Investor group launches sector-based net-zero strategy

August 6, 2021

Climate Action 100+ this week launched plans for sector-by-sector decarbonisation starting with the steel industry, which is responsible for around 9% of total global emissions.

The ‘Global Sector Strategies’ report will inform the actions of each member investor group of the Climate Action 100+. It aims to facilitate constructive engagement between investors and producers, focussing on high-emitting sectors.

The initiative marks the first time that sector-level decarbonisation efforts have been led by the investor group. Starting with the steel industry, the climate investor group plans to target food and beverage, electric utilities, trucks, and mining.

To align with the International Energy Agency’s Net-Zero by 2050 scenario, the steel sector’s net Scope 1 emissions must reduce by 29% by 2030 and 91% by 2050, Climate Action 100+ said. However, the industry is currently set to miss these targets by some margin.

While there is a willingness to begin transitioning, with nine companies representing 20% of global steel production setting net-zero emission commitments, these companies are concentrated in Europe and Asia, reflecting national net-zero pledges and existing regulations.

However, the Climate Action 100+ strategy found that it was feasible for the global industry to reach net-zero through coordinated action across value chains and regions, and by scaling up emerging technologies.

As such, the investor group has outlined several priority actions, including short-, mid-, and long-term decarbonisation targets; feasibility assessments for emerging technologies; aligning capital expenditure with net-zero strategies, and specifying policy positions that will accelerate their transition plans.

Stephanie Pfeifer, IIGCC’S chief executive and a Climate Action 100+ steering committee member, said there was no “silver bullet solution” to help the industry hit the IEA’s Net-Zero by 2050 scenario.

She said: “We cannot afford to delay action – while emerging technology has a role to play, the IEA’s report highlights that existing technology can deliver 85% of the emissions reductions needed by 2030.

“Investors need to see interim targets from companies and then detail on how they will deliver these in the short- and mid-term, so they can accurately assess how prepared they are for the net-zero transition.”