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80-625: The New Zealand Superannuation Fund ( Māori : Te Kaitiaki Tahua Penihana Kaumātua o Aotearoa ) is a sovereign wealth fund in New Zealand . New Zealand currently provides universal superannuation for people over 65 years of age and the purpose of the Fund is to partially pre-fund the future cost of the New Zealand Superannuation pension, which is expected to increase as a result of New Zealand's ageing population. The fund

160-624: A special-purpose acquisition company in a deal that valued the company at $ 2.2 billion. During August 2015, The New Zealand Superannuation invested US$ 75 million into American-based electrochromic glass company View with a percentage owned not being released. On Feb, 28th 2014, The Fund sold 2.5% of its stake in the Kaingaroa Timberlands Partnership to the Kakano Investment Limited Partnership, reducing its share from 41.25% to

240-591: A "decent pledge". The UN Race to Zero campaign calls them "starting line criteria". This states that they must have a "plan and published evidence of action taken towards reaching the target" besides a stated pledge. One of the main reasons for the low credibility of many net zero claims is their heavy reliance on carbon credits. Carbon credits are often used for offsetting. They reduce or remove emissions of carbon dioxide or other greenhouse gases in order to compensate for emissions made elsewhere. Many fossil fuel companies have made commitments to be net zero by 2050. At

320-631: A 2007 report from the Transnational Institute , Kevin Smith likened carbon offsets to medieval indulgences. He said they allowed people to pay "offset companies to absolve them of their carbon sins." He said this permits a "business as usual" attitude that stifles required major changes. Many people have criticized offsets for playing a part in greenwashing . This argument appeared in a 2021 watchdog ruling against Shell . Loose regulation of claims by carbon offsetting schemes combined with

400-530: A 2014 study, SWFs are not created for reasons related to reserve accumulation and commodity-export specialization. Rather, the diffusion of SWF can best be understood as a fad whereby certain governments consider it fashionable to create SWFs and are influenced by what their peers are doing. As market participants, SWFs influence other institutional investors, who may see investments made alongside SWFs as inherently safer. This effect can be seen with increasing frequency, especially with regard to investments made by

480-525: A 38.75% stake in the Kaingaroa partnership. Other investments include a 7,943,351 share (0.71%) stake in partially state-owned and controlled (51.95% - state-owned portion) company Air New Zealand . The Super Fund also holds a 37.59% stake in Datacom Group . The Fund occasionally cooperates with outside companies to develop projects. The Superfund maintains a list of excluded companies similar to

560-646: A base year to measure emissions reductions against. This should be representative of their typical greenhouse gas profile. They should explain the choice of baseline and how they will account for changes in conditions since the baseline. Financial organizations should also include emissions within their portfolio . This should include all organizations they have financed, invested in, or insured. Countries and regions should include both territorial emissions released within their boundaries and consumption emissions related to products and services imported and consumed within their boundaries. Cities and countries pose

640-412: A baseline or status quo. But they do not remove emissions from the atmosphere. Weak standards such as ISO and BSI "carbon neutrality" standards allow organizations to use avoided-emissions carbon credits. They do not specify how permanent or durable a credit must be. Carbon offsetting has been criticized on several fronts. One important concern is that offsets may delay active emissions reductions. In

720-734: A central bank, which accumulates the funds in the course of its management of a nation's banking system; this type of fund is usually of major economic and fiscal importance. Other sovereign wealth funds are simply the state savings that are invested by various entities for investment return, and that may not have a significant role in fiscal management. The accumulated funds may have their origin in, or may represent, foreign currency deposits, gold, special drawing rights (SDRs) and International Monetary Fund (IMF) reserve positions held by central banks and monetary authorities, along with other national assets such as pension investments, oil funds, or other industrial and financial holdings. These are assets of

800-458: A challenge when it comes to calculating emissions. This is because the production of products and services within their boundaries might be linked to either internal consumption or exports. At the same time the population also consumes imported products and services. So it is important to state explicitly whether emissions are counted at the location of production or consumption. This helps to prevent double counting. The lengthy manufacturing chains of

