The Steps to Net-Zero Emissions
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Net-Zero Emissions: The Steps Companies and Investors Can Consider

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Net-Zero emissions

The Steps to Net-Zero Emissions

To help prevent the worst effects of climate change, a growing number of companies are pledging to achieve net-zero emissions by 2050. In fact, the percentage of companies declaring a net-zero target nearly doubled from 2019 to 2020.

With urgency building, how can companies and investors approach net-zero emissions? The above infographic from MSCI highlights the steps these two groups can take, from defining a strategy to reporting progress.

Net-Zero Emissions: A Clear Process

Setting a net-zero emissions target means reducing carbon emissions to the greatest extent possible, and compensating for the remaining unavoidable emissions via removal.

Companies and investors can take four broad steps to move toward their targets.

1. Define Strategy

To begin, companies can measure current emissions and identify priority areas where emissions can be reduced. For example, ABC chemical company determines that its greenhouse gas (GHG) emissions far exceed those of its competitors. In response, ABC chemical company prioritizes reducing GHG emissions during material processing.

Similarly, wealth and asset managers can assess climate risks:

  • Risks of transitioning to a net-zero economy
  • Risks of extreme weather events

They can then map out a strategy to curb climate risk. For example, XYZ asset manager determines that 33% of its portfolio may be vulnerable to asset stranding or some level of transition risk. XYZ decides to lower its transition risk by aligning with a 1.5 degrees Celsius (2.7 degrees Fahrenheit) warming scenario.

2. Set Target

With a strategy set, companies can pledge their net-zero emissions commitment and set interim goals. They can also specify how their pledge will be achieved. For example, ABC chemical company could set a net-zero emissions target by 2050. To increase short-term accountability, they set an interim target to halve carbon emissions by 2035.

Wealth and asset managers can also set targets and interim goals, as they apply to their portfolios. For instance, XYZ asset manager could set a goal to decarbonize its portfolio 5% by 2025, and 10% by 2030. This means that the companies within the portfolio are reducing their carbon emissions at this rate.

ScenarioWarming Potential
Business as usual3.6℃ (6.5℉)
10% decarbonization1.5℃ (2.7℉)

As shown above, a 10% year-on-year decarbonization will align XYZ asset manager’s model portfolio with a 1.5 degrees Celsius warming scenario.

3. Implement

ABC chemical company takes immediate action consistent with its interim targets. For instance, the company can start by reducing the carbon footprint of its processes. This approach carries the lowest risks and costs. But to take larger strides toward its net-zero emissions goal, ABC could draw on renewable energy together with carbon-removal technologies as they are developed.

In the same vein, XYZ asset manager can move toward its decarbonization targets by adopting a benchmark index and reallocating capital. This could include:

  • Increasing investment in clean technologies
  • Re-weighting securities or selecting those that are “best in class” for ESG metrics
  • Reducing risk exposure and targeting companies for shareholder engagement
  • Selling holdings in companies with the greatest exposure

All of these actions will help XYZ become better aligned with its investment strategy.

4. Track and Publish Progress

Here, the actions for companies and investors converge. Both groups can measure and monitor progress, disclose results, and adjust as necessary.

For example, XYZ asset manager shares the following year-end results of its decarbonization strategy. The results compare the portfolio and its benchmark on their implied temperature rise and exposure to low-carbon transition categories.

 PortfolioBenchmarkDifference 
(Portfolio - Benchmark)
Implied temperature rise3.2℃ (5.8℉)3.4℃ (6.1℉)-0.2℃ (-0.4℉)
Exposure to companies classified as:
Asset stranding0.0%0.5%-0.5%
Product transition6.1%8.1%-2.0%
Operational transition5.2%7.0%-1.8%
Neutral77.6%77.8%-0.2%
Solutions11.1%6.6%+4.5%

Asset stranding is the potential for an asset to lose its value well ahead of its anticipated useful life because of the low carbon transition. Companies with product transition risk may suffer from reduced demand for carbon-intensive products and services, while companies with operational transition risk may have increased operational or capital costs due to the low carbon transition.

XYZ asset manager’s portfolio has less risk than the benchmark. XYZ has also significantly reduced its exposure to transition risk to 11.3%, down from 33% in step 1. However, with an implied temperature rise of 3.2 degrees Celsius, the portfolio is far from meeting its 1.5 degrees Celsius warming goal. In response, XYZ begins to intensify pressure on portfolio companies to cut their GHG emissions by at least 10% every year.

