Commenting on the need for net zero transition plans that focus on real world outcomes, Mhairi Gooch, Senior Responsible Investment Consultant and Net Zero Lead at Hymans Robertson, says:

“As we reflect on some of the outtakes from the first week of COP 27 it is clear, policy and action to tackle climate change remain vastly disconnected and this needs to change. For leaders in the global north to talk about ‘hope’ is surely an insult to the global south. Hope alone will do nothing and needs to be superseded by meaningful action. The transition to net zero can not be achieved by working in silos so all groups whose operations can or, do have a real world impact, need to develop clear understanding around how to properly invest in the transition to net zero.

“Investors like UK pensions schemes could collectively have great influence. The UK pensions market has more than £2trn of assets in a variety of asset classes. But our research shows there is significant room for improvement in levels of engagement around net zero strategies and training. This may be why tactics like divestment are less likely to be critically assessed and their ability to effect real world change is misunderstood.

“The role of Stewardship, is a way investors can use their position to positively influence the companies they’re invested in. With the right plans in place they can not only effectively manage portfolio risk but importantly the real-world impact of their assets, particularly those in classes that are traded via secondary markets.

“An effective net zero transition needs to look forward, invest in the transition and focus on both effective stewardship and investments in solutions to bring about change in the real economy. We need to look forward and focus on actions that actively reduce emissions in the real economy rather than simply tilting portfolios away from the high emitters of today. In the long term this, is how we will ensure our environment, society and consequently our economic and financial systems survive.”