How to manage the transition to net-zero


As economies around the world pledge their commitment to net-zero emissions by 2050, companies need to step up their decarbonisation plans. Deutsche Bank’s Lavinia Bauerochse reflects on how this is changing the role of banks and why transition is becoming a core element in client conversations


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ackling climate change is one of the biggest challenges of our generation. Policymakers, companies


and individuals need to take urgent and coordinated action to achieve net-zero emissions by 2050. The momentum has, encouragingly, ramped up since the COP26 summit in Glasgow in November 2021. While many businesses and market participants have focused on ‘dark green’ activities over the past couple of years, managing the transition is now becoming essential for corporates and financial institutions alike. The term ‘transition’ refers to the time period during which an organisation transforms its high-carbon business model to adapt it to a low-carbon world. For many


industries, this shift to net-zero requires fundamental changes, so organisations need to act now in order to mitigate transition risks. This is undoubtedly more challenging for sectors with a high climate impact, such as power, coal mining, upstream oil and gas, auto manufacturing, cement, steel, aviation and shipping – collectively accounting for approximately 75% of greenhouse gas emissions globally. Some industries have already started their journey – for example, certain oil and gas companies are using the knowledge and experience gained from developing offshore oil production to create offshore wind energy infrastructures. Others have just begun the journey and require more support in defining a clear pathway towards meeting the goals


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