880-655: A commitment to reach net-zero emissions by the year 2050. These promises are often made at the corporate level. Both governments and international agencies encourage businesses to contribute to a national, or international, net zero pledge. The International Energy Agency says that global investment in low carbon substitutes for fossil fuels needs to reach US$ 4 trillion annually by 2030 for the world to get to net zero by 2050. Some analyses have raised concerns that net zero cannot be achieved worldwide by 2050. On average, approximately 29% of companies in EU member states have formulated

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960-529: A globalised market might make this challenging. There are additional challenges with looking at renewable energy systems and electric vehicle batteries. This is because the necessary embodied energy and other effects of raw material extraction are often significant when measuring life-cycle emissions. However the local emissions at the place they are used may be small. Leading standards and guidance allow official accreditation bodies to certify products as carbon neutral but not as net zero. The rationale behind this

1040-543: A lack of binding regulation. It is also due to the need for continued innovation and investment to make decarbonization possible. To date, 27 countries have enacted domestic net zero legislation. These are laws that legislatures have passed that contain net zero targets or equivalent. There is currently no national regulation in place that legally requires companies based in that country to achieve net zero. Several countries, for example Switzerland, are developing such legislation. The idea of net zero came out of research in

1120-525: A material risk, one that is not being properly priced by the markets." Fossil fuel divestment campaign organisation 350.org Aotearoa had been campaigning for the New Zealand Superfund to divest from fossil fuels for one year. 350 Aotearoa and Greenpeace Aotearoa New Zealand supported the decision, calling it a "turning point for New Zealand." Sovereign wealth fund A sovereign wealth fund ( SWF ), or sovereign investment fund

1200-642: A need to protect business as usual, not the climate. If we want to keep people safe then large and sustained cuts to carbon emissions need to happen now. [...] The time for wishful thinking is over." In his 2021 report, Dangerous Distractions, economist Marc Lee said that net zero had the potential to be a dangerous distraction that reduced political pressure to reduce emissions. "A net zero target means less incentive to get to 'real zero' emissions from fossil fuels, an escape hatch that perpetuates business as usual and delays more meaningful climate action," he said. "Rather than gambling on carbon removal technologies of

1280-507: A notable exception to this more typical model. Stabilization SWFs are created to reduce the volatility of government revenues, to counter the boom-bust cycles' adverse effect on government spending and the national economy. Savings SWFs build up savings for future generations. One such fund is the Government Pension Fund of Norway . It is believed that SWFs in resource-rich countries can help avoid resource curse , but

1360-401: A rate just fast enough to compensate for this deep ocean adjustment. The result would be approximately constant global average surface temperatures over decades or centuries. It will be quicker to reach net-zero emissions for CO 2 alone rather than CO 2 plus other greenhouse gases like methane , nitrous oxide and fluorinated gases . The net-zero target date for non-CO 2 emissions

1440-596: A report that stated that the carbon neutrality pledges of many corporations , local governments , regional governments , and financial institutions around the world often amount to nothing more than greenwashing and provided 10 recommendations to ensure greater credibility and accountability for carbon neutrality pledges such as requiring non-state actors to publicly disclose and report verifiable information (e.g. greenhouse gas inventories and carbon footprint accounting in prospectus for financial securities ) that substantiates compliance with such pledges. After

1520-457: A respective target to achieve net zero or have already reached this goal. However, these numbers can vary significantly across different industries, countries, and firm sizes. External pressures, such as companies' exposure to risks associated with climate change and its perception as a problem, can influence a company's ambition to adopt specific targets and strategies. The guidance from standards institutions says that organizations should choose

1600-412: A voluntary basis. The lack of an enforcement mechanism surrounding these claims means that many are dubious. In many sectors such as steel, cement, and chemicals, the pathway to reaching net zero in terms of technology remains unclear. Further investment in research and innovation and further regulation will probably be necessary if net zero claims are to become more credible. Tzeporah Berman , chair of

