Investment firms’ carbon targets and their alignment with power and utility assets - A portfolio view to energy transition strategy

Abstract

The world leaders both in public and private sectors have agreed to set a 1.5 °Celsius ceiling to the global warming and the greenhouse emissions. The commitments to these goals are both voluntary and binding and are designed to lead mid-century anthropogenic emissions to balance to zero. The carbon zero targets can open us a solution and a pathway for change but also, they can be misleading and ambiguous. An important emissions source related to carbon neutrality is carbon-intensive power and utilities. Over 80 % of these critical energy infrastructures are private sector owned and governed by the investment firms and capital markets. In this article we study the connection between the investment firm's carbon targets and their power and utilities company portfolios. The analysis clearly indicates a disconnect between the owner and the assets. Also, investment firm's own operations related carbon targets are highlighted with less emphasis and transparency on total portfolio or asset-based carbon strategies. The high impact activities and alignment with the indicated carbon zero strategies were not transparent and the various indicators showed compelling evidence of lack of positive progress and reaching the targets committed.