ZERONOMICS - Kenyan News Trends

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ZERONOMICSFinancing the transition to a net-zero world

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ForewordRead on

The transition to net zero carbon emissions

is the challenge of our generation. The Paris

Agreement – to stave off the worst effects of

climate change by keeping global warming

below 2°C – requires companies and econo-

mies to move at an unprecedented pace.

The challenge is especially evident in

Standard Chartered’s footprint markets of

Asia, Africa and the Middle East. Many of

our markets are amongst the most vulner-

able to climate change – and most in need

of funding to ensure that economic de-

velopment can continue while the climate

crisis is addressed.

We commissioned Zeronomics to under-

stand how far companies have come on

their journey, what’s blocking their path

and what might help them move faster.

Our survey of senior business leaders and

investors reveals that most companies

intend to transition to net-zero by 2050 but

have yet to take the action needed to get

there. A majority cite funding as an obsta-

cle, saying they need medium to high lev-

els of investment to transition to net zero.

Carbon-intensive industries and emerg-

ing-market companies struggle the most

with funding. One reason for this might

be an unintended consequence of the rise

of environmental, social and governance

(ESG) investing, which means that car-

bon-intensive companies are struggling

to raise finance for their net-zero transi-

tion. Another reason particularly affecting

emerging markets is the perceived invest-

ment risk. A successful net-zero transition

must be just, leaving no nation, region or

community behind. The stakes are high.

In spite of the hurdles, action needs to be

swift. Net carbon emissions must fall by

45 per cent from 2010 levels by 2030 for

the world to stay on-track1 but seven in 10

companies plan to defer action on climate

change, raising the threat of the 2020s

becoming a lost decade.

If businesses fail to take rapid, meaning-

ful action to reduce emissions, we will fail

to arrest the very worst effects of climate

change. We must act now, and we must

act together: companies, consumers,

governments, regulators and the finance

industry must collaborate to develop

sustainable solutions, technologies and

infrastructure.

Some form of standardised global net-zero

transition measurement, an effective glob-

al carbon tax and a full functioning carbon

1 https://www.ipcc.ch/2018/10/08/summary-for-policymakers-of-ipcc-special-report-on-global-warming-of-1-5c-approved-by-governments/

market, as recently proposed by the Task-

force on Scaling Voluntary Carbon Mar-

kets, 2 all have a part to play in a successful

transition to net zero by 2050.

Decarbonisation is a key focus for Stand-

ard Chartered: we are committed to

reaching net zero carbon emissions from

our operations by 2030, and from our

financing by 2050. Our markets are among

those most impacted by climate change,

but they also represent some of the great-

est opportunities to leapfrog to low-car-

bon business models and renewable

power.

Our presence in these markets gives us a

unique opportunity to ensure that eco-

nomic development continues at pace

while climate impact is reduced. There

are many challenges on the road to net

zero, but there are also many reasons for

optimism: rapid technological advances,

focus from governments, and the positive

intentions of many business leaders and

investors.

Good intentions are the first step towards

sustainable change. Now is the time to

translate strong words into bold action.

Bill Winters Group Chief Executive, Standard Chartered

2 https://www.iif.com/tsvcm

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Executive summaryRead on

ZeronomicsReaching net zero carbon emissions by

2050 will be a considerable challenge.

Every organisation in every sector has a

critical role to play in limiting global warm-

ing. Commitment to this agenda must be

top of mind for all companies – public and

private, large and small – and to succeed

they must undergo major transformation.

The private sector can move the needle

significantly on net zero. To find out where

companies (multinationals and large

domestic corporates) are in their net-ze-

ro transition, we spoke to investors and

global senior executives, from both car-

bon-intensive and less carbon-intensive

industries.4

The responses reveal that:

• Companies are moving too slowly:

55 per cent of companies say they are

not transitioning fast enough and 78

per cent of investors say most business

leaders are failing to take the action

needed to transition their company

by 2050.

