COMPANIES AND
CLIMATE CHANGE

A research application of the
AIIB-Amundi Climate Change Investment Framework

Table of Contents

List of abbreviations

Report Summary 3

AIIB – Asian Infrastructure Investment BankAPI – Active Pharmaceutical Ingredients
BEV – Battery electric vehicle
CCIF – AIIB-Amundi Climate Change
Investment Framework
CDP – Carbon Disclosure Project
CLF – Carbon Trust’s Climate Leadership Framework
CT – The Carbon Trust
DM – Developed market
EM – Emerging market
ERM – Enterprise risk management
ESG – Environmental, Social & Governance
ESS – Energy Storage Systems
EV – Electric vehicle
FTTx – Fibre backbones and last-mile connections
GB – Green bond
GDP – Gross domestic product
GG – Global Generics
GHG – Greenhouse gas (emissions)
GPONs – Gigabit passive optical networks
GSMA – Global System for Mobile
Communications Association
HEV – Hybrid electric vehicle
ICE – Internal combustion engine
ICP – Internal carbon price
IEA – International Energy Agency
IPCC – International Panel on Climate Change
LNG – Liquefied natural gas
NDC – Nationally Determined Contribution
OEM – Original equipment manufacturer
PPA – Power purchase agreement
PSAI – Pharmaceutical Services andActive Ingredients
PV – (Solar) Photovoltaic
RCF – Revolving Credit Facility
REC – Renewable energy certificate
R&D – Research & Development
SBT – Science-based target
SBTi – Science-Based Targets Initiative
SDG – Sustainable Development Goal
SLB – Sustainability-linked bond
SUV – Sport utility vehicle
TCFD – Taskforce on Climate-Related
Financial Disclosures
TPI – Transition Pathway Initiative
ULEV – Ultra-low emissions vehicle
UNFCCC – United Nations Framework
Convention on Climate Change
UN – United Nations

1. Introduction 5
The Paris Agreement in Action 5
2. Fitch Solutions: Sector Trackers 8
Index Generation & Methodology 8
Summary Findings 8
Sector Deep Dives 11
Utilities 12
Telecommunications 15
Transport 18
Energy 21
3. The Carbon Trust: Company Case Studies 24
Summary Findings 24
Case studies 24
4. Climate Bonds Initiative:
Debt Issuers Analysis 44
Summary findings 44
Methodology 44
Results 44
Appendix 51
Climate Mitigation Indicators 51
Scoring framework: Debt Issuers Analysis 52
Endnotes 53

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework2

Report Summary
Context

About this report

The 2015 Paris Agreement represented awatershed moment in the global response to
climate change. It required countries to commit
to Nationally Determined Contributions (NDCs),
outlining and regularly revising a strategy for how
they will reduce greenhouse gas emissions, aswell as adapt to the changing climate. Building onthese commitments, companies and investors are
beginning to mobilise to support the objectives of
the Paris Agreement. Companies are figuring out
how to transition their businesses towards a low
carbon economy, as well as improving related
reporting and disclosures. Conversely, investors
are seeking to understand the environmental
strategy and credentials of companies.

This report presents the research application of
the Asian Infrastructure Investment Bank (AIIB) Amundi Climate Change Investment Framework(CCIF). The CCIF aims to provide investors witha benchmark tool for assessing an investment,at the issuer-level, in relation to climate changerelated financial risks and opportunities. The
approach translates the three objectives of the Paris
Agreement into fundamental metrics that investors
can use to assess an investment’s level of progress
towards achieving climate change mitigation,
adaptation, and low-carbon transition objectives.

Comparison and benchmarking of companies
is, however, difficult. The disclosure and qualityof reported data on corporate climate targets,greenhouse gas emissions, transition strategies,
and other environmental factors remains
inconsistent, with large variations between
countries and sectors. Policymakers andregulators across the world are also developing
diverse frameworks for assessing climate risks,
and investors have a vast range of methodologies
and approaches available to them to identify
opportunities. All of this can add to the existing
complexity of financing the low carbon transition.

This report presents the results of research
conducted by three leading climate financeresearch organizations. Here, Fitch Solutions,
The Carbon Trust and the Climate Bonds
Initiative have applied the CCIF to sectors,
companies, and debt issuers. The research
universe comprised of companies domiciledin AIIB Members, predominantly in emerging
market (EM) Asia, and operating within major
infrastructure sectors including energy, water,
sustainable cities, transport, and digital
infrastructure. This report reviews the overallmarket and does not cover AIIB and/or Amundispecific funds.

The AIIB – Amundi Climate Change
Investment Framework
Launched in September 2020, The AIIB - Amundi
Climate Change Investment Framework (CCIF)
aims to provide investors with a benchmark
tool for assessing an investment against climatechange-related financial risks and opportunities.
It translates the three objectives of the Paris
Agreement into fundamental metrics thatinvestors can use to assess an investment’s levelof progress towards achieving climate change
mitigation, adaptation and resilience, and lowcarbon transition objectives. For each objective,
the CCIF sets out key metrics that can be used toassess financial risks and opportunities. The CCIF
was jointly developed by AIIB and Amundi andwas endorsed by the Climate Bonds Initiative.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework3Fitch Solutions

The Carbon Trust

Climate Bonds Initiative

By sector: Data availability and quality
gaps drive differences in performance

By company: Some progress, but work
remains especially on climate adaptation

This analysis compiled sector-level low carbon
transition trackers, assessing and scoring theperformance of 208 companies across eightsectors: automotive (auto), basic industries,
energy, healthcare, technology & electronics,
telecommunication (telecom), transportation(transport), and utilities. Key findings are
outlined below.

This analysis compiled nine company casestudies from the following sectors: autos, basic
industries, energy, healthcare, technology &electronics, telecom, transportation, and utilities.
These companies were among some of themore advanced organizations incorporatingclimate mitigation and adaptation strategies
in their operations in Asia. The geographies
covered include China, India, South Korea, andSingapore. Key findings are outlined below.

By issuer: Companies contributing to thetransition are not necessarily preparedfor climate risks

1. Using the CCIF shows high variation
in how sectors align with the Paris
Agreement objectives.
a. Climate change mitigation: Most sectors
report on mitigation but inconsistenciesabound. Sectors are generally reporting
carbon emissions and carbon reduction targets
however the underlying data, methodology andscope is inconsistent.
b. Climate Change Adaptation: Limited
reporting on the physical risks related toclimate change. Sectors are limited in reporting
their physical exposure to climate change.
Alternative data sources and analyses, such as using
country-level scores as a proxy, are sometimes
required to assess sectors’ efforts on adaptation.
c. Financial contribution to transition:
Varying performance by sectors. Sectors
with a higher correlation between direct
carbon emissions and business models, forexample energy, utilities, and autos, have moredetailed policies and data related to financial
contribution. Conversely, for sectors whereemissions are indirect, policies and data related
to financial contribution are less explicit.
2. CCIF is a robust benchmarking tool,
but financial capability should also be
considered in assessing the companies’
ability to transition. Reducing carbon
emissions, ensuring resilience, and investingin green technologies are all capital-intensive
processes thus a company’s green transitionis partly contingent on its financial health. In
acknowledgement of this, financial capability
was added to the CCIF.

