The G20 has highlighted the urgency and importance of financing net zero transition. Investors, however, lack a systematic framework to assess the credibility (incentive‐compatibility) of corporate transition claims. As such, negative screening based on current GHG emissions or even sectors remains a dominant climate investment strategy. In response, this paper develops an economic foundation for credible corporate net zero transition. Our model shows that, besides its current emissions, both a firm's transition capacity and urgency should be considered when assessing its likelihood of attaining net zero; interestingly, it shows how the concavity of its transition pathway may serve as a litmus test. Finally, we discuss how the Task Force on Climate‐Related Financial Disclosures (TCFD) framework can be utilized for credibility assessment of corporate transition pathways. Our findings and recommendations are one of the first attempts to address the market call for systematic approaches to evaluate forward‐looking climate mitigation claims.

中文翻译：

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评估企业净零转型路径可信度的经济基础


G20强调了净零转型融资的紧迫性和重要性。然而，投资者缺乏一个系统的框架来评估企业转型主张的可信度（激励兼容性）。因此，基于当前温室气体排放甚至行业的负面筛选仍然是主要的气候投资策略。作为回应，本文为可信的企业净零转型奠定了经济基础。我们的模型表明，除了当前的排放量外，在评估企业实现净零排放的可能性时，还应考虑其转型能力和紧迫性；有趣的是，它显示了其转换途径的凹度如何可以作为试金石。最后，我们讨论如何利用气候相关财务披露工作组（TCFD）框架对企业转型路径进行可信度评估。我们的研究结果和建议是满足市场对评估前瞻性气候缓解主张的系统方法的呼声的首批尝试之一。