Avoided emissions: how investors can judge companies’ net-zero credentials

The increasing frequency and severity of weather-related events due to climate change has highlighted the urgent need to take action and achieve net-zero greenhouse gas (GHG) emissions by 2050.1 Investors can turn to “avoided emissions” – the positive impact of a more sustainable product or service – to assess which potential investments can make the most significant contribution to achieving this target.

Key takeaways

- Avoided emissions reflect emissions savings achieved by a product, service, or project in wider society. Avoided emissions is a key complementary metric to more established scope 1, 2 and 3 measures.
- Climate solutions such as solar, wind, grid technologies and sustainable biogas are key to boosting avoided emissions.
- There is a lack of methodological clarity around avoided emissions, but greater application across private and public markets will formalise measurement approaches.
- Measures of avoided emissions can help channel investment to solutions that make the most significant contribution to achieving net zero emissions by 2050.