1. Greater focus on renewable energy and
GHG measurement. Most of the companies
adopted climate mitigation strategies by procuring
renewable energy and measuring and reporting atleast Scope 1 and Scope 2 greenhouse gas (GHG)
emissions. Fewer companies had set 1.5-degreescience-based targets and/or publicly committed
to net zero goals.
2. More efforts needed to devise andimplement detailed adaptation measures.
Most of the companies conducted physicalclimate risk assessments. However, few
companies incorporated financial analyses andimplemented measures to respond to these risks.
In addition, while many companies disclosed
their climate mitigation plans, few companies
focused on long-term climate adaptation plans.
3. Growing investment into green
technologies and integration of circular
economy in operations: Most companies
focused on optimizing energy consumption acrosstheir products and services through investments
in energy-efficient technologies. Continuous
research and development initiatives for exploring
green technologies, and life cycle assessments inmost of the analysed companies were observed.

This analysis compiles 483 issuers and covered
33 geographies. Key findings are outlined below
1. No companies performed well across all
three CCIF objectives. Even among green
bond issuers, this analysis did not identify any
issuers that did well on all three objectivesof the CCIF: mitigation (target-setting andstrategies), adaptation (low risk exposure and/or
adaptation plans and strategies), and financial
contribution (green revenues).
2. Best performers were characterizedby significant green revenues, and being
located in low-risk areas. These companies
contribute a total of USD466bn of debt
outstanding to the market as investment
opportunities. However, due to the unpredictable
nature of climate impacts, these companies may
nonetheless be exposed to climate risks if they
do not develop credible transition, adaptation,and resilience strategies.
3. Most companies are subject to physicalclimate risks but are not taking actions
to manage them. Only 14% of companies
researched have an adaptation and resilienceplan in place, leaving the rest exposed topotential loss of financial value. This isparticularly relevant for EM companies,
as many of their domiciles already suffer
disproportionately from the physical impactsof climate change. Further planning andimplementation action is strongly recommended
to manage climate risks.

Conclusion
This report applies CCIF to analyse the climate
performance of different sectors, companies,
and debt issuers. The research found thatwhile sectors and corporates are more climatemitigation focused, more concentrated efforts
are needed towards climate adaptation
planning and implementation. For the sampled
entities, operations across diverse geographicallocations, climate mitigation and adaptation
data inconsistencies, and company financial
capability were among the challenging factors in
performing well across all three CCIF objectives.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework41. Introduction
The Paris Agreementin action
The 2015 Paris Agreement to the United Nations
Framework Convention on Climate Change(UNFCCC) represented a watershed momentin the global response to climate change. At anational level, the Paris Agreement required
countries to commit to Nationally Determined
Contributions (NDCs), which outline how acountry would reduce greenhouse gas emissions,as well as adapt to the changing climate. Every
five years, countries are required to recommit
their NDCs at a more progressive level. Building
on country level commitments, companies andinvestors are starting to mobilise to support theobjectives of the Paris Agreement.

Driving company change:
Regulations, investors
and consumers
Regulatory changes, in part driven by the NDCs,
are a major enabler of company and investorlevel actions. For example, regulations to phaseout internal combustion engine vehicles, toincrease renewable energy generation, and to
impose carbon taxes are having a notable impact
on company investments and business models
in sectors such as energy and transport. Other
sectors have seen shifts around the edges, forexample through their supply chain, end products,
or underlying operational infrastructure.
Companies are also increasingly having toreport on climate factors, including theirgreenhouse gas (GHG) emissions. In the EU,
public companies with more than 500 employees
must disclose information related to the socialand environmental impacts of their operations.
In Asia, jurisdictions are moving away fromvoluntary disclosures to a comply-or-explainor mandatory model. Singapore and Hong
Kong, China have comply-or-explain policies inplace, and in China, environmental disclosure
requirements have been proposed.

On the investor side, there is a drive to aligninvestments with climate change reduction
efforts driven by disclosure regulations levied bymarket regulators as well as growing demandacross institutional and retail clients. This has
encouraged investors to develop frameworks toscreen assets based on climate related factors(and more broadly social and governance throughEnvironmental, Social and Governance (ESG)
investing). In the future, a companies’ access tofinance may be more directly correlated with theirenvironmental credentials. A current example ofthis is the lower yields on some green bonds.1
Finally, companies are under pressure from risingconsumer awareness and concern over climatechange, especially from younger demographics.
All of this is beginning to change company
strategies, as shown for example in the
results of the 8th Fitch Solutions Pulse Survey(published in May 2021 and including responses
from 227 companies), where 66% of companies
surveyed responded that they have a mandate
to include ESG factors in their investment
considerations.2 Corporate green bond issuance
has also grown to just over USD400bn over the2014 - H12022 period.3

Figure 1. Responses to the question:‘Do you factor ESG considerations
into your investment?’
Not atall 7%

Heavily
26%

Somewhat
67%

Source: May 2021 edition of the Fitch Solutions Pulse Survey

Spotlight on regulations: The autos sector
The autos sector is an example of a directbusiness model shift. Governments inmost of the major automotive markets
are encouraging the adoption of electricvehicles (EVs) as part of decarbonisation
goals through a mix of positive support suchas purchase incentives, as well as restrictive
policies such as longer-term bans on internal
combustion engine vehicles.
In South Korea, for example, the government’s
2020 ‘Green New Deal’ set aside KRW73.4tn(USD60bn) of investment in 2020-2025 to fundpurchase incentives for EVs and hydrogen fuelcell vehicles, as well as expanding charging

infrastructure. The government will also
incentivise scrapping older diesel models to
put cleaner models on the road and to remove
the existing highly polluting cars.
Similarly, the Indian government introduced
the Faster Adoption and Manufacturing ofHybrid and EVs (FAME) scheme in 2015 withinvestment of INR9.95bn (USD130m) for
purchase incentives. This was followed by
FAME II in 2019 which extended the incentives,
added funding for charging infrastructure,and included local content directives for thepurchased EVs to encourage the domestic
manufacturing industry.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

5The AIIB-Amundi Climate
Change Investment Framework

Chart 1. Corporate green bond issuance over time300

To meet client demand and contribute to theachievement of Paris targets, investors are
increasingly seeking to understand, measure,and track company climate strategies. However,
the extent of disclosure and quality of datareported vary between countries and sectors,
making comparisons and benchmarking
difficult for investors.

The Framework is a knowledge product from
AIIB’s Asia Climate Bond Portfolio project, whose
objective is to select and invest in Climate
Champions that will outperform in the long run.
AIIB’s Asia Climate Bond Portfolio, which applies
the Framework, will function as a live case-study
for institutional investors.

Non-Financial Corporate

200
150
100
USD Billions

The AIIB-Amundi Climate Change Investment
Framework (CCIF) is an attempt to provide
investors with the ability to screen investments
based on climate aspects, and quantify andmanage investment risk exposure to climatechange. It adopts a holistic approach in linewith the objectives of the Paris Agreement:
Climate Change Mitigation, Climate Change
Adaptation and Contribution to the Transition.
For each objective, the CCIF sets out several
metrics to quantify associated risks andopportunities.4 The fundamental metrics are
outlined in Table 1 on page 7.

