- HL has seen flows into ESG funds rise 11.8% over the past year compared to a 1.87% uplift in all funds during the same period.
- Net zero week offers renewed momentum to the global push toward net zero, underscoring the investment risks and opportunities that come with a large-scale energy transition.
- This week is another reminder that you can invest in line with your values without necessarily sacrificing returns.
Laura Hoy, ESG analyst, Hargreaves Lansdown:
“Many of the world’s largest companies have released plans to decrease their carbon emissions. However, it’s vital for investors to scrutinise these strategies to determine whether the companies they invest in are capable of surviving and thriving in a more sustainable world.
Lacklustre net zero plans should cause you to ask serious questions about how the company is governed. Worse still, if transition plans are deemed misleading, it could lead to litigation. Oil and gas giant Shell is already battling angry shareholders on several fronts thanks to accusations that its transition disclosures are inadequate and misleading.
What should you look for in a credible net zero plan?
Action and implementation are what set companies apart. Net zero should be considered in everything from financial implications to its effect on company policies. Businesses serious about reducing emissions will also look to have an impact outside their own four walls. That means setting up plans to engage with customers and suppliers, working with industry leaders to create meaningful change, and even liaising with the government where needed.
Accountability is another key factor. Board-level oversight is an essential component, as is a clear designation of responsibility throughout the management chain. Net zero targets should be aligned to compensation requirements to encourage management to step up to the plate and embed net zero into the company culture.
Mondi’s carbon commitments shine
The paper and pulp industry is energy intensive. From running the machines that grind pulp to the high heat needed for paper drying, its and industry that will see a marked impact as net zero progresses. Mondi has set scope 1,2&3 net zero targets aligned to a 1.5 degree scenario, and the group’s worked hard to integrate them into the wider strategy. Its commitment to net zero has been integrated into top-level decision making, with sustainability goals linked to executive bonuses.
At present, Mondi powers about 80% of its mills using waste biproducts from the pulp-making process. The other 20% comes from natural gas and coal. The group’s working to continue chipping away at that 20% by improving its energy independence and shifting more reliance onto renewable biomass.
With its targets firmly in place, the group’s building out an engagement process that will help suppliers and customers reduce their emissions as well. Mondi is also part of a handful of industry associations working to address issues like climate change and biodiversity.
Mondi’s got the bones of a solid net zero strategy in place, and its commitments are underpinned by integration across the business. The group’s strong disclosure means investors can keep tabs on performance against these targets to monitor their execution.
AstraZeneca steps ahead on scope 3
For some industries, transitioning to net zero within their own operations is less of an undertaking. That’s because most of the greenhouse gasses come from their suppliers or the use of their products. This was the case for pharmaceutical giant AstraZeneca, whose scope 3 footprint is about 20 times that of its scope 1 and 2 emissions combined. That meant although Astra committed to an ambitious 98% reduction by 2026, the impact would be relatively muted if scope 3 was ignored.
With that in mind, AstraZeneca set a target to halve its scope 3 emissions by 2030 and reduce them by 90% by 2045. To get there, the group’s requiring that suppliers across key areas set their own science-based net zero targets. By engaging with its supply chain, AstraZeneca is accelerating our collective progress toward net zero while significantly improving its own impact.
The group’s also been looking at how it can rethink its products to reduce their impact once they’re in consumers’ hands. The greenhouse gasses used in inhalers are significant contributors to climate change, with studies showing they make up some 13% of the NHS’s delivery of care carbon footprint. That’s led AstraZeneca to redesign its inhalers and roll-out lower carbon alternatives beginning in 2025.“
