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This is a Quantitative Study study.

Carbon Misconceptions: Clarifying the Impact of a Net Zero Commitment on Equity Portfolios

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Analysis reveals net zero policies do not require high active risk in equity portfolios, suggesting new strategies for investors.

Investors can align with multiple sustainability objectives through net zero commitment without high active risk.
A significant reduction in factor content isn't necessary even with major carbon footprint reductions.
Misconceptions about net zero policies include the need for high risk and the incompatibility with factor investing.
Careful consideration of style factors and forward-looking metrics is required for effective portfolio alignment.

Zymali et al. (2025) studied this question.

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