Globally, we’ve witnessed governments set their net zero-emission targets, some even with a 2050 deadline. This presents a colossal challenge for companies, particularly considering that the ASX-200 produces a combined 240 million tonnes of emissions.

Whilst reducing this number may present challenges, Firetrail Investments' Portfolio Manager James Miller says it also presents large opportunities in the market. One common mistake investors are making when considering sustainability is investing only in the companies that have already reduced their emissions. However, Miller says that by broadening your view and taking into account those that have work to do, investors are likely to see earnings and valuation growth when these companies are eventually successful in lowering their emissions. He cites Danish electricity provider Ørsted who have seen such success and has subsequently rewarded its investors, as its PE went from 11x earnings to 35x.

In this episode of the Firetrail Analyst Series, Miller clearly explains what net-zero emissions mean, the impact this will have on markets, and why companies who embrace the green wave will benefit immensely in the long run.

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