Carbon emission stabilisation 'reframes' investment climate risk: Emmi

Latest modelling from Emmi indicates carbon emissions may plateau within the next two years before gradually declining, signalling the first ever emission stabilisation outside an of economic crisis.

According to its in-house research Carbon in Reverse, reductions in the US and Europe now outweigh growth in India, while China, the world's largest emitter, has likely reached a plateau.

As a result, for the first time, the carbon footprint of global listed equites has declined by 2.5%.

Global CO₂ emissions are expected to plateau with peak emissions of 36.90 ± 0.61GtCO₂ per year expected around 2027, followed by a gradual decline of 0.12 GtCO₂ per year through 2030.

The peak emerges from developed economies' deep emissions cuts more than offsetting developing world growth, with structural declines in the carbon-intensity of economic growth in China and the rest of the world tipping the global balance toward decline, Emmi said.

Emmi said the plateau should, however, "not be mistaken for success", as it is still far above the targets of the 1.5°C or 2°C pathways, demonstrating more work still needs to be done.

These include the shadow carbon pricing being enacted through market mechanisms, government policies, and corporate decisions, Emmi said.

Companies that thrive through fossil fuel demand will face "accelerated stranded asset risks" as the growth phase ends.

Investment strategies now need to account for different regional trajectories, inclusive of India's continued growth in emission, China's plateau, and declines in other developed markets, it said.

"Institutional investors must act decisively in this window of opportunity, accelerating capital allocation toward net-zero transitions, enforcing regulatory consistency, and integrating carbon risk into all levels of financial planning," the report said.