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Firms’ net-zero plans are key to meeting climate goals

Wednesday, December 23, 2020

Significance

To achieve the 2015 Paris agreement climate targets, greenhouse gas (GHG) emissions must be net-zero by 2050. While the Paris agreement was a commitment by governments, businesses account for a substantial proportion of emissions. Firms have often had to plan without clear government guidance.

Impacts

  • The Network of Central Banks for Greening the Financial System has 83 members; the US Fed joining this month may give the scheme impetus.
  • The United Kingdom, euro-area and Australia plan to stress test the impact of climate change on financial stability; others may follow.
  • Banks will target net-zero emissions by 2050 from loans, deals and operations; Barclays, HSBC and JP Morgan have made plans since October.
  • Better tools to measure the emissions indirectly produced or financed by firms will help executives adopt more targeted strategies.
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