The path to net-zero: investor scorecards to assess corporate preparedness

A growing number of corporates are adopting science-based targets and pledging to reach net zero by 2050 or sooner. However, corporate net zero pledges differ significantly beneath the surface/headline details. While many companies are speaking the right language with regard to climate-related commitments, very few have set credible strategies that would help deliver on their pledges or have established quantitative KPIs that investors could monitor to track progress. Acuity Knowledge Partners has developed a proprietary net zero scoring framework designed to support clients in assessing and comparing net zero pledges across companies, and identifying potential attempts at greenwashing.

Key Takeaways

1.Investors wanting to target/invest in net zero issuers should make detailed assessments of corporate decarbonisation and net zero commitments to identify firms with effective/meaningful plans that are best prepared to transition to, and function in, a low-carbon economy. This could be achieved through the use of robust and comprehensive scoring frameworks.

2.Acuity Knowledge Partners’ (Acuity’s) proprietary net zero scoring framework looks beyond headline net zero targets, which may appear similar across companies but differ significantly in terms of details and execution. Our scorecard captures these nuances and systematically ranks corporates on a four-point rating scale ranging from “net zero early adaptor” to “net zero laggard”.

3.Our comprehensive scoring criteria covers 14 qualitative and quantitative factors across four pillars and offers clients a standardised tool to compare net zero pledges across companies, sectors and geographies. It functions as a guide for pro-climate investors to enhance decision making regarding capital reallocation aligned with a low-carbon economy.

Lourdeena Kudaliyanage

Lourdeena Kudaliyanage

Assistant Director, CFA

Lourdeena Kudaliyanage has over 12 years of experience in investment research. At Acuity Knowledge Partners, she is part of the Fixed Income and Credit Research team in the Investment Research division, currently supporting a European client. During her tenure at Acuity, Lourdeena has worked for leading buy side and sell side firms covering multiple sectors, focusing primarily on frontier and emerging markets, with expertise in thematic and company research. She is a CFA charterholder and holds a BSc Econ (Hon.) and MSc in Financial Management from the University of London.

The path to net-zero: investor scorecards to assess corporate preparedness

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