• Their progress is being hampered by

a lack of finance: this is the greatest

barrier to net-zero transition according

to both senior executives and inves-

tors. And the need for finance is great:

some 85 per cent of companies require

medium or high levels of investment

to transition to net zero, rising to 91 per

cent of carbon-intensive companies.

• Carbon-intensive industries and

emerging markets are struggling

most: both companies and investors

believe that significantly more invest-

ment is being directed at developed

markets than emerging markets, and

that carbon-intensive sectors in emerg-

ing markets will experience the most

significant capital shortfall.

• Net zero is not seen as commercially

viable: 64 per cent of senior executives

believe the economics of operating as

a net-zero organisation do not stack up

for their company.

• Key actions would speed up transition:

a majority of companies believe that a

standardised global measurement and

disclosure framework would help them

move faster – as would more evidence

of cost savings, pressure from supply

chain partners and investors, and an

effective global carbon tax.

4 The carbon-intensive companies included in this study were from the following sectors: energy, oil and gas; metals and mining; transport and logistics; and infrastructure.

The state of play: Where are companies on their net-zero journey?Despite the urgent need to cut carbon emissions, companies are not taking the action needed to transition.

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Companies must move faster

Given the scale of the challenge, now is the

time to take action. The next 10 years will

be critical in reaching the Paris Agreement

target of net-zero carbon emissions by

2050. Governments across the world have

made ambitious commitments to reduce

emissions (see appendix 1). However, more

than half of senior executives (55 per cent)

acknowledge that their organisation is not

transitioning to net zero fast enough, while

seven in 10 investors believe that compa-

nies are transitioning too slowly.

Without decisive action now the chances

of reaching net zero by 2050 are slim; it

is estimated that net carbon emissions

need to fall by about 45 per cent from 2010

levels by 2030 to hit that target.3 However,

despite the urgency, many companies are

deferring action by at least a decade: 71

The Paris AgreementThe Paris Agreement is a landmark global pact on climate change, drafted in

2015 and signed by more than 190 nations. The aim of the agreement is to keep

the global temperature rise this century well below 2°C (above pre-industrial lev-

els) and to try to limit the temperature increase to 1.5°C. Scientists estimate that

global greenhouse gas emissions will need to be reduced to net zero by around

2050 to meet the 1.5°C target.

per cent plan to make the most progress

towards net zero between 2030 and 2050.

Why are corporates delaying action?

Business leaders appear to be over-

whelmed by the scale of the challenge,

with most companies requiring extensive

transformation.

5 https://www.ipcc.ch/2018/10/08/summary-for-policymakers-of-ipcc-special-report-on-global-warming-of-1-5c-approved-by-governments/

The world needs corporate leaders to be climate leaders. Governments, investors,

companies, and consumers need to rapidly scale renewables as a source of pow-

er, put ESG at the heart of their business and investment plans, and develop low

carbon alternatives for emission intensive businesses.

We need to catalyse, standardise and democratise access to sustainable finance

to drive greater capital to those facing the greatest risk from climate change and

the regions where there is the greatest opportunity to leapfrog to low carbon

technology and business models.

Daniel Hanna

Global Head of Sustainable Finance,

Standard Chartered

POLL

When will your organisation make the most progress in transi-tioning to net zero?

Early action - 2020-2030

Medium-term action - 2030-2040

Late action - 2040-2050

Action spread evenly

No action

See results

By delaying their transition journey companies

are risking much more than missing net-zero

targets – the longer action is deferred, the great-

er the disruption. This will play out in the form of

the more obvious physical risks brought by cli-

mate change, but also the effects of a more dis-

orderly transition, which could impact financial

markets and the provision of capital at a time

when companies need it most. It’s never been

more important to act now; the consequences of

inaction could be dire.

Adityadeb Mukherjee

Head of Climate Risk Management,

Standard Chartered

Business leaders are failing to actInvestors view leadership as crucial to progress, but more

than three-quarters (78 per cent) believe most business

leaders are failing to take sufficiently bold action to tran-

sition their company to net zero by 2050.

