9 Numbers Reveal the Size of the net zero Opportunity

Posted on August 20, 2020 by Cambium Insights

The size and scale of the net zero opportunity was revealed in a keynote article published this week.

In a 2,000 word article published in Forbes magazine earlier this week[1], eminent sustainable investor, Georg Kell  provided compelling evidence for optimism that  2021 will be a major transition year for climate action.

Georg Kell is eminently qualified to make such predictions.  He was one of the founders of the UN Global Compact.  This is the world’s largest voluntary corporate sustainability initiative (9,000+ corporate signatories from over 160 countries).  He was also a leading player in the establishment of UNGC’s sister initiatives, the Principles for Responsible Investment (PRI) and the Sustainable Stock Exchanges (SSE).

The Pandemic and associated Lockdown has had many negative impacts.  However, its effect on the environment has been to some extent positive.  For instance, the lockdown has seen significant, but temporary emission reductions.  However these falls in GHGs will not persist as discussed in the most recent talk on Cambium’s new net zero Exchange channel

In his article, Georg cited  4 key trends set to accelerate our net zero journey, which provide reasons for optimism:

4 Trends Will Underpin Climate Action in 2021

  • New Political and Economic Framework Conditions
  • The Energy Transformation Is Accelerating
  • The Business Case For Decarbonization
  • The Rise of Sustainable Finance

To understand the drivers of these trends in more detail, we recommend you read the full article.  The reference to it is provided in the footnotes the end of this blog.

9 Numbers that Reveal the Size of the net zero Opportunity

To support his analysis, Georg cited several key evidence points that are worthy of recap here.  Considered collectively they make a powerful argument about the size and scale of the net zero opportunity.

  1. According to the IMF, rich countries have announced over USD 4 trillion in fiscal stimuli to counter the impact of the pandemic. This money will provide opportunities to tackle inequality and to improve public services.
  2. The “Next Generation EU” programme announced on 21 July 2020 provides the European commission with fiscal authority worth 750 billion Euros.  This is being targeted to build more resilient, healthier and cleaner markets by tying aid to low-carbon commitments.
  3. Volkswagen Group of Germany, the world’s largest volume automotive producer, has committed to invest over USD 40 billion into e-mobility and digitalisation.  This decision follows the lead of Tesla, who are now the world’s most valuable car company.  As a result of this growing private sector investments, battery-powered e-mobility is set to scale.  This will make a big contribution to decarbonising transport, which is responsible for a third  of global emissions.
  4. More evidence of the accelerating energy transition is provided by BP.  They recently announced plans to sell major petroleum assets and to reduce fossil fuel exploration. Additionally BP have also significantly upgraded their investment in low-carbon energy services.  By 2030, BP plans to invest about one third of its capital spending (USD 15 billion) in low-carbon businesses.
  5. The list of large corporations are making big public commitments to reduce their emissions is growing rapidly.  The Science Based Targets initiative (SBTi[2]), for example, has had its biggest increase in membership since its founding in 2015, now approaching 1,000 members.  These commitments are exemplified by the world’s most  valuable corporation, Apple, who announced in July 2020 plans to become carbon neutral [3] for its supply chains and products by 2030.
  6. This growing band of influential corporations are becoming climate advocates, includes 150 corporations are making the case for climate action to #buildbackbetter under the banner Uniting Business and Governments to Recover Better[4]
  7. Investors are increasingly factoring the integration of environmental, social and governance (ESG) factors into their decision-making processes.  This is a trend that has accelerated  since the onset of the Pandemic.  For instance, the Climate Action 100+[5] initiative, is further adding momentum by encouraging corporations with high emissions to move towards low-carbon pathways.
  8. Sustainability is being rapidly embraced by the debt market. The issuance of green, social and sustainable bonds is projected to grow from USD 50 billion in 2015 to over USD 400 billion in 2020[6].  For example, Alphabet announced the biggest ever sustainability bond of USD 5.75 billion[7] in early August 2020.
  9. Microsoft has also announced its ambition to become carbon negative by 2030[8] and simultaneously launched a USD 1 billion initiative to invest in innovations to achieve this target.

What does this mean for suppliers of innovative net zero products and services?

Kell points out that the pandemic has reminded us that good decision-making must be informed by science.  He provides a compelling case that 2021 may well mark a crucial turning point in our efforts to combat climate change.  The commitments by governments, businesses and investors provide real evidence of interest and the growth potential of the markets for goods and services that enable the transition to a net zero economy.

For UK suppliers capable of playing a role in the new net zero supply chains that are being created, the opportunities are especially good.  There are real policy commitments, by all the regions of the UK, to decarbonise by 2050 at the latest. There is also a  major global climate summit (COP26) is due to take place in Glasgow in November of 2021, which will showcase UK net zero innovation to the world.

Given this powerful momentum behind the net zero transition, now is the right time to ask the question:

Is your business ready to make the most of the opportunities accompanying the net zero transition?

 

Footnotes:

[1] https://www.forbes.com/sites/georgkell/2020/08/17/will-2021-be-the-transition-year-for-climate-action/

[2] Science Based Targets initiative

[3] https://www.apple.com/newsroom/2020/07/apple-commits-to-be-100-percent-carbon-neutral-for-its-supply-chain-and-products-by-2030/

[4] Uniting Business and Governments to Recover Better

[5] Climate Action 100+

[6] https://www.eticanews.it/wp-content/uploads/2020/02/Sector-In-Depth-Sustainable-Finance-Global-03Feb20.pdf

[7] https://blog.google/alphabet/alphabet-issues-sustainability-bonds-support-environmental-and-social-initiatives/

[8] https://blogs.microsoft.com/blog/2020/01/16/microsoft-will-be-carbon-negative-by-2030/

 

About Cambium LLP

At Cambium, we are passionate about taking positive action to address the climate crisis.

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