What the War in Ukraine Could Mean for Net-Zero Investing

The war in Ukraine threatens to derail the world’s already difficult path to net-zero emissions. Some of the world’s largest economies, especially in Europe, are trying to cut their dependency on Russian energy, potentially leading to higher emissions for years to come as they turn to more emissions-intensive sources as replacements. In an extreme worst case, if Europe were to replace all Russian gas imports with coal, emissions could rise by as much as 0.8 gigatons of CO2 equivalent in the first year. We’ve seen the effects in places such as India, as well, where higher energy prices and supply-chain uncertainties have led to an increased use of coal in that country.

In light of these developments, investors rightfully ask: How does the war in Ukraine impact the net-zero ambitions that so many political and business leaders have committed to achieve? And in turn, how will this affect my investment strategy?