Fewer than half of companies (47 per cent) fully support

the aims of the Paris Agreement, falling to 41 per cent of

emerging market companies.

Where are companies on their transition journey?Many companies have made a start on the transition to

net zero; they believe they have the strategy and leader-

ship in place but are struggling with the investment, data

and measurement needed.

The size of the task: What are the barriers to net-zero transition?A lack of finance is the biggest barrier to reaching net zero by 2050 but raising the investment needed will be a significant challenge.

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What is standing in the way of a net-zero

future? The answer is the scale of the fi-

nance needed and the challenge of raising

it. Most companies (85 per cent) require

medium or high levels of investment to

transition to net zero, rising to 91 per cent

of carbon-intensive companies. Yet more

than two-thirds of senior executives (67 per

cent) say that lack of capital is a signif-

icant barrier to net-zero transition. The

issue is even more pressing for emerging

market companies: three-quarters (73 per

cent) cite a lack of capital as a significant

barrier.

Investors agree that finance is an issue: 85

per cent say that lack of capital is a signif-

icant barrier to corporate net-zero transi-

tion and the investment community readily

admits that attitude is part of the problem:

82 per cent of investors surveyed believe

there is a lack of support for net-zero tran-

sition among the investment community.

The critical need for net-zero finance

52 per cent of companies say net-zero transition will be the most expensive project they have ever undertaken.

Almost eight in 10 senior executives (79 per cent) believe it will be difficult for their organisation to raise the capital needed to achieve net-zero transition by 2050.

POLL

What is the biggest challenge your organisation faces in its transition mission?

Lack of capital

Lack of available affordable alternative

technology

Lack of support for net-zero transition from

investors

Lack of regulatory certainty

Lack of consensus on net-zero definition and

targets

See results

Lack of support for net-zero transition from

companies’ boards

Carbon-intensive sectors are struggling to access capital For the world to reach net zero, all industries need to

find new ways of operating, making investment a

critical requirement, especially for sectors with high

carbon emissions. Almost nine in 10 investors (89 per

cent) agree that if the investment community does

not finance the transition of carbon-intensive indus-

tries, the world will not reach net zero by 2050.

Yet more than two-thirds of senior executives (69 per

cent) say investors are reducing their exposure to

carbon-intensive assets, making it harder for com-

panies to pivot to low-carbon business models. This

could be an unintended consequence of increased

environmental, social and governance (ESG) invest-

ment; Standard Chartered’s report The $50 Trillion

Question found that investors are increasingly

considering ESG issues when making decisions, and

that trillions of dollars are expected to flow into ESG

funds over the next three years. This could result in

divestment from carbon-intensive companies at a

time when investment is needed most.

To reach net zero, investors cannot just walk

away from carbon-intensive sectors. Financing

these companies helps them invest in the re-

search and development critical for developing

clean technologies and pivoting their business

models. Many of these companies are actively

engaged in the net-zero challenge and their

involvement will be key to transitioning global

infrastructure, energy supplies and consumer

products. Strategic investment into these indus-

tries can help to drive a more sustainable future.

Divestment is not the answer; engagement is.

Amit Puri

Global Head, Environmental & Social Risk

Management, Standard Chartered

Emerging markets urgently need more capital To reach net zero by 2050, a global approach is

needed, and emerging markets need investment

the most. The majority of the world’s population

lives in emerging markets, and if economies with

vast populations like India and China do not transi-

tion to net zero, efforts in the developed world will

have a limited impact.

However, both companies and investors believe

that emerging markets are currently being over-

looked. Eighty per cent of companies and 79 per

cent of investors say there is a significant gap

between net-zero transition investment directed at

developed and emerging markets.

This is despite widespread acknowledgement of

the focus needed, and the amount of private-sec-

tor capital that will need to flow to emerging mar-

kets.6 Eighty-one per cent of senior executives and

77 per cent of investors believe that significantly

more capital must be invested in emerging markets

to reach net zero by 2050.

