UCL Institute for Sustainable Resources


UCL researchers co-author Financial Times piece calling for high-carbon investment intensity tax

22 March 2023

FT 'Sustainable Views' comment piece calls for the introduction of an investment emissions intensity tax to penalise investors based on the emissions their portfolios finance

Oil drill in landscape

UCL Institute for Sustainable Resources (ISR) researcher Nadia Ameli has collaborated with Marie Fricaudeat (UCL Energy Institute) and David Donnelly (WWF, formerly ISR) on a comment piece for the Financial Times 'Sustainable Views' journal calling for a significant increase in taxation of investments in high-emission industry.

The comment piece is based on a recent paper which the team published in the Ecological Economics journal entitled, 'Accelerating institutional funding of low-carbon investment: The potential for an investment emissions intensity tax.'

In their new comment piece, they note that high carbon-polluting industries have been recording record profits whilst the consequences of climate change are becoming increasingly challenging. The authors noted:

And although fund managers are swimming in environmental, social and governance ratings, only a minority of ESG and climate-themed funds have portfolios aligned with Paris Agreement targets. Some still have significant fossil fuel-related holdings, justifying these with promised transition plans rather than actual emissions and investment plans (...) That leaves high-carbon industries with booming capital flows, locking in future emissions. Meanwhile, low-carbon businesses struggle to secure the investment they need. It adds up to climate catastrophe.

Explaining how an investment emissions intensity tax would operate, they note several advantages of this approach:

  • The tax treats asset classes neutrally, giving funds the flexibility to implement their own net zero strategies.

  • It can be implemented across borders.

  • With little need for international co-ordination, the tax could be implemented within a decade.

  • It is powerful enough to include indirect emissions — those embedded in supply chains, or released when products are used.

Addressing the possibility that investors made subject to such an intensity tax would 'offshore' those funds to try and evade it, the authors explain that this risk could be reduced by setting tax thresholds by sector, which would penalise the most polluting outliers within those sectors, instead of creating excessive exposure (and offshoring risk) for the most emissions-intensive industries. Acknowledging that current measures are not producing the change required, they conclude:

Climate disclosures do not have the power to divert capital away from fossil fuels quickly enough. An investment emissions intensity tax would challenge funds to match their net zero declarations with actions.


  • To read the comment piece, go here.
  • To read the original academic journal paper upon which the article is based, go here.
  • To learn more about the work of UCL Institute for Sustainable Resources in the area of financing the low-carbon transition, go here.


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