ESG Investing

Embracing Climate Positive: Taking Net-Zero to the Next Level

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In the fight against climate change, remaining neutral—carbon neutral—may no longer be enough. In its place comes the concept of “climate positive,” which advances hitherto net-zero goals to the next level by removing more carbon than is produced.

This notion is moving up the corporate agenda in many industries as it wins the approval of companies and national governments alike. For investors, embracing climate positivity offers yet another opportunity to turn up the heat on climate change and maximize impact, pushing stakeholders to go beyond what is regulated to what is needed.

Going Climate Positive

Although a paradoxical set of terms, “carbon negative” and “climate positive” are one and the same. A climate-positive approach aims for a more ambitious goal than reaching carbon neutrality—actually reducing emissions by more than it produces.

To begin implementing this, a business will calculate the total amount of greenhouse gas emissions created by the production and operation of a product or service before looking to mitigate those emissions. For instance, the company may switch to renewable energy sources and reduce the carbon footprint of its distribution, supply chain, and raw materials.

Alternatively, the business may purchase a surplus of carbon credits. According to climate-positive theory, this means that the company becomes responsible for fewer emissions than its processes create, effectively making its existence and operations a net benefit to the environment.

A climate-positive approach aims for a more ambitious goal than reaching carbon neutrality—actually reducing emissions by more than it produces.

Achieving Progress from Burberry to Burgers

For instance, Burberry has pledged to become climate positive by 2040 and aims to lower its emissions by 46% before this deadline by reducing “emissions across its extended supply chain” and “investing in nature-based projects with carbon benefits that restore and protect natural ecosystems and enhance the livelihoods of global communities.”

Swedish hamburger restaurant chain MAX is now offering climate-positive burgers to back up its declaration that it would not stop its efforts at climate neutrality. Here, too, the company measures its product emissions and implements a variety of measures to cut those greenhouse gas emissions before capturing “at least 110%” of them by planting trees to absorb and store CO2.

IKEA has also taken up the climate positive goal, declaring “By 2030, our goal is to reduce the absolute greenhouse gas emissions from the IKEA value chain by at least 15% compared to FY16, while still growing the IKEA business.” The company’s plan points to several dimensions of green manufacturing, including design and material changes as well as striving toward 100% renewable energy.

Countries are also signing on to climate positivity. Bhutan and Suriname—both already carbon negative—took the 2021 United Nations Climate Change Conference as an opportunity to sign a formal alliance with Panama, which is on its way to certification. The union calls for greater support of other carbon-negative nations yet to emerge.

Answering Climate Positivity’s Call

Wealth managers and personal investment firms alike have moved to respond to the increasing interest in climate positive initiatives. “From green savings bonds to green gilts, to green liquid and illiquid investments, and ultimately green pensions—individuals in the UK can direct their money to short and long-term climate positive goals,” says Aviva Investors ESG Analyst Richard Butters.

Nevertheless, there is still a considerable way to go. According to a 2020 study of the Fortune Global 500’s climate commitments, carbon-neutral action and targets outnumbered their climate-positive counterparts by 17 to 1, and only five of the companies directly referred to “positive” targets.

Ultimately, this opens the door for impact investors and ESG enthusiasts to drive support of climate-positive action. Moving beyond neutrality invites a swathe of resources, tools, and opportunities to help achieve long-term sustainability goals.

Any company, security, fund or other investment identified herein is provided solely for illustrative purposes and should not be construed as a recommendation or solicitation for the purchase or sale of any such investment.

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