Concerns about risk are blocking capital: 84 per cent

of investors state that the high level of investment risk

posed by emerging markets is a barrier to financing

net-zero transition in these regions. The $50 Trillion Ques-

tion revealed that concerns about emerging market risk

persist despite evidence of strong returns: more than

two-thirds of investors believe emerging markets are

high-risk, yet only 7 per cent of investors say that these

investments have performed worse than their developed

market investments over the past three years.

78 per cent of senior executives and

71 per cent of investors expect the most significant net-zero transition cap-ital shortfall to occur in carbon-intensive sectors in emerging markets.

6 Opportunity 2030: The Standard Chartered Investment Map found an almost

USD10 trillion private-sector investment opportunity in contributing to three

of the most tangible, infrastructure-focused goals – SDG 6: Clean Water and

Sanitation, SDG 7: Affordable and Clean Energy and SDG 9: Industry, Innovation

and Infrastructure.

Funding is not flowing to the markets at the

greatest risk from climate change. We must

decarbonise in a way that accounts for the com-

munities at most risk, both from climate change

and from the transformation of carbon-intensive

industries.

While failing to act is not an option, the wrong

kind of action, including withholding transition

finance to incumbents, can also do harm. Our

aim must be a just transition, leaving no one

behind, enabled by the widespread benefits of

sustainable finance.

Simon Connell,

Global Head, Sustainability Strategy,

Standard Chartered

Despite the need for immediate action, the transition to

net-zero carbon is a long-term project with long-term

benefits. However, companies are not set up to take

the long view. Ninety-three per cent of investors believe

that short CEO tenure makes it hard for leaders to tackle

net-zero transition; 79 per cent of senior executives agree.

And almost two-thirds of investors (65 per cent) believe

that most business leaders are focused on short-term

performance and profitability rather than long-term

value creation.

However, a leader’s net-zero transition strategy is in fact

key to accessing investment. Nine in 10 investors say the

net-zero transition story communicated by a company’s

CEO is critically important to investment appeal and

two-thirds believe that a company’s net-zero transition

strategy and leadership is now a better predictor of

future corporate success than its past financial perfor-

mance. If CEOs become climate leaders, this may pave

the way to net zero.

But under pressure to deliver here and now and with

COVID-19 forcing many businesses to focus on imme-

diate survival, 52 per cent of senior executives say their

organisation is postponing net-zero transition in order

to maximise revenues in the short to medium term. Al-

though they need to take urgent action, companies are

struggling to prioritise and make a business case for their

net-zero transition.

Short-termism is hindering net-zero transitionCOVID 19 has, understandably, caused companies

worldwide to prioritise their short-term viability and

survival. As we emerge from the emergency phase

of the crisis and begin to look towards recovery, we

need companies to take up the longer-term challenge

of tackling something just as existential: climate

change. To support private sector action, govern-

ments should integrate environmental objectives

throughout their pandemic response measures and

wider policy framework.

Ashley Dorrington,

Executive Director, Group Public and Regulatory

Affairs, Standard Chartered

With a focus on the short term, more than three-quarters

of companies (77 per cent) say they struggle to justify

sacrificing reliable revenue from a proven business model

today, for uncertain revenue tomorrow.

Transition is not commercially viable

64 per cent of companies say that it is not commercially viable for them to operate as a net-zero organisation.

Companies also doubt whether the work needed to tran-

sition their organisations will be worth it: 62 per cent of

senior executives believe the expected benefits of net-ze-

ro transition do not outweigh the cost.

Moving from intention to action is toughCorporates are struggling with the scale of the net-ze-

ro challenge, finding it difficult to take decisive action.

Two-thirds of companies (66 per cent) are relying mainly

on carbon offset rather than carbon reduction. While

carbon offsetting has an important role to play alongside

carbon removals and decarbonisation in the transition

to a net-zero state, this high proportion may indicate an

over-reliance on offset rather than more impactful but

more complex routes to net zero.

