Top Aussie firms have ‘1 in 5 chance’ of hitting net zero targets

ASX 300 firms, collectively, have around a 20% chance of achieving their stated carbon reduction and net zero targets by 2050, according to artificial intelligence (AI)-backed research from investment management firm Acadian Australia.

The research found that while many companies had “tackled the low-hanging fruit”, including improvements in their operational efficiency and ready adoption of renewable energy sources and EV fleet solutions, the next phase of carbon reduction will demand far greater effort and investments, according to Acadian’s Matt Picone, senior vice president and portfolio management.

“This will require investing in technology and exploring more theoretical options to develop their decarbonisation strategies,” Picone said.

“With so much uncertainty, we can’t say for sure a company will or won’t hit their targets but our model examines corporate communications and information, including historical data, track record of strategy execution and forward-looking statements, to produce a range of likely outcomes for each company and then aggregates that for a market view.”

Picone declared that “the probability of the Australian market achieving its targets is worryingly low”.

Acadian’s analysis follows the recent launch of the group’s Net Zero Credibility Assessment model, which helps assess the likelihood of companies and markets achieving their sustainability targets.

According to the asset management firm, the model is the first of its kind to integrate Large Language Models (LLMs) – the same technology that underpins ChatGPT – to gather and interrogate volumes of company data and information “at speed”.

Acadian said it uses the same technology “to build and manage sustainable portfolios and generate alpha for its wholesale and institutional clients”.

“We’re able to gather, monitor and digest company information, including annual reports, investor presentations and analyst research reports in a fraction of the time it takes traditional fundamental managers,” said Acadian chief executive Gillian Savage.