A Climate Revolution for Net-Zero Emissions

The time to drive the transition to net-zero emissions is now. By the end of this century, the world is on track to be up to 3.5 degrees Celsius warmer. This could lead to catastrophic flooding, harm to human health, and increased rates of mortality.

As of July 2021, just 10% of the world’s publicly listed companies have aligned with global temperature goals. Preventing the worst effects of climate change will demand the largest economic transformation since the Industrial Revolution. Companies, investors and other capital-market participants can drive this change.

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Visualizing Global Per Capita CO2 Emissions

33.6 Gt of CO2 was emitted across the world in 2019. Here we visualize the global per capita CO2 emissions by country and region.

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Highest Per Capita CO2 Emissions

Developing countries like China, India, and Russia are some of the highest producers of CO2 worldwide and will be so for a while. But the situation is far from straightforward—and looking at CO2 emissions per capita can add nuance to the overall story.

Based on data presented by the Aqal Group and the IEA, here we visualize the countries and regions with the highest per capita carbon emissions from around the world.

Let’s dive into the highest per capita carbon emitters and how they are trying to reduce their carbon contributions.

Leaders in Per Capita CO2 Emissions

Oil-producing countries in the Middle East are the highest emitters of CO2 on a per capita basis, but developed countries like the U.S., Australia, New Zealand, and Canada also have some of the higher rates of per capita emissions.

RankCountry or RegionCarbon Emissions Per Capita (t/year)
#1Middle East A*19.5
#2Canada15.2
#3Saudi Arabia14.5
#4United States14.4
#5Australia & New Zealand13.6
#6Russia11.4
#7South Korea11.3
#8Kazakhstan & Turkmenistan11.2
#9Taiwan10.8
#10Japan8.4
Global Average4.4

*Middle East A group includes Bahrain, Oman, Kuwait, Qatar, and United Arab Emirates

Canada and the United States have per capita carbon footprints of 15.2 and 14.4 tonnes per year, respectively. Meanwhile, Australia and New Zealand combine for an average per capita footprint of over 13.6 tonnes per year.

It’s worth noting that all of these numbers are more than three times higher than the global average, which in 2019 was 4.4 tonnes per person.

Energy Sources and Per Capita CO2 Emissions

Since there is a strong relationship between wealth and per capita CO2 emissions, we’d expect countries with high living standards to have a high carbon footprint.

But the data above shows significant differences in per capita emissions, even between countries with similar living standards. Many countries across Europe, for example, have much lower emissions than the U.S., Canada, or Australia.

Here’s a look at the top 25 countries by standard of living and their share of electricity production from fossil fuels:

RankCountryPer Capita Electricity
Consumption (kWh)
% Electricity Production
(from fossil fuels)
1🇫🇮 Finland12,17415.6%
2🇩🇰 Denmark5,01521.8%
3🇳🇴 Norway26,4921.2%
4🇧🇪 Belgium7,41434.6%
5🇸🇪 Sweden16,4782.2%
6🇨🇭 Switzerland7,9351.0%
7🇳🇱 Netherlands7,26471.5%
8🇫🇷 France8,0979.5%
9🇩🇪 Germany6,77143.8%
10🇯🇵 Japan7,44669.1%
11🇬🇧 United Kingdom4,50040.7%
12🇨🇦 Canada16,64816.6%
13🇰🇷 South Korea10,45865.8%
14🇺🇸 United States12,23560.1%
15🇹🇼 Taiwan11,09182.8%
16🇦🇹 Austria7,71620.7%
17🇦🇺 Australia9,85775.1%
18🇮🇪 Ireland6,40859.3%
19🇸🇬 Singapore8,54296.7%
20🇪🇸 Spain5,64134.4%
21🇮🇹 Italy4,55456.8%
22🇨🇿 Czech Republic7,53450.7%
23🇵🇹 Portugal5,10041.2%
24🇳🇿 New Zealand8,88018.9%
25🇱🇺 Luxembourg1,52928.5%

Sources: Electricity consumption, Fossil fuel mix

The choice of energy sources plays a key role here. In the UK, Portugal, and France, a much higher share of electricity is produced from nuclear and renewable sources.

For example, only 9.5% of France’s electricity production comes from fossil fuels, compared to other developed countries like the U.S. at 60.1% and Japan at 69.1%.

G20 Countries and Carbon Emissions

This reliance on fossil fuels for energy production extends to the rest of the G20 countries. According to the Climate Transparency Report, CO2 emissions will rise by 4% across the G20 group this year, dropping 6% in 2020 due to the pandemic.