1680-627: Is a member of the International Forum of Sovereign Wealth Funds and is therefore signed up to the Santiago Principles on best practice in managing sovereign wealth funds. The Superannuation Fund was created by the New Zealand Superannuation and Retirement Act 2001 on 11 October 2001 by Michael Cullen , who was then Minister of Finance under the Fifth Labour Government , and is colloquially known as

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1760-628: Is a set of policy initiatives by the European Commission with the overarching aim of making the European Union (EU) climate neutral in 2050. The plan is to review each existing law on its climate merits, and also introduce new legislation on the circular economy (CE), building renovation , biodiversity , farming and innovation . The president of the European Commission, Ursula von der Leyen , stated that

1840-517: Is a short-term target, and net zero is a longer-term target. To balance residual emissions, actors may take direct action to remove carbon dioxide from the atmosphere and sequester it. Alternatively or in addition they can buy carbon credits that "offset" emissions . Carbon credits can be used to fund carbon removal projects such as reforestation . Strong standards such as the ISO and BSI "net zero" standards only allow removal-based offsets that have

1920-419: Is a state-owned investment fund that invests in real and financial assets such as stocks , bonds , real estate, precious metals , or in alternative investments such as private equity funds or hedge funds . Sovereign wealth funds invest globally. Most SWFs are funded by revenues from commodity exports or from foreign exchange reserves held by the central bank . Some sovereign wealth funds may be held by

2000-454: Is because it allows actors to defer present-day emissions reductions by relying on future, unproved technological fixes. Examples are carbon offsetting, carbon dioxide removal and geoengineering . "The problems come when it is assumed that these [technological fixes] can be deployed at vast scale. This effectively serves as a blank cheque for the continued burning of fossil fuels and the acceleration of habitat destruction ", they said. By tracing

2080-559: Is because of the possibility that offset projects themselves could have harmful effects. The ISO Net Zero Guidelines say that net zero strategies should align with the United Nations Sustainable Development Goals .This is in order to "support equity and global transition to a net-zero economy, and any subsequent UN global goals which supersede the 2030 SDGs." The UNFCCC's Race to Zero campaign says emissions reductions and removals should "safeguard

2160-616: Is due to political instability, while economic determinants generally play a less important role. SWFs in unstable countries may provoke risks for recipient states of SWF investments, given that the instability in SWF-sponsor countries makes those investments uncertain and likely to be disinvested to weather political risk in the short-term. Highly stable countries, such as Denmark, Qatar, China, or Australia are less likely to experience SWF depletion precisely because of their political stability. Carbon neutral People often use

2240-415: Is later partly because modellers assume that some of these emissions such as methane from farming are harder to phase out. Emissions of short-lived gases such as methane do not accumulate in the climate system in the same way that CO 2 does. Therefore there is no need to reduce them to zero to halt global warming. This is because reductions in emissions of short-lived gases cause an immediate decline in

2320-538: Is not always possible or desirable to hold this excess liquidity as money or to channel it into immediate consumption. This is especially the case when a nation depends on raw material exports like oil, copper or diamonds. In such countries, the main reason for creating a SWF is because of the properties of resource revenue: high volatility of resource prices, unpredictability of extraction, and exhaustibility of resources. SWFs are primarily commodity-based and many have been established by oil-rich states. SWFs of China are

2400-704: Is now worth $ 853 billion. Another early registered SWFs is the Revenue Equalization Reserve Fund of Kiribati . Created in 1956, when the British administration of the Gilbert Islands in Micronesia put a levy on the export of phosphates used in fertilizer , the fund has since then grown to $ 520 million. SWFs are typically created when governments have budgetary surpluses and have little or no international debt. It

2480-436: Is often confused with "stabilization of greenhouse gas concentrations in the atmosphere". This is a term that dates from the 1992 Rio Convention . The two concepts are not the same. This is because the carbon cycle continuously sequesters or absorbs a small percentage of cumulative historical human-caused CO 2 emissions into vegetation and the ocean. This happens even after current CO 2 emissions are reduced to zero. If