Financial Corporate

250

50
0
2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022
YTD (Nov)

Source: Climate Bonds Initiative

Sectors in focus for this report
Energy: Gas Distribution;
Integrated Energy

Automotive: Autoparts & equipment;
auto manufacturers*

Telecommunications:
Telecom-satellite;
Telecom-wireless;
Telecom-wireline
integrated and services

Basic Industries:
Building &Construction,
Environmental
Services**

Transport: Rail;Transport Infrastructure
Services; Trucking anddeliveryTechnology &Electronics:
Electronics; Software& Services; Techhardware andequipment

Utilities: Electric
generation/distribution;
electric-integrated; nonelectric utilities

Healthcare:
Health Facilities;
Health Services;
Medical Products;
Pharmaceuticals*Only including autos companies with someelement of electric or hybrid technology**Environmental services carried out byengineering and construction services firmsiCompanies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

6

Table 1. Climate Change Investment Framework: Summary of investment metrics per Paris Agreement objectives
Paris
Agreement
Objective

Economic
Risk /
Opportunity

Investment Metric

Climatechangemitigation

Transition
risk

Main Metrics:• Risk exposure assessment metric: What are the company’s direct (Scope 15) and indirect(Scope 2 & 36) carbon emissions?
• Risk management metric: Is the company showing efforts aimed at reducing its Scope 1, 2 and 3 emissions?

Key considerations:• Has the company set emission targets and/or have climate-related incentives for management?
• Is the company pricing-in the cost of emissions in their current and future operations by using anappropriate shadow carbon price?
• Are the company’s current and future operations consistent with the pace recommended by climate change
scientists to limit the impact of climate change in line with the Paris Agreement mitigation target to holdthe increase in the global average temperature to well below 2°C above pre-industrial levels and pursuingefforts to limit the temperature increase to 1.5°C above pre-industrial levels?
Note: Mitigation efforts from issuers differ by sector and can be assessed per sector by methodologies such as the Science-Based Target Initiative. CBI’s Climate
Bonds Standard and the EU Taxonomy for Sustainable Activities (EU Taxonomy) also provide guidelines on the taxonomy of activities that can be considered as
positively contributing to climate mitigation. Investors may use these guidelines as a starting point to quantify reductions in Scope 1 to 3 emissions.

Climatechangeadaptation

Physical risk

Main Metrics:• Risk exposure assessment metric: What proportion of the company’s operations are located in
geographies that have high climate change risk? What is the probability of occurrence of a climate hazard in
the company’s geography of domicile in the next years?
• Risk management metric: Despite a certain level of exposure to physical risks, is the company taking
steps to increase the resilience of its assets to climate change appropriately?

Key considerations:• Does the company take physical or soft infrastructure (e.g. capacity building) steps to make its operations
more resilient to the impacts of climate change?
• How dependent is the company on raw materials which face a risk of shortages in the case of climate hazards?
• What is the financial impact of climate-related disruptions to the company?
Note: Quantifying the exposure of a company and the steps it has taken to adapt to the effects of climate change related physical risks varies largely by
sector and location. Commodity-dependent companies are more vulnerable to climate-related disruptions on their supply chains. For example, a solar
panel company can be exposed to physical risks through the scarcity of raw materials needed in their production process.

Contribution
to thetransition

Low-carbon
and climate
resilienttechnologies/
activities

Main Metrics:• Risk exposure assessment metric: What percentage of a company’s revenue stream originates fromproducts and services identified as climate change solutions ?
• Risk management metric: Is the company taking steps to increase the proportion of its green revenue
that corresponds to products and services designed for a low-carbon and climate resilient economy?

Key considerations:• Is the company limiting its exposure to carbon-intensive activities and assets?
Note: To date, there is no global consensus on technologies and activities needed to build a low-carbon, climate resilient economy. For example, some
activities may not be considered as contributing activities even though they contribute to reducing carbon emissions (e.g. replacing coal power generation
with less carbon-intensive fossil fuels like natural gas). Guidance from leading International bodies on climate change attempt to provide enough common
features to trace vital technological developments. For example, the IPCC recognizes the development of renewable energy sources as a need for thetransition of the energy sector. It also considers biofuels as a potential solution for the transition of the aviation industry. To this effect, the CBI Climate
Bonds Standard and EU Taxonomy attempts to standardize technical criteria with a list of economic activities that are identified to make substantial
contribution for climate change mitigation and adaptation. However, it is worth bearing in mind that some regional divergences exist, and some definitionsof green may not be applicable to the current state of economies in developing countries. The forthcoming Taxonomy harmonization work by Chinese andEU regulators has the potential to set a globally recognized standard.

Source: AIIB / AmundiCompanies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

72. Fitch Solutions: Sector trackers
Fitch Solutions’ application of the CCIF
focused on understanding the sector issues
and variations in tracking companies based on
the Paris Agreement objectives. This chapter
highlights eight sector-specific trackers thatconsider and measure companies based onalignment with the three pillars of objectives of
the Paris Agreement – mitigation, adaptation,and contribution – and explores the four highest
scoring sectors in more detail.
This exercise involved:• Identifying key metrics to assess progress
towards the Paris Agreement objectives;• Understanding the availability and quality ofdata on a company and sectoral basis;

Figure 2: Fitch Solutions sector tracker structure
FITCH SOLUTIONS SECTOR TRACKER

Mitigation

Contribution

Adaptation

Capability

CarbonFootprint

Asset
Modernisation

Supply Chain
Management

CapitalAvailability

CarbonMitigation
Approach

CapitalExpenditure

DisasterManagement

Leverage• Understanding variations in progress by sector;

Index generation andmethodology
The three objectives of the Paris Agreement
have been translated into company level metrics
across eight sectors. While the CCIF is robust, indesigning these sector trackers, Fitch Solutions
added a fourth pillar to consider financial
capability. This has been added as reducing
carbon footprint, protecting against physicalrisk, and investing in green technologies are
all capital-intensive processes and therefore
any transition will be partly contingent on acompany’s financial health and capacity. Thosecompanies in a more financially stable position,with access to capital, are better placed to set
meaningful targets and fulfil them with actions.
It is important to note that any investment
should be recouped in the longer term, as
greater alignment with the Paris Agreement will
create a more financially sustainable company,
whose revenue streams are protected fromclimate risk and benefit from opportunities in a
low carbon economy.
In accounting for the variations in businessmodels, strategies and developments towarda low carbon economy on a sector-by-sector
basis and as a result of the vast variations inmeasuring climate change mitigation, adaptationand contribution, it was necessary to separate
the eight indices into standalone assessments.
This ensured they could be tailored to the most
relevant measurements of alignment with theParis Agreement.
Each of the Paris Agreement objectives wereassessed within a measurable and quantifiable Index
with indicators varying across the sectors assessed.

