Ceres releases new resource for investors on understanding avoided emissions

Today Ceres released a new report for investors focused on how avoided carbon emissions can be used to identify solutions that address climate risks and investment opportunities arising from the shift to a low-carbon economy. The report, Investing in the Future: Unlocking Value Through Avoided Emissions, is designed to equip investors with the knowledge and tools needed to understand and calculate avoided emissions - the metric for expected emissions that a climate solution prevents or saves in place of a higher-carbon product or service in the market.   

“While current resources on avoided emissions for investors are sparse, this new research is a critical step in filling that gap,” said the Rev. Kirsten Snow Spalding, Vice President, Ceres Investor Network, Ceres. “By gaining insight into avoided emissions, investors can capitalize on the transition to a low-carbon economy by unlocking key investment opportunities in emerging projects, products, and technologies.” 

The increasing level of carbon emissions is affecting global supply chains, consumer behavior, and regulatory landscapes. Lowering carbon emissions in the U.S. and globally will require substantial investment – an estimated $125 to $275 trillion by 2050. Demand for these emerging industries, technologies, products, and services is likely to increase, catalyzed by key government incentives that help de-risk these investment opportunities and make them more attractive to private capital.  

As our report notes, investors seeking opportunities for competitive risk-adjusted returns can capitalize on the growing demand to address climate risk by investing in projects that help avoid the emissions that would otherwise have been produced. Avoided emissions is a separate and complementary concept to the widely used strategy of measuring emissions – or carbon footprint - and estimates the emissions impact of investments on the real economy. 

“Increasing investment into low carbon technologies is an essential part of the world’s journey to achieve zero greenhouse gas emissions by midcentury. And measuring the emissions avoided as a result of these technologies is key to understanding the impact of those investments,” said Julie Gorte, Senior Vice President, Sustainable Investing, Impax Asset Management. “However, measuring avoided emissions can be tricky, and it’s common to overestimate them. To help make investment choices and deliver returns for our investors, we need accurate measuring for avoided emissions. Ceres’ report helps investors to understand how these emissions can be counted accurately and to distinguish the real impact of climate solutions that deliver investment returns for clients.”  

This Ceres report presents avoided emissions as an additional metric that complements investor decarbonization efforts and adds value to investment decision-making. While not yet widely used by investors, the use of avoided emissions can help identify investment opportunities, address misperceptions about net zero pathways, potentially improve portfolio value, and provide more information to stakeholders.  

This resource includes an investor toolkit offering steps for calculating avoided emissions and questions for investors to ask their portfolio companies to better understand the assumptions used in the calculation. This information can be used by investors to direct their capital towards solutions with both the greatest upside potential and greatest emissions reduction impact.  

Download our full analysis here. 

About Ceres  

Ceres is a nonprofit advocacy organization working to accelerate the transition to a cleaner, more just, and sustainable world. United under a shared vision, our powerful networks of investors and companies are proving sustainability is the bottom line—changing markets and sectors from the inside out. For more information, visit ceres.org.