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2560-429: Is that until organizations and their supply chains are on track for net zero, allowing a product to claim to be net zero at this point would be disingenuous and lead to greenwashing. The International Monetary Fund estimates that compared to current government policies, shifting policies to bring emissions to net zero by 2050 would result in global gross domestic product (GDP) being 7 percent higher. In its estimates,

2640-564: Is widely believed most have diversified hugely into assets other than short-term, highly liquid monetary ones, though almost no data is publicly available to back up this assertion. The term "sovereign wealth fund" was first used in 2005 by Andrew Rozanov in an article entitled, "Who holds the wealth of nations?" in the Central Banking Journal . The previous edition of the journal described the shift from traditional reserve management to sovereign wealth management; subsequently

2720-559: The 25 countries with the greatest emissions (whose pledges cover more than 90% of the gross world product ) by the recommendations of the UN report and found that many these pledges were largely unsubstantiated and more than half of cities had no plan for tracking and reporting compliance with pledges. The concept of net zero has attracted criticism for the impact it could have on equity and distribution. The use of removals or carbon credits for offsetting has been particularly controversial. This

2800-674: The Bank of Portugal to recover the lost money. The Superfund's investment portfolio is the subject of ongoing debate. Labour Party MP David Shearer called in August 2014 for divestment from a company manufacturing white phosphorus which is used by the Israeli Defence Force as a weapon. In February 2015 Green Party MP Russel Norman called for the Superfund to divest $ 676 million from fossil fuel companies. In August 2017

2880-534: The Fossil Fuel Non-Proliferation Treaty Initiative , has criticized net zero claims by fossil fuel companies, describing them "delusional and based on bad science". A consortium of climate scientists has tracked net zero commitments. Their research found that net pledges drafted in law or policy documentation have grown from 7% of countries in 2020 to 75% in 2023. However, very few have met the minimum requirements for

2960-619: The Government Pension Fund of Norway . The Superfund will not invest in the companies within the list. The list includes, In February 2015 the Superfund wrote off a $ 150 million loss in a Goldman Sachs organised loan to the Portuguese Banco Espirito Santo . The loss represented 0.7% of the total value of the Superfund's investment portfolio at that time. Managers of the Superfund appeared before Parliament's commerce select committee on 26 February 2015 where they confirmed that legal action had been commenced against

3040-743: The Kuwait Investment Authority during the Gulf War managed excess reserves above the level needed for currency reserves (although many central banks do that now). The Government of Singapore Investment Corporation , Temasek Holdings , or Mubadala are partially the expression of a desire to bolster their countries' standing as an international financial centre. The Korea Investment Corporation has since been similarly managed. Sovereign wealth funds invest in all types of companies and assets, including startups like Xiaomi and renewable energy companies like Bloom Energy. According to

3120-666: The " Cullen Fund ". The sovereign fund posted a record 25.8% return in the twelve months till 30 June 2013. In the 2009 New Zealand budget the National Government suspended payments to the fund. Contributions were proposed to resume in 2020/21 when the Government's net debt to GDP was forecast to fall below 20% again. Instead, the new Labour-led government started payments into the superfund again in December 2017. The New Zealand Government had contributed $ 21.8 b to

3200-747: The European Green Deal would be Europe's "man on the moon moment". On 13 December 2019, the European Council decided to press ahead with the plan, with an opt-out for Poland . On 15 January 2020, the European Parliament voted to support the deal as well, with requests for higher ambition. A year later, the European Climate Law was passed, which legislated that greenhouse gas emissions should be 55% lower in 2030 compared to 1990. The Fit for 55 package

3280-535: The Government Pension Fund of Norway, Abu Dhabi Investment Authority , and Temasek Holdings, and China Investment Corporation. SLFs help facilitate a state's ability to use its selective equity investments to promote its industrial policies and strategic interests. The growth of sovereign wealth funds is attracting close attention because: The governments of SWFs commit to follow certain rules: A number of transparency indices sprang up before