Findings
Data availability and quality
There are a number of high-level conclusions on
the availability and quality of the data available inorder to track and measure companies based on
the three objectives of the Paris Agreement.
1. There is stark variation in how sectors andcompanies report data in alignment with
the Paris Agreement objectives. Whilst mostcompanies report some level of data related
to carbon emissions, carbon mitigation plans,
green investments and other relevant factors,
there is little consistency in the underlying data,thus making direct comparisons hard. Thiscan be as simple as inconsistent units, or more
complex based on underlying methodology andwhat level of carbon emissions are reported,for example including only direct emissions(scope 1), or including varying levels of indirectemissions (scope 2 or 3).
2. Data availability varies significantly
across the three objectives.
a. Mitigation: Most companies report on
Mitigation. Companies are generally reporting
carbon emissions, carbon reduction targets
and are making clear their internal structures tomeet these aims.
b. Adaptation: There is limited quantifiabledata on the physical risks around climatechange, especially at company level.
Companies are not forthcoming about theirpotential physical exposure to climate change, nor
their efforts to mitigate this and it is hard to assess
this risk at an asset level. In order to measure how
companies are adjusting to the impact of climatechange, much of Fitch Solutions’ data collection
focused on assessing how businesses are reducing
their exposure to raw materials that will become
scarcer as a result of climate change, such as
water, and making their supply chains more
resilient and less exposed to climate impacts.
As a result of a lack of data, in many instances,country level scores have been used to represent
company level exposure, as there is far greater
data on country level exposure to climate risk.

Figure 3: Data quality and availability variations by index objective
Adaptation

Contribution

Mitigation

Financial capability• Limited information on
physical exposure to climate• Large variation dependent
on industry• Carbon emission data andreduction plans mostly
available• Standard set of financial
indicators• Some ability to track
adjustment of suppy chain

HarderCompanies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

Easier

8

1.5
0.5

sp
or
t

es
iti

El

Tr
an

Ut
il

ec
tr
on
i

cs

rg
y

Te
l

En

ec
om
s

ca
re

Ba

Te
ch
-

si
c

In

He
al

du

th

st
r

ie

to
s

s

0

Data availability
In total Fitch Solutions assessed the performanceof 208 companies across eight sectors. Dataavailability is highly correlated to overall sector
performance, as in these indices companies are
penalised for not having data available on their
low carbon transition efforts. This is importantas transparency and therefore the ability to trackcompanies on the pillars of the Paris Agreement
is a fundamental part of what is being measured.
It is notable that utilities and transport score very
well in terms of data availability. As chart 2 aboveshows, companies in these sectors tend to report
the most data relevant to mitigation, adaptation,and contribution and certainly there are fewer
data gaps, as compared to autos, basic industries
and healthcare companies – all of which have far
greater data gaps than average.

Which sectors perform best?
Owing to the structure of the indices, with eachtailored to the specific metrics and dynamics
of individual sectors, there is limited scope tohighlight an overall winning industry in terms oftransition towards a low carbon business model.
Some sectors are further along their transition
journey (e.g. utilities); this is largely down to thefact that this is an industry which needed to shift
from a business model dependent on fossil fuels.
In the case of many of the other sectors, there
has been far less of a journey to make. A further
complicating factor in assessing the different
sectors in terms of their performance is the vast
variation in data quality. Telecom companies, forexample, tend to produce much more data thanautos companies and therefore appear to havetransitioned further. However, as a sector, Autos

Chart 3. Average index score by sector
60

58.5

46.2

40

44.8

44.5

43.5

th
ca
re

48.5

Au
to
s

53.1

s

53.1

50

30
20
10

He
al

ie

ic

In
du
st
r

ic
ct
ro
n

Ba
s

Te
c

hE

le

s
ec
om
Te
l

ili
tie
Ut

s

0

s

When assessing the data of the eight sector
trackers, several trends emerge on variations
in sector performance.

Average

1.5

er
gy

Sector performance analysis

2.0

En

Based on the conclusions of data collection andindex building, companies need to improve thequality of their data reporting in order to illustrate
the progress they are making toward the Paris
Agreement objectives. In order to encourage this,regulatory directions need to be strengthened
across all countries. Further, greater consistency
in reporting standards and the type and formatof data need to be introduced to enable bettercross-comparison of companies and sectors. This
will necessitate companies investing in better
tools to track and report on emissions. Greatertransparency and regulatory pressure will in turnsupport more ambitious policies in order to meetthe objectives of the Paris Agreement, as well
as place greater accountability on companies inensuring progress is made on these targets.

2.5

Tr
an
po
rt

4. Companies in traditional carbon intensive
sectors have better data, and conversely
sectors with less of a carbon footprint haveless to say on their contribution to transition.

3.0

Au

3. Companies in emerging and frontiermarkets disclose fewer data points on
their transition to a low carbon economy,
compared to companies in more developed
markets. This is often correlated to theregulatory and reporting requirements within
the country in which companies are based.
Companies in some countries are required todisclose a high level of information, especiallyon mitigation related factors, whilst in many
emerging and frontier markets, these regulations
are not yet in place. Additionally, large
international corporations are typically more
exposed to reputational risks related to climatechange, as well as facing greater exposure tointernational investors who are increasingly
considering these factors in their investments –making voluntary reporting more likely.

Chart 2. Average data gaps by sector

Index Score out of 100

c. Contribution related data, including
investment in low carbon technologies andrevenue from green sources, is variable
dependent on the sector. Those sectors witha higher correlation between direct carbon
emissions and their business models, forexample energy, utilities and autos, have clearer
and more detailed policies and data related
to diversifying and greening their strategies.
Conversely for those sectors where emissions
are more of an indirect element or form only
part of the production process, the policies andstrategies are more tenuous and less explicit. This
will be explored further below.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

9Transport and telecom are two other sectorsof note, both scoring above 50 on average fortransition. The transport sector’s performanceis strongly tied to high data availability – it has
the most data available of any sector – as well
as strong scores across categories. Part of the
explanation for this is the size of the companies
measured within this sector – many are large
industry stalwarts. Global brand names tend to be
more likely to fall under investor spotlight to reporton carbon mitigation efforts, given the extent of
direct emissions from the transport sector.
A similar story emerges in the telecom sector
with major national incumbents making up
the majority of companies measured in theindex. Whilst the telecom sector has muchlarger variation in scores with companies
from developed markets scoring much higher
than emerging market telecom providers, theavailability of data remains strong and thus
boosts the overall sector average.
The technology & electronics sector scores arereasonable. Indeed, the overall data availability
is relatively strong compared to other industries
and the sector scores especially well for its
adaptation, owing to a shift in the use of raw
materials exposed to climate change.
Of the eight sectors, healthcare companies score
on average the worst, which is due to a lack ofdata availability to measure carbon transition
performance and the challenge faced within this
sector in identifying metrics required to meet

Adaptation

Mitigation

Financial Capability

250
200

50
48.6

49.0
150

67

50.2

55.9

61.8

100

50.3

47.5

39.1

36.2

33.0

55.5

46.9

47.5

43.7

38.1

47.9

45.6

An important part of the scoring for all the indicesis around data availability with companies
penalised for a lack of data: it is this that has
impacted the scoring for the healthcare industry
with companies unable to record on average
2.3 indicators (compared to an average of 0.3
indicators in the utilities sector). Furthermore,
healthcare is a sector where carbon emissions
are more indirect, or form only part of the
production process, and so the policies andstrategies restricting carbon emissions tend to be
more tenuous and less explicit. The lack of data
is especially apparent when companies reportaround contribution, compared to mitigation andadaptation. In collecting data on how healthcarecompanies are making contributions to thetransition to a low carbon world, it is notable thatsome are at least trying to make their production
processes greener and to reduce waste and thiscomes through in relatively strong scores foradaptation versus other pillars of the index.