However, moving beyond this approach will be difficult

without affordable technology. Almost two-thirds of

senior executives (64 per cent) say the lack of available

alternative technology at a commercially viable cost is a

significant barrier to transition.

51 per cent of companies state that the technology they need to transition does not exist yet.

Until this technology is available, some emissions are

almost impossible to eliminate. On average, companies

say 32 per cent of their Scope 1 emissions (i.e. their direct

emissions) are difficult or impossible to transition.

One of the greatest challenges, however, is building a

net-zero supply chain. Almost two-thirds of senior exec-

utives (64 per cent) say a significant proportion of their

organisation’s emissions are in their supply chain where

they have little visibility or control.

Could COVID-19 prove fatal to the fight against climate change? Added to this, the COVID-19 pandemic has forced many

organisations to put net-zero action on the backburner.

Eighty-five per cent of senior executives say that COVID-19

has delayed their transition.

ZEROING IN: ASIANorth Asia Japan and South Korea

Sign-up is high but there is a long way to go

Seven in 10 North Asian companies support the Paris

Agreement, substantially higher than the global average

of 47 per cent. However, 57 per cent of North Asian senior

executives believe their company is not transitioning fast

enough, and companies in this region need the highest

level of financial investment to get to net zero: 77 per cent

of senior executives say they require high levels of invest-

ment to transition, compared to 60 per cent across

all markets.

ZEROING IN: ASIAGreater China Mainland China, Taiwan, Hong Kong

Leadership challenges

Of the private sector companies surveyed, 50 per cent

of senior executives in Greater China say their company

is not transitioning to net zero fast enough; 55 per cent

believe their company requires high levels of investment

to transition.

The biggest barrier faced by companies in Greater China

is lack of support from their leadership, cited by 72 per

cent of senior executives. Another major transition chal-

lenge, according to 88 per cent of senior executives, is

short CEO tenure making it hard for leaders to tackle

long-term issues like net zero transition.

ZEROING IN: ASIAASEAN Singapore, Malaysia, Thailand, Vietnam

Increased investor support needed

The biggest barrier to net-zero transition faced by ASE-

AN companies is a lack of support from their organisa-

tion’s investors (73 per cent of senior executives cite this

challenge, 13 percentage points above the global aver-

age). ASEAN companies are also facing serious net-zero

transition delays caused by COVID: 97 per cent of senior

executives say the pandemic has delayed their compa-

ny’s net-zero transition, compared to 85 per cent globally.

Companies in ASEAN view increased operational effi-

ciency and cost savings from sustainable practices as the

most important factor that would accelerate their transi-

tion (cited by 90 per cent of senior executives).

ZEROING IN: ASIASouth Asia India

Held back by lack of finance

Fifty-seven per cent of Indian senior executives believe

their company isn’t transitioning to net zero fast enough.

Support for the Paris Agreement is consistent with the

global average: 47 per cent of senior executives say that

their organisation supports the Paris agreement.

Sixty per cent of Indian companies say they require high

levels of investment to transition.

Meeting the challenge: How do we overcome the obstacles to a net-zero world?More capital, transition frameworks and shareholder activism crucial to achieving net zero by 2050.

Read on

Our research reveals that investors are placing more em-

phasis on net-zero strategy in their investment decisions.

Increasingly, companies must show their commitment to

net zero to access capital. More than two-thirds of inves-

tors (68 per cent) were either already considering net-ze-

ro transition as part of their investment decision-making

or intended to do so by the end of the year (2020).

61 per cent of investors will not invest in a company that lacks a clear net-zero transition strategy.

On average, companies are investing just over 2 per cent

of annual turnover in net-zero transition. However, almost

all senior executives (97 per cent) admit this will need to

increase. Globally, senior executives believe that an aver-

age of 60 per cent of the finance they need to transition

will have to come from internal sources, such as retained

earnings and reserves, and 40 per cent from external

sources (of this, they expect 55 per cent to be equity

financing and 45 per cent to be debt financing).