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3360-873: The Principles, representing collectively 80% of the assets managed by sovereign funds globally or US$ 5.5 trillion. Assets under management of SWFs amounted to $ 7.94 trillion as of 24 December 2020. Countries with SWFs funded by oil and gas exports, totaled $ 5.4 trillion as of 2020. Non-commodity SWFs are typically funded by transfer of assets from official foreign exchange reserves, and in some cases from government budget surpluses and privatization revenues. Middle Eastern and Asian countries account for 77% of all SWFs. Numerous SWFs have gone bust throughout history. The most notable ones have been Algeria's FRR, Brazil's FSB , Ecuador's numerous SWF arrangements, Papua New Guinea's MRSF, and Venezuela's FIEM and FONDEN. The main reason why these funds have been exhausted

3440-707: The Santiago Principles, some more stringent than others. To address these concerns, some of the world's main SWFs came together in a summit in Santiago , Chile, on 2–3 September 2008. Under the leadership of the IMF, they formed a temporary International Working Group of Sovereign Wealth Funds. This working group then drafted the 24 Santiago Principles , to set out a common global set of international standards regarding transparency, independence, and accountability in

3520-451: The Superfund quit or reduced holdings in 300 fossil fuel companies, making 40% of all Superfund investments carbon neutral . Companies include: ExxonMobil , Anadarko , Shell , BP , Statoil , New Zealand Oil & Gas, Genesis Energy , Alliant Energy, Berkshire Hathaway , Chevron , Rio Tinto , ConocoPhillips , Mitsubishi and Occidental Petroleum . Chief investment officer Matt Whineray stated, "We think that climate change represents

3600-671: The United States. While the PSF was first funded by an appropriation from the state legislature, it also received public lands at the same time that the PUF was created. The first SWF established for a sovereign state is the Kuwait Investment Authority , a commodity SWF created in 1953 from oil revenues before Kuwait gained independence from the United Kingdom. As of July 2023, Kuwait's Sovereign Wealth Fund, or locally known as Ajyal Fund,

3680-1065: The company's activities. This can greatly affect the volume of emissions that are counted. Some oil companies, for instance, claim that their operations (Scopes 1 and 2) produce net-zero emissions. These claims do not cover the emissions produced when the oil is burned by its customers, which are 70 - 90% of oil-related emissions. This is because they count as Scope 3 emissions. Robust net zero standards require Scope 3 emissions to be counted, but "carbon neutrality" standards do not. To achieve net zero, actors are encouraged to set net zero targets for 2050 or earlier. Long-term net zero targets should be supplemented by interim targets for every one to five years. The UN, UNFCCC, ISO, and SBTi all say that organizations should prioritize early, front-loaded emissions reduction. They say they should aim to halve emissions by 2030. Specific emissions reduction targets and pathways may look different for different sectors. Some may be able to decarbonize more quickly and easily than others. Many companies often claim

3760-421: The concentration of CO 2 in the atmosphere were kept constant, some CO 2 emissions could continue. However global average surface temperatures would continue to increase for many centuries due to the gradual adjustment of deep ocean temperatures. If CO 2 emissions that result directly from human activities are reduced to net zero, the concentration of CO 2 in the atmosphere would decline. This would be at

3840-457: The cost of emissions reductions in 2050 is less than 2% of world GDP, and the cost savings from reducing the effects of climate change are approximately 9% of world GDP. More and more nations and private and public-sector organizations are committing to net zero. But the credibility of these claims remains low. There is no binding regulation requiring a transition to net zero. So the overwhelming majority of net zero commitments have been made on

3920-815: The difficulties in calculating greenhouse gas sequestration and emissions reductions has also given rise to criticism. This argument is that this can result in schemes that do not adequately offset emissions in reality. There have been moves to create better regulation. The United Nations has operated a certification process for carbon offsets since 2001. This is called the Clean Development Mechanism. It aims to stimulate "sustainable development and emission reductions, while giving industrialized countries some flexibility in how they meet their emission reduction limitation targets." The UK Government's Climate Change Committee says reported emissions reductions or removals may have happened anyway or. not last into