34.5

th

Au

53.5

He
al

In

du

st
r

ie

cs

36.4

Ba

si
c

ec
tr
on
i
El

En

Te
ch
-

Tr
an

the contribution pillar, given the limited direct
carbon emissions generated by this sector. The
better performing companies in the sector tend
to be located in developed markets, wherereporting standards are higher and therefore data
availability is stronger.

49.7

ca
re

49.3

ot
s

44.2

s

57.9

er
gy

53.9

po
rt

57.2

ec
om
s

50

60.5

Te
l

0

50

es

50

61.6

iti

The utilities sector tends to report data better
than many other sectors, across all pillars of
the index, most notably in terms of their level ofrenewables investment (contribution) and theactual penetration of renewable electricity into
the overall power asset portfolio (mitigation). The
utilities sector has the most advanced low carbon
technologies of any sector, with renewableelectricity generation an established part ofpower generation portfolios. The sector has also
initiated many incentives to expand investment
into these assets such as feed in tariffs and tax
incentives, and now in many cases has cost parity
with carbon intensive technologies, enabling this
sector to move ahead in its low carbon transition.
Furthermore, due to the intrinsic nature of carbon
emissions in the utilities sector, the availability ofdata is high, enabling better scores.

Contribution

Util

Taking the scores across all companies
measured for each industry, the utilities sector,
on average, has the highest overall index score,at 58.5 out of 100. This indicates that utilities
companies are better at reporting data and are
more likely to be tracking their transition to a
low carbon economy.

Chart 4. Sector performance by index pillar

Cummulative Index scoreis contributing heavily to the transition throughelectric and alternative fuel vehicles, whereas theadvancements in the telecom industry are lesssubstantial in terms of overall business models.

the development of electric and alternative fuelvehicles. However, rather like healthcare, thebiggest reason for the sector’s underperformanceis down to the high level of data gaps in company
reporting; indeed, the autos sector has thehighest number of gaps (on average each autos
company measured has 3.2 indicators notreported). Additionally, we observethe largest
spread of transition scores across companies in
the autos sector, with a large gap between thestrongest performers, who are scoring well across
many elements of the index, and the weakest
performers who have poor scores and data gaps.
Notably, those top scorers are primarily large
automakers, whilst those at the bottom tend
to be manufacturers of commercial vehicles or
those companies focused on electric vehicles or
its component parts. These companies may becontributing to transition but the data reporting
amongst this last category of companies isparticularly poor. As such, autos companies
should focus on improving their poor andinconsistent reporting standards.

The basic industries sector also suffers from poor
quality data, with the second highest number ofdata gaps of all industries. This is most notable inthe mitigation pillar, with many companies failingto report data on energy consumption, waste
management or overall emissions. As such, it is notpossible to illustrate any progress in the transition
for many companies assessed and the sector scores
especially poorly for this pillar as a result.
The other industry notable in having a low
Transition score is Autos. This result is a little
surprising given the clear contribution theindustry is making to carbon reduction throughCompanies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

10Sector deep divesThis section focuses on the four industries thatscore highest in the Sector Index, namely utilities,
telecom, transport, and energy.
There is little doubt that power utilities stand to
gain from the energy transition outlined under theParis Agreement, and several of the world’s largest
power companies are well on the way towards
carbon neutrality. However, there is still much to
do: in order to transition to a low-carbon businessmodel, utilities will still need to invest in greater
renewable capacities, phase out coal-fired power
and upgrade levels of power efficiency.
There is less at play for telecom companies
and indeed, those companies performing bestin making a transition to low-carbon businessmodels appear to be doing so as a response
to a range of external stakeholders, be theyshareholders, customers or governments, rather
than addressing the issue of climate change as a
specific operational challenge.
Rather like the utilities sector, companies
operating in the transport industry realise
there are a number of business opportunities
as a result of climate challenge concerns.
These include investing in technologies that
employ greener fuels, investing in supporting
infrastructure to accommodate greener fuel use
and increasing the use of rail, inland waterways
and cleaner maritime transport to benefit fromcleaner, readily available freight options.
Energy companies have perhaps the biggest
incentive to align themselves with the Paris
Agreement. Doing so pre-empts tighter
regulations and bolsters public perception.
Mitigation also benefits companies in terms ofdelivering greater efficiencies, lower energy use
and input costs, thereby cutting expenditureand increasing revenues. Indeed, the bestperforming energy companies tended to havethe most developed climate change mitigation
strategies, attempting to tilt their business awayfrom core oil and gas activities into clean energy
products and services.
These four sectors are examined in the next section.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

11Utilities

Figure 4: Utilities Index composition

Utilities Index
Using the CCIF, the Utilities
Index seeks to capture theextent to which this sector’s
companies’ operations,investments and strategies
fall in line with the Paris Agreement goals of
mitigation, adaptation, and contribution to
the transition. A fourth vertical – Financial
Capability – was also added to the CCIF to assess
a company’s financial strength and ability todeliver on its climate objectives.

UTILITIES INDEX

Mitigation

Contribution

Adaptation

Capability

CarbonFootprint

Capex

Location
Vulnerability

CapitalAvailability

CarbonMitigation

Renewables
R&D

DisasterPreparedness

CapitalSustainability

NaturalResource Usage

Utilisation
FactorTechnological
Adoption

CapitalEfficiency

Mitigation
Comprising four segments, the first is based on
the utility’s carbon footprint. Here, the Index
assesses each utility’s percentage change inemissions between 2016 and its most recent
levels (2020/2021), and gives a ranked score
relative to the other utilities in the index. Thisscore is combined with a carbon intensity score,
which measures the total emissions per unit ofgeneration for power generators or per unit of
total sales for power transmission utilities. These
two data points are combined and weighted
equally to give an average.
The three other segments are all qualitative. By
researching and analysing each utility’s annual
reports, sustainability reports, websites andother official documentation, scores are given for
Carbon Mitigation, Natural Resource Usage andWaste Management. Scoring considered aspects
such as the presence of dedicated committees,budgetary allocations, internal policy formation,
resource consumption, waste creation, recycling,
mitigation commitments and plans in place toachieve these targets.

Waste
Management

LeverageContribution

Adaptation

Capex forms the base of this pillar as it is anindication of the overall investment undertakenby the utility over the most recent reportingyear. The Utilisation factor score denotes aranking of the overall generating efficiency
of a utility’s power plants, and is calculatedby dividing total power generated in 2020 by
the total operation capacity owned by theutility. Finally, the Renewables R&D score is aqualitative score derived by the analysis of eachutility’s efforts in designing and deploying newrenewable power technologies to determine theutility’s contribution towards innovation andimprovement in the industry.

