emissions from the atmosphere by rapidly developing and scaling carbon-removal technologies.
Viola Lutz, Head of Climate Solutions at ISS ESG, said: “In light of the IEA NZE Roadmap, investors must now anticipate an overhaul of many countries’ climate change action plans which will impact fossil fuel sector returns and investment stewardship strategies, while generating a new wave of clean energy investment opportunities, and sustainability bonds, as governments move towards accelerated targets.”
Download a copy of the report here.