Current investment approaches to net zeroAlthough investors acknowledge there is more to

be done, there are signs that individual investment

management firms are using companies’ pace of

decarbonisation to guide their investment deci-

sions. Almost eight in 10 investment firms (79 per

cent) are now actively assessing the impact of their

portfolio on climate change and six in 10 (61 per

cent) say that supporting transition to net zero is

now an important factor in every investment deci-

sion they make.

Closing the transition finance gap

How do we tackle short-termism? More than three-quarters of senior executives (78 per

cent) say that increased shareholder activism and inves-

tor scrutiny would be an important accelerator for net-ze-

ro transition – and so too the inclusion of net zero as a key

part of company directors’ duties.

Making net-zero transition commercially viableNet zero could be made more commercially viable by

a combination of incentives and penalties alongside

changes in demand and standardised frameworks. More

than three-quarters of senior executives (77 per cent) say

that an effective global carbon tax, based on a carbon

price that reflects the true cost of climate change, would

be an important factor in accelerating their transition.

Navigating the current matrix of definitions, measurement and reporting requirements is a major challenge for

companies. The desire for globally consistent standards is understandable, but a silver bullet is unlikely and glob-

al alignment takes time. In the meantime, governments are taking policy decisions that support the mobilisation

of private finance to help companies to transition. Over the coming years, we expect to see policies that price in

carbon, such as a carbon tax. While this will be effective in motivating some companies towards transition, the

potential exists for others to get caught by unintended consequences, making it harder for them to access transi-

tion finance or make net zero commercially viable. This is even more relevant as policymakers consider measures

in the context of the economic impact of the COVID pandemic, working towards a common goal of a sustained

and sustainable recovery. Our goal at Standard Chartered is to work with the policy-making community and our

clients to ensure that transition occurs but does so on a smoothed pathway.

Farisa Zarin,

Global Head - Regulatory and Public Affairs,

Standard Chartered

photo

Almost two-thirds of senior executives (62 per cent) be-

lieve the financial sector could help by providing incen-

tives in the form of margin discount on loans and bonds

linked to net-zero transition.

Senior executives believe that if they could demonstrate

the business case for transition, companies would be able

to transition faster: 81 per cent believe that increased

efficiency and cost savings would be a significant driver.

They also believe that pressure from their supply-chain

partners would help, with 79 per cent of senior executives

citing this as a key accelerator.

How Standard Chartered is helping companies to reach net zeroClimate change is one of the greatest challenges facing the

world today and we want to support our clients achieve a

low-carbon just transition aligned to the Paris Agreement.

We are engaging with all clients to understand their role in

transitioning to low carbon in order to help them measure,

manage and reduce their emissions. We are also developing

sector-specific transition pathways for the most carbon-in-

tensive industries within our portfolio.

We want to play our part by balancing our lending – provid-

ing more funds to climate-positive companies and helping

carbon intensive firms better manage their emissions.

Collaboration is crucial and it is our hope that partnerships

with the 2 Degrees Investing Initiative and Imperial College,

as well as our work on the Collective Commitment to Cli-

mate Action will play an important role in helping the world

achieve net zero by 2050.

Supporting sustainable growthWe provide financial products and services to people

and businesses to help drive sustainable development,

economic growth and job creation. Our Sustainability

Aspirations set out how we aim to promote social and

economic development through our core business

of banking.

Our product frameworksWe are creating sustainable finance products to support

sustainable development. Our frameworks, developed in

collaboration with Sustainalytics, the leading provider of

ESG and corporate governance research, set out what

qualifies as ‘sustainable’ and ‘green’ products.

Sustainable finance impactWhile we are a leading international bank, 91 per cent of our

sustainable finance assets are located in emerging markets

where the need for finance to be a positive catalyst is great-

est. Our sustainable finance impact report highlights Stand-

Learn more about our green and sustainable product framework.

Read our latest Sustainable Finance Impact Report. Find out more about our Sustainability Aspirations.