This score for Adaptation takes three variables
into account. Location Vulnerability is a functionof the utility’s exposure to climate change risks
based on its operating location. Here, large
multinational corporations achieve strong scores,as their geographical dispersion mitigates therisk of localised changes in the climate impacting
negatively on their operations. This score isparticularly pertinent for utilities maintaininga heavy hydroelectric asset base due to its
vulnerability to drought. Similarly, Disaster
Preparedness scores utilities based on theirlocation, and denotes the level of preparation for
natural disasters in each market. The last of thesethree segments refers specifically to the level of
uptake in new, clean and efficient technologies
in each utility’s businesses, and is scoredqualitatively. By adopting these technologies,
utilities are seen to be better prepared toundertake the energy transition and be more
resilient to the challenges faced in doing so.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

12

20
15
20
16
20
17
20
18
20
19
20
20
20
21
f
20
22
f
20
23
f
20
24
f
20
25
f
20
26
f
20
27
f
20
28
f
20
29
f
20
30
f

0%

Hydropower, % of total electricity generation
Nuclear, % of total electricity generatione/f = Fitch Solutionse estimate/forecast.
Source: EIA, IRENA, National Sources, Fitch Solutions

Non-Hydropower Renewables, % of total electricity generation
Thermal, % of total electricity generation

Steam integration props up gas fired
profits while reducing emissions
While coal power has been the core focus ofmany markets’ carbon reduction efforts, gasfired power has offered an attractive alternative
form of baseload thermal generation, seeing
net growth amounting to more than 750TWh
between 2015 and 2020. By integrating steam
generation into gas power plants, utilities areable to significantly improve the efficiency of
their existing simple-cycle gas turbines. This,in conjunction with back-end mechanical andchemical filtration, can markedly improve thetechnology’s emissions relative to overall power
production. As a result, there has been strong
investor interest in combined-cycle gas power
generation, especially in markets traditionallyreliant on conventional thermal power. While thishas presented notable potential opportunities,
investment has largely been concentrated among
utilities either already operating a portfolio of
gas-fired power plants seeking to offset carbon
tax expenditure by increasing production, or tooffset declining coal power production.

Renewables present most attractive
investment opportunities
Despite gains being made in the gas-fired power
segment, the Paris Agreement has driven the vast
majority of investment outside of conventional
thermal power. With binding agreements inplace, numerous governments have instituted
policies aimed at attracting investment into
renewables, with a particular focus on solar

20

2000

10

0

0

20

20

20

19
20
e
20
21
f
20
22
f
20
23
f
20
24
f
20
25
f
20
26
f
20
27
f
20
28
f
20
29
f
20
30
f

4000

18

30

17

6000

% change year on year

Chart 6. Global and China – Hydropower and non-hydropower
renewables generation, TWh

16Power utilities have been heavily engaged in thesustainable energy transition brought on by theParis Agreement, with the primary focus being
to reduce Scope 1 emissions (direct emissions
from the business, such as power generation).
As a result, the conventional thermal power
sector has been at the centre of government
intervention aimed at disincentivising further
investment, with a particular focus on coal-fired
power. The retraction of subsidies, introductionof punitive tax measures and instalment ofpolicies preventing new investment in coal-fired
power have been widespread, most prominently
among EU member states. Indeed, since the Paris
Agreement’s signing in 2015, the overall share ofcoal-fired power in the global power mix dropped
from 38.9% of total generation to an estimated35.0% by the end of 2020, representing an 86TWh
decline in total coal-fired power.

25%

20

The Paris Agreement establishes a number ofbinding commitments for its signatories, which
included 174 states as well as the European
Union. With significant carbon emissions
emanating from the burning of fossil fuels, thepower sector has been a focal point of reforms
that states have deemed necessary to meettheir commitments. As a result, there have been
vast changes in investment patterns across thesector, with a rapid uptake in low- and zerocarbon generation types.

50%

20

Coal-fired power facing sustained
downward pressure

75%

15

Sharp declines in the cost of solar and wind
power equipment have greatly reduced theinitial capital expenditure required to constructlarge-scale power plants. With numerous
governments offering preferential tax incentives,a variety of subsidy structures and renewablesspecific pricing regimes, margins on such power
plants have grown to compete broadly withconventional generation types. Added to that,the uptake in renewables has also increased thediversity of many utilities’ generation portfolios,
making them less vulnerable to feedstock
market fluctuations, climate change and overall
improving the resilience of their businesses.

100%

20

The global initiative to reduce carbon emissions
has been one of the most prominent driving
forces behind major changes in the power
utilities sector over recent years. Signatories to
the Paris Agreement have been at the centre ofefforts to transition their power sectors towards
sustainability and eventual carbon-neutrality
by 2050. While severely eroding profitability forconventional thermal power producers, thissystemic shift has also cultivated some of its
most attractive investment opportunities withparticular focus on renewable generation types.

Chart 5. Global share of total power generation by type, 2015 – 2030

TWh

Context: Transition to sustainability
and carbon neutrality

Global-Generation, Non-Hydropower Renewables, TWh (LHS)
China-Generation, Non-Hydropower Renewables, TWh (LHS)

e/f = estimate/forecast.
Source: EIA, IRENA, Fitch
SolutionsGlobal-Generation, Non-Hydropower Renewables, % change -y-o-y (RHS)
China-Generation, Non-Hydropower Renewables, % change -y-o-y (RHS)

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

13and wind power. Many utilities investingin renewables benefit from tax incentives,
government subsidies and/or balanced pricing
regimes specifically offered to renewable power
projects. These incentives and support structures
are particularly strong among EU member states,with robust green financing mechanisms alsooffered to renewables investors in the region.
These markets, along with other developed
economies such as Canada, have fostered policy
structures conducive to renewables investment,
boosting the share of emissions-free generationin their overall power mixes.
Major financiers in the Asian market havealso announced plans to boost support for
renewables investments across the region,
which holds some of the world’s highest wind,solar and geothermal power potentials. Despite
the fact that policy support structures in Asian
countries are not typically as robust as their
Western European counterparts, their vast power
potential and rapid power consumption growth
have nonetheless made the region an attractive
destination for renewables investment. China
represents by far the largest power market in
the region and, despite its ongoing investment
into new conventional thermal power capacity,
it stands out as the world’s leading market
for renewables investment. China alone has
increased its non-hydropower renewables
generation by nearly 570TWh between 2015 and2020, with further growth forecast at more than
1,430TWh between 2021 and 2030.
Even in developing economies, utilities stand to
gain significantly from the low-carbon transition
being driven by the overarching commitments
made under the Paris Agreement. Unlike
many developed markets, most developing
economies have not yet adopted comprehensive
policy reforms and subsidy structures for nonhydropower renewables investment. However,
the energy transition can have long-term benefits
for utilities in these regions even without suchincentives. Markets such as those in the Middle
East, North Africa and Sub-Saharan Africa tend
to rely heavily on single generation types, be it
thermal or hydroelectric. By investing in nonhydro renewables, utilities in these markets
would make significant strides in diversifying
their generation portfolio, thereby improving
the business’ resilience against drought andfeedstock price fluctuations. At the sametime, these utilities would also have access to
dedicated green financing options even in higherrisk markets where conventional international
financiers would not likely be willing to invest.

