Net‐Zero Investment Strategies Need an Absolute Emission Reduction Metric
Bibliographic Data
| ID | 22418619 |
|---|---|
| Authors | Andreas G F Hoepner (0000-0002-4311-2403, Smurfit Graduate Business School University College Dublin Dublin Ireland), Stefan Jacob (0009-0001-4876-761X, Faculty of Business Administration and Economics University of Augsburg Augsburg Germany), Sarah Koch (0000-0001-9461-8407, Faculty of Business Administration and Economics University of Augsburg Augsburg Germany, corresponding author), Marco Wilkens (0000-0003-1939-5914, Faculty of Business Administration and Economics University of Augsburg Augsburg Germany), Jonas Zink (0000-0002-2817-2694, Versicherungskammer Tecta Invest GmbH Munich Germany) |
| Year | 2026 |
| Publication date | 2026-07-15 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Business Strategy and the Environment (JOURNAL) |
| Journal identifiers | ISSN: 0964-4733 • E-ISSN: 1099-0836 |
| Publisher | Wiley (PUBLISHER • GB) |
| DOI | 10.1002/bse.71301 |
| OpenAlex | W7168722864 |
| Language | EN |
| References cited | 16 |
The climate crisis calls for rapid absolute reductions in greenhouse gas (GHG) emissions, requiring significant capital reallocation. In the financial industry, net‐zero investment strategies are mostly guided by relative carbon intensity (CI) metrics rather than absolute GHG emissions. We show that such net‐zero oriented investments can be misleading, cause insufficient investor action, and delay meaningful emission reductions. We propose two solutions: first, the rigorous and universal application of an inflation‐adjusted CI metric that accounts for changes in a key financial fundamental relative to the portfolio inception year. Second, we propose the addition of absolute GHG emission limits at portfolio inception. These measures will better align net‐zero investment strategies with real‐world absolute GHG emissions targets and avoid “emission intensity loopholes” as large as the GHG emissions of the Netherlands and Sweden together.
Emission intensity · Financial crisis · Greenhouse gas · Portfolio · Tonne · Atmospheric and Environmental Gas Dynamics · Climate Change Policy and Economics · Sustainable Finance and Green Bonds
| Citation velocity | historical |
|---|---|
| Highly cited | No |