Six insights on investing for net zero

This briefing from the Stockholm Environment Institute outlines six insights for investors aiming to align their portfolios with the Paris Agreement's net-zero goals. It argues that while divestment is a common strategy, investors may achieve greater impact by using their financial power to coordinate the decarbonization of four high-emitting sectors: oil and gas, agricultural commodities, steel, and cement.

• To achieve net-zero targets, investors must demand immediate action from companies to avoid investing in long-lived polluting assets and to implement yearly emissions improvements based on science-based targets. Specifically, no new investments in expanding aggregate production in the oil and gas sector are compatible with global climate targets, and agricultural commodity companies must eliminate deforestation from their supply chains.
• Investors can drive the transition in heavy industry and agriculture by engaging across value chains. This includes encouraging the transport and construction sectors to pay the higher costs of green steel and cement, and working with food value chain companies to develop business models that incorporate sustainable production costs.
• Investment strategies should prioritize sector-wide alignment over isolated company actions to prevent 'offloading' polluting assets. For example, oil and gas companies might sell polluting assets to actors who will not reduce emissions, and agricultural buyers might avoid emissions-intensive regions without changing the underlying unsustainable practices.
• The effectiveness of engagement versus divestment in the oil and gas sector remains unclear, as evidence for cost-of-capital impacts from divesting public stocks is not strong. However, divestment may reduce the industry's social license and political influence. Investors are encouraged to stop financing debt for new oil and gas exploration and development.
• Beyond general trajectories and targets, investor coalitions should coordinate around concrete sectoral actions. Examples include setting targets for the number of carbon capture and sequestration (CCS) projects in the cement sector or the share of oil and gas production fields moving into planned production decreases.

APA

Maltais, A., Gardner, T., Godar, J., Lazarus, M., Mete, G., & Olsson, O. (2021). Six insights on investing for net zero. Stockholm Environment Institute. https://www.sei.org/wp-content/uploads/2021/10/sei-brief-six-insights-net-zero-maltais-281021.pdf

Chicago

Maltais, Aaron, Toby Gardner, Javier Godar, Michael Lazarus, Gökçe Mete, and Olle Olsson. Six insights on investing for net zero. Stockholm Environment Institute, 2021. https://www.sei.org/wp-content/uploads/2021/10/sei-brief-six-insights-net-zero-maltais-281021.pdf.

Wikipedia

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BibTeX

@techreport{maltais2021six, author = {Maltais, Aaron and Gardner, Toby and Godar, Javier and Lazarus, Michael and Mete, Gökçe and Olsson, Olle}, title = {{Six insights on investing for net zero}}, institution = {Stockholm Environment Institute}, year = {2021}, month = oct, url = {https://www.sei.org/wp-content/uploads/2021/10/sei-brief-six-insights-net-zero-maltais-281021.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }