The science is clear that we need a net-zero emissions economy no later than 2050 to avoid the worst effects of climate change. Companies must rapidly decarbonize to achieve this. Investors must scale investments which support the transition, and work to align their portfolios with maximum of 1.5 °C of warming.
To help investors to benchmark, communicate and reduce the temperature of their portfolios and products, CDP's temperature ratings dataset provides a temperature pathway for over 4,000 global companies, based on emission reduction targets covering all relevant emissions in a company’s value chain. The temperature ratings reflect the long-term global warming potential if global GHG emissions would reduce at the same pace as the company.
As a result, CDP temperature ratings give investors a clear, science-based and uniform standard for taking and measuring action towards a sustainable economy.
Mobilization and concrete action can only be achieved through a common understanding of the target impacts set by companies, and a recognition of the remaining required efforts. CDP’s new temperature ratings support this collective journey as the economic and financial ecosystem develops new methodologies and data. By being better equipped, investors can future-proof their investment universe from the impact of climate change and improve corporate dialogue.Jean-Jacques Barbéris, Member of the Executive Committee & Head of Institutional Clients Coverage and ESG, Amundi
Temperature ratings are ideally suited for investors’ forward-looking corporate climate risk analyses and portfolio temperature assessments.
The CDP temperature ratings dataset covers 4,000 companies, including detailed analytics of their target data. An extended dataset also includes all corporate GHG emissions data and a portfolio temperature calculator.
Select best-in-class stocks with the lowest temperature pathways, calculate future carbon footprints, use temperature ratings for forward-looking risk analysis, and add to your analysis of companies’ climate governance, risk, or investment data.
Reporting and disclosure
Disclose the temperature of your portfolio to your key stakeholders.
Portfolio assessment and target setting
Measure the temperature rating of your portfolio, set science-based targets and monitor progress against those targets.
Easily identify laggards and better engage with companies to set meaningful and ambitious emissions targets.
Transparent - Uses a public, expert-reviewed and open-source target assessment methodology being developed by CDP and WWF and used by the Science Based Targets Initiative (SBTi).
Forward-looking - Based on forward-looking corporate ambition defined by targets, rather than historical GHG emission trends or current performance metrics.
Science-based - Temperature pathways derived from the IPCC 1.5C and the Integrated Assessment Modelling Consortium (IAMC) compiled database of climate scenarios.
Includes Scope 3 - Systematically assesses corporate targets along the entire value chain, including a company's scope 3 emissions when relevant.
High level of detail - Shows separate temperature ratings per scope and for three distinct timeframes.
Powered by CDP data - Uses CDP’s unique GHG emissions and granular targets data disclosed by companies and cleaned by CDP’s dedicated Data Analytics division.
Standard-setting - Can be used by financial institutions for portfolio analysis and target setting, in addition to corporate supply chain analysis.
CDP temperature ratings draw on CDP’s disclosure system and expert Data Analytics team for its ratings. CDP holds the world’s largest and most detailed corporate environmental dataset, which contains uniquely detailed information on company targets and GHG data.
It uses a public, expert-reviewed and open-source protocol currently being developed by CDP and WWF for interpreting corporate emission targets under key climate scenarios. This protocol translates individual targets of varied formats into consistent and comparable temperature ratings.
The temperature pathways used in CDP temperature ratings are derived from the UN Intergovernmental Panel on Climate Change (IPCC) 1.5°C report and the Integrated Assessment Modelling Consortium (IAMC) database of climate scenarios.
CDP temperature ratings systematically assess companies’ entire emissions, producing separate °C temperatures for operational (scope 1 and 2) and complete value chain (scope 1, 2 and 3) emissions, including across short, medium, and long-term timeframes.
Companies without relevant public targets, or without targets covering all emissions scopes (such as scope 3), are assigned a default temperature rating.
Why are CDP and WWF developing a method for temperature ratings?
Clearly communicated and ambitious corporate targets are generally regarded as a key feature of good strategic corporate management. To help achieve the Paris Agreement and to mitigate business risks from climate change, target setting is a necessary first step and should be applied by corporate managers to the climate-related impacts of their companies.