This rise is mainly due to the increase in coal consumption across these countries. Coal consumption is projected to rise by almost 5% in 2021, with this growth driven by China (accounting for 61% of the growth), the U.S. (18%), and India (17%).

Here’s a look at the current coal power capacity of each G20 country:

coal power capacity of g20 members

Coal use in China has surged, with the country experiencing increased demand for energy as the global economy has recovered. Coal prices are up nearly 200% from a year ago.

Plans to Tackle Emissions

The conclusion of the U.N. Climate Change Conference (COP26) in Glasgow saw several pledges and announcements being made by various countries. Here are some of the highlights:

  • The world’s biggest CO2 emitters, the U.S. and China, pledged to cooperate more over the next decade in areas including methane emissions and the switch to clean energy.
  • Leaders from more than 100 countries—with about 85% of the world’s forests—promised to stop deforestation by 2030.
  • More than 100 countries agreed upon a scheme to cut 30% of methane emissions by 2030.
  • Financial organizations have agreed to back renewable energy and direct finance away from fossil fuel-burning industries.

Many countries have pledged to do their part to tackle climate change. It will be an impressive display of global unity if global CO2 emissions drop significantly over the next decade.

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Visualizing the Accumulation of Human-Made Mass on Earth

The amount of human-made (or anthropogenic) mass, has now exceeded the weight of all life on Earth, including humans, animals, and plants.

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Visualizing the Accumulation of Human-Made Mass on Earth

This was originally posted on Elements. Sign up to the free mailing list to get beautiful visualizations on natural resource megatrends in your email every week.

The world is not getting any bigger but the human population continues to grow, consuming more and more resources and altering the very environment we rely on.

In 2020, the amount of human-made mass, or anthropogenic mass, exceeded for the first time the dry weight (except for water and fluids) of all life on Earth, including humans, animals, plants, fungi, and even microorganisms.

In this infographic based on a study published in Nature, we break down the composition of all human-made materials and the rate of their production.

A Man-made Planet

Anthropogenic mass is defined as the mass embedded in inanimate solid objects made by humans that have not been demolished or taken out of service—which is separately defined as anthropogenic mass waste.

Over the past century or so, human-made mass has increased rapidly, doubling approximately every 20 years. The collective mass of these materials has gone from 3% of the world’s biomass in 1900 to being on par with it today.

While we often overlook the presence of raw materials, they are what make the modern economy possible. To build roads, houses, buildings, printer paper, coffee mugs, computers, and all other human-made things, it requires billions of tons of fossil fuels, metals and minerals, wood, and agricultural products.

Human-Made Mass

Every year, we extract almost 90 billion tons of raw materials from the Earth. A single smartphone, for example, can carry roughly 80% of the stable elements on the periodic table.

The rate of accumulation for anthropogenic mass has now reached 30 gigatons (Gt)—equivalent to 30 billion metric tons—per year, based on the average for the past five years. This corresponds to each person on the globe producing more than his or her body weight in anthropogenic mass every week.

At the top of the list is concrete. Used for building and infrastructure, concrete is the second most used substance in the world, after water.

Human-Made MassDescription1900 (mass/Gt)1940 (mass/Gt)1980 (mass/Gt)2020 (mass/Gt)
ConcreteUsed for building and infrastructure, including cement, gravel and sand21086549
AggregatesGravel and sand, mainly used as bedding for roads and buildings1730135386
BricksMostly composed of clay and used for constructions11162892
AsphaltBitumen, gravel and sand, used mainly for road construction/pavement 012265
MetalsMostly iron/steel, aluminum and copper131339
OtherSolid wood products, paper/paperboard, container and flat glass and plastic461123

Bricks and aggregates like gravel and sand also represent a big part of human-made mass.

Although small compared to other materials in our list, the mass of plastic we’ve made is greater than the overall mass of all terrestrial and marine animals combined.

Human-Made Mass Plastic

As the rate of growth of human-made mass continues to accelerate, it could become triple the total amount of global living biomass by 2040.

Can We Work It Out?

While the mass of humans is only about 0.01% of all biomass, our impact is like no other form of life on Earth. We are one of the few species that can alter the environment to the point of affecting all life.

At the current pace, the reserves of some materials like fossil fuels and minerals could run out in less than 100 years. As a result, prospectors are widening their search as they seek fresh sources of raw materials, exploring places like the Arctic, the deep sea, and even asteroids.

As the world population continues to increase, so does the pressure on the natural environment. It is an unavoidable fact that consumption will increase, but in an era of net-zero policies and carbon credits, accounting for the human impact on the environment will be more important than ever.

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