Since the Paris Agreement, many companies have committed to different levels of decarbonization in line with climate goals. From making net-zero commitments to setting targets aligned with the Science Based Targets initiative, more and more companies are signaling their commitment to climate. In this report, we examine pre- and post-commitment equity and fixed income trends and find that climate pledges do not cost companies money in the short run. Over the medium to long run (past three to five years), companies with net-zero pledges have significantly outperformed their peers, as evidenced in the equity and fixed income markets.

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Using an original, hand-collected dataset of net-zero committed companies and commitment dates, we found that:1

Capital markets do not penalize companies for climate pledges in the short term:

Net-zero companies have significantly outperformed in the past three-to-five years:

The fixed income markets reward companies with net-zero commitments:

Companies that have a clear climate strategy, maintain a consistent message on climate, and deliver on interim decarbonization goals can build buy-in among investors, ensuring their valuations are more reflective of a decarbonized business model over time.

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1 For more on our convention on the use of the terms “climate pledge”, “net-zero commitment”, “decarbonization goal”, see the Methodology section of the appendix.

2 Of note, we did find that the more carbon-intensive sectors had positive abnormal returns at the 10% significance level, suggesting that investors may place more value on commitments from more carbon-intensive firms. For more, see the results section.