Challenges: Slow renewables growth,
especially in developing economies
However, despite the opportunities derived
from the low-carbon transition, utilities will be
faced with a number of challenges in achieving
the goals set out by the Paris Agreement. Manyutilities still rely heavily on conventional thermal
power, and will face the significant cost of retiring
these assets while simultaneously investingin new renewable power plants. Given thefrequently decentralised nature of renewable
power plants, transmission and distribution
utilities will need to invest heavily on building
out their grid systems to access areas withthe highest natural potential for renewablegeneration types. Further investment will also beneeded to modernise transmission infrastructure
and install grid-stabilization storage in order toavoid the vast fluctuations in supply coming fromintermittent solar and wind power. Those utilities
that are dominant in their markets will incur aheavier burden to carry out these reforms alone,
as decarbonising the state’s power sector will fall
primarily on their business alone.
Larger multinational utilities will see greateradministrative loads as markets institute moredetailed and stringent standards for emissions
reporting and operational data collection, while
simultaneously initiating and overseeing the
progressive mitigation of waste and non-core(Scope 2 and 3) emissions.

Conclusion: Transition needs to offer
economic and operational opportunities
The energy transition outlined under theParis Agreement continues to drive significant
changes in the power sector. With many of its
signatory states putting in place measures tosupport the transition, power utilities stand to
gain both economically and operationally fromthe changing market environment despite thechallenges it presents.
A number of the world’s largest power utilities
are already well on the way towards carbon
neutrality and fostering sustainability. By putting
in place such plans, utilities can make informed
investment decisions which both grow thebusiness and reduce its overall emissions. Data
tracking forms an essential part of a utility’s
ability to accurately forecast the impacts ofparticular investment strategies and internal
policies, and consistent oversight is necessary
to ensure that these plans can be executed in afinancially sustainable manner.
Information pertaining to government policy
formation plays a major role in all aspects ofthe transition, and can make some technology
types considerably more attractive to investors
than others. In markets with high carbon tariffs
in place and where strong renewables incentives
are offered, investment in solar and wind power
may offset the long-term cost of retiring thermal
power plants. Utilities with strong low-emissions
baseload capacity such as nuclear power in theirportfolio are at an advantage, as these utilities
may be better equipped to power down large
coal and oil power plants without risking thereliability of their power output or jeopardising
their revenues. The same can be said for

those investing in large-scale power storage
infrastructure such as pumped hydropower
plants or battery storage facilities. In markets
with high solar power potential, utilities which
maintain high levels of coal-fired power in theirportfolios may benefit from investment in solar
thermal power plants with associated short-tomedium duration storage as an interim step insecuring the reliability of their electricity supplies
while building out their renewables base.
On the other hand, utilities that have alreadyheavily invested in intermittent renewables may
benefit more from investments in long-durationelectricity storage (capable of 10 or more hours
of supply at peak rated output) infrastructure
to better stabilise sales during hours of peakdemand low generation. Overall, by undertaking
well-planned investment strategies with
ambitious long-term goals and regular interim
targets, many of the world’s most successful
utilities have been able to ensure solid businessgains while still leading the way towards theenergy transition in the sector, something which
will make these utilities far less vulnerable to thechallenges to be faced by those utilities which areslow to take up the transition.
Finally, it is observed that many of the world’s
leading power utilities emphasize transparency
in their business operations, plans andperformance. Under Article 13 of the Paris
Agreement, developed countries are required
to report information on the financial, capacitybuilding and technological transfer support
offered to developing countries, and developing
countries should provide information on the
support they need for each of these aspects.
Being a core component of a country’s economy,
information from power utilities is crucial inensuring proper reporting. While utilities fromdeveloped economies such as those in the
EU generally maintain very strong and easily
accessible reporting practices, many of those indeveloping countries still leave significant room
for improvement.
Overall, our index highlights one significant
lesson for utilities across all the Paris Agreement’s
signatories. The energy transition in the power
sector presents both significant opportunities
and challenges to utilities, and the best way tocapitalise on those opportunities and mitigate
the risks presented by those challenges is tobegin improving upon key aspects such as
emissions and investment in renewables as
early as possible, which allows for a slower andmore controlled transition. In order to transition
successfully to a low-carbon business model,
utilities need to act by• building out renewable power capacities;• phasing out coal-fired power; and• investing in power efficiency upgrades

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

14

Telecommunications

Figure 5. Telecommunications Index composition

Telecommunications
Index
Using the CCIF, theTelecommunications Index
seeks to capture the extent towhich this sector’s companies’
operations, investments and strategies fall in line with
the Paris Agreement goals of mitigation, adaptation,and contribution to the transition. A fourth vertical– financial capability – was also added to the
CCIF to assess a company’s financial strength andability to deliver on its climate objectives.

TELECOMMUNICATIONS INDEX

Mitigation

Contribution

Adaptation

Capability

CarbonFootprint

Operational
Efficiency

Regulation Network

CapitalAvailability

E-WasteTechnology

Regulation Services

CapitalSustainability

NaturalResource Usage

Capex

DigitalMaturity

CapitalEfficiency

Mitigation
Although the telecom sector has, for many
years, been reporting on its environmental andsocietal impacts, few standardised KPIs have yet
been devised to quantify these impacts and thismeans that it is difficult to compare each entity’sreported KPIs on a like-for-like basis. The Index
therefore uses a mix of industry-standard KPIs
that have some direct bearing on environmental
impact as well as subjective assessments of what
entities say and are seen to be doing.
Mitigation is the best reported part of the Indexscores as these efforts resonate best with thelargest pool of stakeholders within the industry’s
ecosystem: consumers, shareholders, employees
and governments. Data purporting to show
progressive reductions in carbon emissions andmore efficient usage of energy have an easilyappreciated visual impact, even though themethodologies behind these indicators are notalways water-tight. For example, apparent fallingcarbon emission data may be leveraging carbon
offsets that do not show how overall carbon
emissions might be rising when taking into
account contributions through third-party assets
such as data centres and rivals’ infrastructure.

Contribution
In common with the findings from the othersectors surveyed in this section, it proved
difficult to assess contribution to the transition
process on a purely quantitative basis. A lack ofmeaningful and standardised data is the mainbarrier to fully understanding how this objective
is being addressed. In the Telecommunications
Index, only three aspects of companies’
low-carbon transition contribution efforts
are trackable, and we have used a number ofoperational and financial indicators as proxies.
The Index considers how revenues and capital
expenditure per user are improving (or not) for
each company; this suggests that improving
metrics reflect enhanced operational efficiencies
and growing revenues.
Increasing revenues feed into capital availability
for companies, giving them more resources
to invest in newer and more energy efficienttechnologies (e.g. electrification of fleets, use of

Waste
Management

artificial intelligence in customer servicing, use ofdrones in infrastructure maintenance) as well as
undertaking more capital-intensive activities suchas consolidating their asset bases, streamlining
back-office functions and rationalising resources
such as office space and manpower.