Reducing our emissionsOur climate impacts are primarily from the clients we fi-

nance and support. We measure, manage and ultimately

reduce the emissions related to our operations and the

financing of our clients. For example, by 2030 we will only

provide financial services to clients who are less than 5 per

cent dependent on thermal coal.

Meanwhile, we are committed to reaching net zero carbon

emissions from our operations by 2030, and from our financ-

ing by 2050. We have targets in place to reduce our energy

use and report our progress every year and have done for

more than a decade.

ard Chartered’s unique contribution to tackling climate

change and the financing of the UN’s Sustainable Develop-

ment Goals.

ZEROING IN: MIDDLE EAST & AFRICAMiddle East UAE and Saudi Arabia

Limited support for Paris Agreement

Support for the Paris agreement is lower among compa-

nies in the Middle East, with just 35 per cent fully support-

ing the aims of the agreement.

More than half (55 per cent) of companies require high

levels of investment to transition. A major challenge for

Middle East corporates is the economic impact of COV-

ID-19 in delaying their net-zero transition (85% of senior

executives).

ZEROING IN: MIDDLE EAST & AFRICAAfrica Ghana, Kenya, Nigeria, Uganda, Zambia and South Africa

More investment required for transition

The biggest barrier faced by African companies is lack of

finance (cited by 78 per cent of senior executives; 11 per-

centage points above the global average).

Ninety per cent of senior executives believe short CEO

tenure in their industry makes it hard for leaders to tack-

le net-zero transition, and 90 per cent believe effective

global carbon tax would be an important factor in accel-

erating their net-zero transition.

About ZeronomicsRead on

Opinion researchThis study of the corporate transition to net zero is based

on in-depth interviews with senior executives and inves-

tors, conducted between September and October 2020.

Senior executivesWe surveyed the senior leadership or management

teams (C-suite level minus one) in 250 companies. Com-

panies were MNCs (defined as having a genuinely global

reach) headquartered in developed markets, and MNCs

and large domestic companies headquartered in emerg-

ing markets. Companies were headquartered in the

following markets / regions: US, Western Europe, Middle

East, Africa, North Asia, South Asia, ASEAN and Greater

China.

InvestorsWe surveyed 100 fund managers, strategists and emerg-

ing market specialists within the asset management

investment profession, identified as having a global

perspective. Half were from tier one firms (the top 50

global asset management firms) and half were from tier

two firms (the top 300 global asset management firms

outside of the top 50).

Company performance against four dimensionsTo gauge where companies are right now on their transi-

tion journey, we scored them against four key dimensions

of transition: measurement and reporting; appropriate

investment; strategy and leadership; and organisational

transition. Some of the survey questions asked the sen-

ior executives to score their companies against factors

that pertained to these four dimensions of transition. We

created an overall score per dimension and then made

this a score out of 100 so that each dimension was com-

parable. We calculated the maximum possible score for

each dimension, and then calculated the percentage

that companies scored out of the possible maximum or

‘perfect’ score. In each instance, the closer a dimension is

to 100, the closer it is to the ideal or perfect possible ap-

proach that can be conceivably taken, within the realms

of our survey questioning.

Appendix 1: Government commitmentsAccurate as of November 2020

Read on

Governments across the world are taking steps to tran-

sition to net-zero, with many markets making commit-

ments in line with international climate goals like the Paris

Agreement.

Some economies, including the UK, Sweden, France, Den-

mark and New Zealand, have enshrined their net-zero

targets in law.

Despite these pledges, emissions remain unsustaina-

bly high. To meet our goals, emissions need to peak as

soon as possible and then decline rapidly. Global CO2

emissions have fallen due to the COVID-19 crisis, but this

decline is likely to be temporary.

There are two different routes to achieving net zero,

which work in tandem: reducing existing emissions and

actively removing greenhouse gases using methods such

as offsetting. The rapid growth of renewable energy and

electric vehicles has demonstrated the potential of new

clean-energy technologies to reduce emissions. However,

we will need to deploy these technologies much more

widely and simultaneously scale up other clean energy

solutions, such as applications of hydrogen and carbon

capture.