Many companies have already started to set and disclose their emissions reduction targets. However, for stakeholders it has been difficult to assess and compare the level of ambition behind these targets. Therefore, CDP and WWF are developing the first ever method for translating corporate ambition into long-term temperature outcomes.
This is to better describe and define the current level of ambition of companies and to drive stronger corporate climate action through various stakeholder mechanisms (e.g. supplier engagement, investor engagement and policy engagement).
The goal is to leverage competitive market forces and accelerate the adoption of science-based targets by global companies.
The method is currently available as a beta version. Once finalised, it is intended to become a tool for financial institutions to set science-based targets under the SBTi for Financial Institutions criteria (currently under development).
Why is it different to other temperature rating methods?
The CDP-WWF methodology in development is the first to enable users to translate corporate emissions reduction targets into long-term temperature outcomes. As such, the method assesses the level of forward looking ambition rather than companies’ past emissions performance.
The resulting temperature ratings per company are better suited for forward-looking climate risk analysis and more relevant for strategic decision-making by corporates and investors than most other temperature scores currently available in the market.
The CDP-WWF methodology and resulting temperature ratings systematically include relevant value chain emissions (Scope 1+2+3) – often the key sources of corporate GHG emissions.
The CDP-WWF methodology is fully transparent and can be applied freely by all corporate and financial market participants (open source).
The temperature ratings are science-based as they are based on the IPCC 1.5C report and the Integrated Assessment Modelling Consortium (IAMC) compiled database of climate scenarios. These scenarios are used to develop models for each target type and sector pathway.
What is the meaning of the temperature ratings?
Company example: Based on its current emission reduction targets, Company A’s operational (scope 1+2) and value chain (scope 1+2+3) emissions are aligned to a 2.5°C and 2.8°C long term 2100 global warming pathway, respectively.
Portfolio example: Based on corporate emission reduction targets, the operational (scope 1+2) and value chain (scope 1+2+3) emissions attributable to Portfolio A are aligned to a 2.1°C and 2.7°C long term 2100 global warming pathway, respectively.
How do you treat companies that already are or claim to be net-zero?
Net-zero claims/targets are not considered because there is no agreed standard definition of net zero or carbon neutrality for the corporate sector.
What about companies without any relevant, publicly disclosed target?
Companies without any relevant, public CDP disclosed targets, or without targets covering an important GHG emissions scope, are assigned a uniform temperature rating (“default temperature rating”) to enable the useful comparison of portfolios that may differ in terms of target coverage, in addition to company-by-company comparison.
Do the temperature ratings account for a company’s current level of emissions?
No, the temperature ratings are not normalised for a company’s current level of emissions. For certain industrial sectors with available sector pathways e.g. cement, steel, power generation, the current intensity of the company (GHG emissions/output) is reflected in the ambition of the targets they would need to set to be aligned to a given temperature outcome. Companies with better current performance (lower intensity) would have to reduce emissions less to achieve the same temperature rating than companies currently operating with a higher carbon intensity.
The current GHG emissions of a company also impacts the portfolio weighting stages, as a company’s emissions are used during the weighting steps when aggregating at the portfolio level. A portfolio temperature rating more strongly reflects the temperature ratings of the highest emitting companies in the portfolio.
What makes the temperature ratings science-based?
The target translation protocol, the method to convert targets of various formats into long-term temperature outcomes, is based on best available scientific climate scenarios from the Integrated Assessment Modelling consortium database. This database was compiled in support of the IPCC’s Special Report on Global Warming of 1.5°C.
What is the difference between a temperature rating and a science-based target (SBT)?
A temperature rating is a quantitative evaluation of a company’s target ambition based on publicly disclosed targets following the new temperature rating protocol. The result is a temperature rating, based on the publicly stated target ambition, on a scale from 1.5 to 3.2 degrees Celcius.
In contrast, a confirmed science-based target is the result of an in-depth qualitative and quantitative assessment by SBT initiative experts of public and private target information to determine compliance with SBTi criteria and alignment of ambition to Paris goals.