Net Zero in the Balance (2024)

Achieving net zero—the future state where greenhouse gas emissions and removals are balanced—requires transformational changes globally on a massive scale and at a swift pace. Financing this transition poses a key challenge, with trillions of dollars needed over the next three decades. Pointing to both the financial risks of climate change and the potential returns to investors in addressing this challenge, policymakers and the public are looking to the investment industry for help.

“Net Zero in the Balance: A Guide to Transformative Industry Thinking” aims to help the investment industry understand and fully implement net-zero investing. It provides research, insights, and tools for industry leaders, asset managers, asset owners, service providers, and regulators that emphasize the strategic importance of net-zero investing and the imperative for a mindset shift and innovative strategies to achieve net zero without compromising returns.

Addressing net zero within a financial system that is focused on risk and return is complex. CFA Institute aims to fill the gap in education on net zero, promote and develop best practices, and support policy development in this area, acknowledging that investment objectives ultimately lie with the end client.

While this guide targets primarily individuals and organizations that are already committed to net-zero investing, it is also a resource for those considering such commitments. Net-zero investors are one of many segments of investors.

Among the guide’s key findings are the following:

• Frameworks are essential for putting net-zero investing into practice. Frameworks recognize net-zero investing as part of sustainable finance, with asset owners making commitments within their fiduciary responsibility and asset managers implementing these commitments.
• Innovations are necessary for wider adoption of net-zero investing, including balanced scorecards, total portfolio thinking, and an expanded version of stewardship.
• Investment strategies for net-zero investing must balance net-zero goals with risk and return goals. Essential components of such strategies include consideration of government and regulatory policies, engagement with other stakeholders, and enhancement of organizational capabilities.

The following experts participated in extensive discussions on the content of this research. The author owes a considerable debt of gratitude to these individuals who brought insight, validation, and challenge to the research process.

Any errors or omissions are the author’s alone

Jane Ambachtsheer is global head of sustainability at BNP Paribas Asset Management

David Atkin is the CEO of the Principles for Responsible Investment.

Duncan Austin was a partner at Generation Investment Management before he became a freelance writer and researcher on sustainability and systems thinking.

David Blood is a founding partner and the senior partner of Generation Investment Management.

Elizabeth Corley, DBE, CBE, is chair of Schroders plc, chair of the Impact Investing Institute, and a director of the Green Finance Institute.

Margaret Franklin, CFA, leads CFA Institute and its nearly 200,000 members worldwide in promoting the highest standards of education, ethics, and professional excellence in the investment profession.

Tom Gosling is an executive fellow in the Department of Finance at London Business School.

Danyelle Guyatt, PhD, leads Climate Insight, a specialist consultancy and research firm focused on best practices in the investment management process.

Catherine Howarth OBE has led ShareAction as chief executive since 2008.

Ma Jun, PhD, is founder and president of the Institute of Finance and Sustainability, based in Beijing.

Mark Konyn, PhD, is AIA Group’s chief investment officer, responsible for providing oversight of the organization’s investment portfolios and investment professionals.

Claudia Kruse is chief of sustainability and strategy at APG Asset Management.

Sonja Laud, CFA, is chief investment officer at Legal & General Investment Management (LGIM) and a member of its Executive Team.

Linda-Eling Lee is head of the MSCI Sustainability Institute and leads the organization’s work to drive progress by capital markets to create sustainable value.

Mindy Lubber is CEO and president of the sustainability nonprofit organization Ceres, which works to mobilize the most influential investors and companies to drive action on the world’s greatest sustainability challenges.

Jon Lukomnik is adjunct professor of international and public affairs and the Brandmeyer Fellow for Impact and Sustainable Investing at Columbia University.

Will Martindale is co-founder and managing director at Canbury.

Hiro Mizuno is a financial executive who has served as the special envoy of UN Secretary-General on Innovative Finance and Sustainable Investments since January 2021.

Russell Picot is chair of the Universities Superannuation Scheme Investment Committee and chair of the HSBC Bank (UK) Pension Scheme.

Anne Simpson is global head of sustainability for Franklin Templeton.

Daisy Streatfeild is the sustainability director at Ninety-One.

Alison Tarditi is Commonwealth Superannuation Corporation’s chief investment officer.

Matt Whineray is the chair of First Cape, a newly formed wealth and asset management firm based in New Zealand.

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