4000-560: The emissions of others (third parties), and (3) actions to directly remove carbon dioxide from the atmosphere (carbon sinks). Robust net zero standards require actors to reduce their own emissions as much as possible following science-based pathways. They must then balance their residual emissions using removals and offsets. This typically involves shifting from fossil fuels to sustainable energy sources. Residual emissions are emissions that are not practical to reduce for technological reasons. Experts and net zero frameworks disagree over

4080-451: The exact percentage of residual emissions that may be allowed. Most guidance suggests this should be limited to a small fraction of total emissions. Sector-specific and geographical factors would determine how much. The Science Based Targets initiative says that residual emissions across most sectors should fall between 5-10% of an organization's baseline emissions. It should be even lower for some sectors with competitive alternatives like

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4160-680: The fund as at 31 March 2022. NZ Super Fund announced a preferred partner agreement with the Māori Investment Fund in March 2018. A full list of investments for current and previous years can be seen at the Annual Equity Listing page at the NZ Super Fund's website. The Fund invested US$ 60 million into Chicago based LanzaTech in December 2014. On March 8, 2022, LanzaTech announced its initial public offering through

4240-699: The future, Canada should plan for a managed wind down of fossil fuel production and invest public resources in bona fide solutions like renewables and a just transition from fossil fuels," he said. At the 2022 United Nations Climate Change Conference (COP27), the High-Level Expert Group on the net-zero emissions commitments of non-state entities of the United Nations formed the previous March by U.N. Secretary-General António Guterres and chaired by former Canadian Minister of Environment and Climate Change Catherine McKenna released

4320-699: The future. This is despite an improvement in standards globally and in the UK. There has also been criticisms of non-native and monocultural forest plantations as carbon offsets. This is because of their "limited—and at times negative—effects on native biodiversity" and other ecosystem services . Most of the carbon credits on the voluntary market today do not meet UN, UNFCCC, ISO or SBTi standards for permanent carbon dioxide removals. So significant investment in carbon capture and permanent geological storage will probably be necessary to achieve net-zero targets by mid-century. Since 2015, there has been significant growth in

4400-446: The history of previous failures in climate policy at reducing emissions from 1988 to 2021, they said they "[arrive] at the painful realisation that the idea of net zero has licensed a recklessly cavalier 'burn now, pay later' approach which has seen carbon emissions continue to soar". They concluded: "Current net zero policies will not keep warming to within 1.5 °C because they were never intended to. They were and still are driven by

4480-641: The largest 2,000 publicly traded companies by annual revenue have net zero targets. Among Fortune 500 companies the percentage is 63%. Company targets can result from both voluntary action and government regulation . The Greenhouse Gas Protocol is a group of standards that are the most common in GHG accounting. These standards reflect a number of accounting principles. They include relevance, completeness, consistency, transparency, and accuracy. The standards divide emissions into three scopes: Corporate net zero targets vary in how widely they cover emissions related to

4560-462: The last few years, net zero has become the main framework for climate action . Many countries and organizations are setting net zero targets. As of November 2023, around 145 countries had announced or are considering net zero targets, covering close to 90% of global emissions. They include some countries that were resistant to climate action in previous decades. Country-level net zero targets now cover 92% of global GDP , 88% of emissions, and 89% of

4640-488: The last half of 2012. In the first half of 2014, global sovereign wealth fund direct deals amounted to $ 50.02 billion according to the SWFI. Sovereign wealth funds have existed for more than a century, but since 2000, the number of sovereign wealth funds has increased dramatically. The first SWFs were non-federal U.S. state funds established in the mid-19th century to fund specific public services. The U.S. state of Texas

4720-468: The late 2000s into how the atmosphere, oceans and carbon cycle were reacting to CO 2 emissions. This research found that global warming will only stop if CO 2 emissions are reduced to net zero. Net zero was basic to the goals of the Paris Agreement . This stated that the world must "achieve a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in

4800-484: The literature on this question is controversial. Governments may be able to spend the money immediately, but risk causing the economy to overheat, e.g., in Hugo Chávez 's Venezuela or Shah -era Iran. In such circumstances, saving money to spend during a period of low inflation is often desirable. Other reasons for creating SWFs may be economic, or strategic, such as war chests for uncertain times. For example,