The challenge ahead is immense. Reaching these targets

will be tough, and will require a concerted global effort

by citizens, governments, regulators, companies and the

finance industry.

Date of significance

Market Detail

2020 South Africa

Committed to reduce emissions by 34% in 2020, and by 42% in 2025.

2021 UAE 24% green energy mix by 2021.

2030 Zambia Reduction of 47% against 2010 as a base year.

Uganda Reduction of 22% of emission on a Business as Usual (BAU) basis by 2030.

Nigeria To reduce its greenhouse gas emissions by 20% by 2030, when compared to business as usual levels.

Ghana Unconditionally lower its green house gas emissions by 15% rela-tive to a BAU by 2030.

Malaysia A reduction of greenhouse gases by 45% by 2030.

India To reduce the emissions intensi-ty of GDP by 33%–35% by 2030 below 2005 levels.

Indonesia Unilateral reduction target of 29%, by 2030.

Date of significance

Market Detail

South Korea

To reduce greenhouse gas emis-sions by 37% below BAU emis-sions in 2030.

Vietnam Unconditional target to reduce emissions intensity per unit of GDP by 20% below 2010 levels in 2030.

Kenya Abate its greenhouse gas (GHG) emissions by 30% by 2030.

China Reach its carbon emissions peak by 2030.

2050 Japan Reduce Japan’s emissions by 80% from current levels and an additional goal to achieve net-zero emissions “as early as possible during the second half of the 21st century”

UK At least a 40% reduction in GHG below 1990 levels by 2030, net zero by 2050.

EU Greenhouse gas emissions by 80–95% below 1990 levels by 2050.

US Joe Biden has set a net zero 2050 goal for the US and pledged to re-join the Paris Agreement.

Singapore Plans to halve emissions from the 2030 peak by 2050 and reach net-zero emissions “as soon as is viable” in the second half of the century.

2060 China Achieve carbon neutrality before 2060.

Appendix 2: The role of retail investors

Read on

Retail investors can also play an important role in the

journey to net zero. The Standard Chartered Sustain-

able Investing Review surveyed affluent and high net

worth individuals in Hong Kong, Singapore, the United

Arab Emirates and the United Kingdom in early 2020 to

discover how COVID-19 had impacted their sustainable

investment plans.

It found that the pandemic has accelerated retail inves-

tors’ focus on sustainability issues. Over the next three

years, 42 per cent of investors are considering investing

5 to 15 per cent of their funds in sustainable investment

while 9 per cent of investors indicated they would like to

have 25 per cent or more of their funds allocated to this

area. Climate Action was cited as the third most impor-

tant SDG, behind Clean Water and Sanitation and Good

Health and Well-being.

Appendix 3: Performance against key net-zero transition dimensions by region and by sector

Read on

Based on their responses, companies headquartered in

developed markets are marginally ahead of their emerg-

ing market counterparts across all dimensions. Emerging

market companies are having the most difficulty with

appropriate investment, ranking lowest on this dimension

and lagging several points behind developed market

companies.

Performance by regionDeveloped Markets Developing Markets

Dimension 1: Strategy and leadership 74 69

Dimension 2: Measurement and reporting 48 45

Dimension 3: Organisational transition 67 64

Dimension 4: Appropriate Investment 44 39

Performance by sectorEnergy, Oil and Gas Metals and Mining Transport and

Logistics

Infrastructure Telecoms and

Technology

Manufacturing and

Chemicals

Financial Services

Dimension 1 71 64 74 71 73 64 77

Dimension 2 47 50 44 43 49 46 44

Dimension 3 63 65 66 65 67 64 68

Dimension 4 40 44 41 40 40 41 40

Read on

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CreditsRead on

Zeronomics is based on in-depth research commissioned

by Standard Chartered, designed by Standard Chartered

and Man Bites Dog.

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