4880-645: The market. SWFs grew rapidly between 2008 and 2021, with global assets under management by these funds increasing from approximately $ 4 trillion to more than $ 10 trillion. SWFs invest in a variety of asset classes such as stocks, bonds, real estate, private equity and hedge funds. Many sovereign funds are directly investing in institutional real estate. According to the Sovereign Wealth Fund Institute's transaction database around US$ 9.26 billion in direct sovereign wealth fund transactions were recorded in institutional real estate for

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4960-452: The national strategy of France, use the term "carbon neutral" to mean net reductions of all greenhouse gases. The United States has pledged to achieve "net zero" emissions by 2050. As of March 2021 it had not specified which greenhouse gases will be included in its target. Countries, local governments, corporations, and financial institutions may all announce pledges for achieving to reach net-zero emissions. In climate change discussions,

5040-428: The net-zero emissions commitments of non-state entities has made several recommendations for non-state actors . Non-state actors include cities, regional governments, financial institutions, and corporations. One of these is not financing new fossil fuel development. Another is supporting strong climate policy. And another is ensuring that business activities and investments do not contribute to deforestation . 65% of

5120-583: The number of actors pledging net-zero emissions. Many standards have emerged that interpret the net zero concept and aim to measure progress towards net zero targets. Some of these standards are more robust than others. Some people have criticized weak standards for facilitating greenwashing . The UN , UNFCCC , International Organization for Standardization (ISO), and the Science Based Targets initiative (SBTi) promote more robust standards. The "United Nations High-Level Expert Group" on

5200-467: The power sector. Sectors such as heavy manufacturing where it is harder to mitigate emissions will probably have a higher percentage of residual emissions by 2050. The ISO and British Standards Institution (BSI) publish "carbon neutrality" standards that have higher tolerance for residual emissions than "net zero" standards. For example, BSI PAS 2060 is a British standard for measuring carbon neutrality. According to these standards, carbon neutrality

5280-832: The release of the report, Net Zero Tracker, a research consortium that includes the NewClimate Institute, the Energy and Climate Intelligence Unit , the Data-Driven EnviroLab of the University of North Carolina at Chapel Hill , and the Net Zero Initiative at the University of Oxford issued a report evaluating the climate neutrality pledges of 116 of 713 regional governments, of 241 of 1,177 cities with populations greater than 500,000 , and of 1,156 of 2,000 publicly listed companies in

5360-456: The resulting radiative forcing . Radiative forcing is the change in the Earth's energy balance that they cause. However, these potent but short-lived gases will drive temperatures higher in the short term. This could possibly push the rise in temperature past the 1.5 °C threshold much earlier. A comprehensive net-zero emissions target would include all greenhouse gases. This would ensure that

5440-506: The rights of the most vulnerable people and communities". It says that organizations should disclose how they will support communities affected by climate impacts and climate transition. As of November 2023, around 145 countries had announced or are considering net zero targets, covering close to 90% of global emissions. They include some countries that were resistant to climate action in previous decades. Country-level net zero targets now cover 92% of global GDP , 88% of emissions and 89% of

5520-726: The same permanence as the greenhouse gases that they balance. The term for this concept is "like for like" removals. Permanence means that removals must store greenhouse gases for the same period as the lifetime of the GHG emissions they balance. For example, methane has a lifetime of around 12 years in the atmosphere. Carbon dioxide lasts between 300 and 1,000 years. Accordingly, removals that balance carbon dioxide must last much longer than removals that balance methane. Carbon credits can also fund initiatives that aim to avoid emissions. One example would be energy efficiency retrofits or renewable energy projects. Avoided emissions offsets result from actions that reduce emissions relative to

5600-463: The same time they continue to increase greenhouse gas emissions by extracting and producing fossil fuels. They claim that they will use carbon credits and carbon capture technology in order to continue extracting and burning fossil fuels. The UN has condemned such pledges as dangerous examples of greenwashing. Climate scientists James Dyke, Bob Watson , and Wolfgang Knorr argue that the concept of net zero has been harmful for emissions reductions. This

5680-566: The second half of this century". The term "net zero" gained popularity after the Intergovernmental Panel on Climate Change published its Special Report on Global Warming of 1.5 °C (SR15) in 2018, this report stated that "Reaching and sustaining net zero global anthropogenic [human-caused] CO 2 emissions and declining net non-CO 2 radiative forcing would halt anthropogenic global warming on multi-decadal timescales ( high confidence )." The idea of net-zero emissions

5760-735: The sovereign nations that are typically held in domestic and different reserve currencies (such as the dollar , euro , pound , and yen ). Such investment management entities may be set up as official investment companies, state pension funds, or sovereign funds, among others. There have been attempts to distinguish funds held by sovereign entities from foreign-exchange reserves held by central banks. Sovereign wealth funds can be characterized as maximizing long-term return , with foreign exchange reserves serving short-term "currency stabilization", and liquidity management. Many central banks in recent years possess reserves massively in excess of needs for liquidity or foreign exchange management. Moreover, it

5840-510: The term gained widespread use as the spending power of global officialdom has rocketed upward. China's sovereign wealth funds entered global markets in 2007. Since then, their scale and scope have expanded significantly. SWFs were the first institutions to use sovereign capital in an effort to contain the financial damage in the early stages of the 2007-2008 global financial crisis . SWFs are able to react quickly in such circumstances because unlike regulators, SWFs actively participate in

5920-471: The terms net zero, carbon neutrality, and climate neutrality are often used as if they mean the same thing. In some contexts, however, they have different meanings from each other. The sections below explain this. People often use these terms without rigorous standard definitions. A given actor may plan to achieve net-zero emissions through a combination of approaches. These would include (1) actions to reduce their own emissions, (2) actions to reduce

6000-454: The terms net-zero emissions , carbon neutrality , and climate neutrality with the same meaning. However, in some cases, these terms have different meanings from each other. For example, some standards for carbon neutral certification allow a lot of carbon offsetting . But net zero standards require reducing emissions to more than 90% and then only offsetting the remaining 10% or less to fall in line with 1.5 °C targets. In

6080-552: The way that SWFs operate. These were published after being presented to the IMF International Monetary Financial Committee on 11 October 2008. They also considered a standing committee to represent them, and so a new organisation, the International Forum of Sovereign Wealth Funds was set up to maintain the new standards going forward and represent them in international policy debates. As of 2016, 30 funds have formally signed up to

6160-523: The world population. According to World Population Review, a number of countries have net zero, or net negative carbon emissions: Bhutan , Comoros , Gabon , Guyana , Madagascar , Panama , and Suriname . However, according to the World Resources Institute, all of these countries have net positive greenhouse gas emissions. These countries generally have a high level of forestation. The European Green Deal , approved in 2020,

6240-571: The world population. 65% of the largest 2,000 publicly traded companies by annual revenue have net zero targets. Among Fortune 500 companies, the percentage is 63%. Company targets can result from both voluntary action and government regulation . Net zero claims vary enormously in how credible they are, but most have low credibility despite the increasing number of commitments and targets. While 61% of global carbon dioxide emissions are covered by some sort of net zero target, credible targets cover only 7% of emissions. This low credibility reflects

6320-465: The world would also urgently reduce non-CO 2 gases. Some targets aim to reach net-zero emissions only for carbon dioxide. Others aim to reach net-zero emissions of all greenhouse gases. Robust net zero standards state that all greenhouse gases should be covered by a given actor's targets. Some authors say that carbon neutrality strategies focus only on carbon dioxide, but net zero includes all greenhouse gases. However some publications, such as

6400-543: Was thus the first to establish such a scheme, to fund public education. The Permanent School Fund (PSF) was created in 1854 to benefit primary and secondary schools, with the Permanent University Fund (PUF) following in 1876 to benefit universities. The PUF was endowed with public lands, the ownership of which the state retained by terms of the 1845 annexation treaty between the Republic of Texas and

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