Adaptation
Assessing companies’ Adaptation potential isalso challenging, given that almost no telcos
actively track this in a meaningful way, eventhough many do report on projects carriedout internally or with third parties to help
communities and society at large leverage theirdigital connectivity and services to adapt to achanging environment.
For this aspect of the Index, the focus was onindustry-specific regulatory requirements on
networks and services, as well as the maturity of thedigital market in which each telco operates. Throughregulations, governments are able to mandate
the advancement of more efficient infrastructuresand systems, requiring the replacement of legacy
physical-based systems with less power-intensive
digital-first or digital-only solutions.
For example, the active pursuit of electronic
payments systems can greatly reduce the needfor the creation and transportation of notes andcoins, reduce or eliminate the need for paperbased bills and invoices and allow for a reductionin the number of physical processing facilities
such as offices. Digital payments services also
allow for greater financial inclusion and tax
collection, monies that can be reinvested inclimate mitigation and adaptation projects welloutside the direct influence of telcos.

Context: Progressive sector ahead of curve
The telecom sector has, in the last decade, tried tohighlight its contribution to climate change. During

Leverage

this time mobile and fixed network operators haveprogressively added climate change mitigation andadaptation goals to their existing ESG strategies,
often with little prompting via sector regulations or
government policies.
Although their initial efforts were concernedwith the more tangible and consumer-facing
environmental impacts of the industry (thepackaging and disposal of communications
devices being the most-discussed example),recent years have brought an increased
appreciation of the industry’s direct impact
on climate change – particularly through theconsumption of power.
The sector provides both the infrastructure on
which the global Internet is based and the evergrowing range of applications and services thatenable its use. This infrastructure – and the myriadof devices directly and indirectly connected toit – is one of the biggest consumers of power and,by extension, one of the biggest generators ofclimate-disrupting carbon emissions.

Brand-sensitivity: A key driver for change
The telecom sector is highly competitive andbrands need to protect themselves against any
consumer backlash, particularly in markets
where customers can choose between multiple
providers. Factoring in a company’s climate
credentials when doing so adds to the sector’s
underlying financial performance pressure.
Many telecom operators and infrastructure
providers are also publicly-listed and their shareprices can be negatively affected by their attitude
to environmental standards: share traders andpension funds are increasingly being directed bytheir clients to invest in ‘greener’ companies. The
sector is also a wealth generator for governments,
not only through traditional channels suchas spectrum sales and licensing fees but also,

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

15

One example is the expansion of mobile andwireline broadband networks into rural areas.
This presents two key challenges: lack of accessto power grids and thes need to build multiple
towers and signal repeaters to serve relatively few
users. The lack of power grids initially necessitatedthe use of diesel generators, but the rising costs oftransporting diesel have seen operators switch toalternatives such as solar and wind generators. The
rising cost of building new towers in areas where arival was doing likewise initially necessitated sharedconstruction and shared tenancy, eliminating theneed for duplicated assets and duplicated towers.
The creation of newer and faster wirelesstransmission standards – with the move to 5G
only just beginning to get underway but set toconnect more than 5 billion devices by 2030 (seechart 7) – has brought with it, efficiencies in power
consumption, with 5G masts using only a fractionof the power used by previous 2G/3G/4G iterations
on a bit-transmission basis (see table 2).

Table 2. 25x energy efficiency
per bit, 4G vs 5G
4G

5G- Enabled Connections

4

5G Connections as %of total mobile base

3500

Data Transmission
Capacity (Mbps)

150

5,000

Bit Power Efficiency(Watt/Mbps)

3.3

0.13

20
30
f

20
29
f

20
28
f

20
27
f

20
26
f

0

20
25
f

0

20
24
f

10

20
23
f

1

20
22
f

20

f = Fitch Solutions forecast. Source: Fitch Solutions

The global mobile operators’ association, theGSMA, said in a briefing timed to coincide with the
COP26 conference in Glasgow in November 2021
that improved connectivity and mobile technology
can enable global savings of around 11 billion
tonnes of carbon emissions through to 2030.
Specifically, smart technology deployed by the fourmain carbon-intensive sectors of energy, transportbuildings and manufacturing – could realise savings
equivalent to the decommissioning of 2,700 coalfired power stations.
Citing examples, the GSMA noted that in theenergy sector, connected technology is onlyused in 35% of solar grids and 10% of windrids globally. In addition, a mere 5% of the
manufacturing sector was using connected
technology as of 2021. Yet, these technologies
alone could help fulfil almost 40% of the carbon
emission cuts required by 2030 if these industries
are to reach net-zero by 2050.

Meanwhile, technologically inefficient andexpensive-to-maintain copper telephone
networks are being replaced with fibre
backbones and last-mile connections (FTTx);
these fibre networks also consume much lesspower than the ageing copper systems. These
upgrades are demanded by consumers for the
faster connectivity they provide; their lower
carbon footprints are merely a secondary benefit.
A study undertaken by cable manufacturer
Prysmian in 2020 found that gigabit passive
optical networks (GPONs) consume seven times
less power than traditional or enhanced copper(VDSL) networks. Nevertheless, the high energy
consumption of consumer devices connected tofibre networks (eg: wireless routers, connectedTVs) will keep actual fibre energy consumption
profiles relatively high (see table 3).

Table 3. Power consumption profiles of selected wireline technologies

650
Active Network Elements

Note: Comparison based on Huawei first-generation 5G base stations;efficiencies reportedly have improved markedly with subsequent
iterations. Source: Huawei Technologies, 2019

30

2

5G

Site Power
Consumption(Watts)40

5G Connections as % of total mobile base

50

20
21
f

Advances in technology are an intrinsic
characteristic in an industry that is constantly
reshaping itself, often in response to existing
demand, sometimes establishing new paradigms
that create new applications and solutions forwhich demand quickly emerges. Smaller, cheaperand more efficient are the drivers in this sector.
And, as new technology standards are adopted, so– almost incidentally – are more climate-friendly
adaptations introduced into the sector.

5

20
20

Changing market paradigms
play indirect role

Chart 7. 5G networks consume less power, have a lower carbon footprint

5G-Enabled Connections (billion units)

increasingly, through the use of technology tohelp economies to become more diversified,inclusive and efficient. As such, commercial
sustainability is a prime motivator for telecom
companies’ efforts to take a leading role intransitioning to a low-carbon world.

VDSL2Vectoring(enhanced
copper)Hybridfibrecoaxial(cable TV)

FTTH(point topoint)FTTH(GPON)

538 street
cabinets, 6
switches

794 fibre
nodes, 12switches36
points ofpresence

36
points ofpresence

Power consumption –Access Network (KW)

142

114

64

19

Power consumption –devices (KW)

253

456

341

341

Total power consumption
(KW)

396

569

406

360

Total energy
consumption (MWh/year)

3,465

4,987

3,557

3,156

Source: PrysmianCompanies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

16Conclusion: Clear, standardised metrics
would help focus climate change
mitigation efforts
While the Telecommunications Index illustrates
the relative strengths and weaknesses of the
key companies exposed to the challenges of thetransition process, the most revealing insights
confirm a number of preconceptions.
First, the highest-scoring companies on the
Index are based in the biggest and most matureeconomies of all those assessed. Scale is importantin confronting the challenges of a global threat:developed market operators can leverage theirextensive customer bases and diverse technology
investments to sustainably contribute to managing
the transition over the next 2-3 decades. In addition,
their deep capital bases give them the scope to useinternal and external resources to the optimum
and tackle multiple projects head-on. As expected,
under-performing companies tend to be those
based in emerging and low-growth economies, withlimited financial resources or capability to buy intechnical expertise. Governments need to provide
more financial support – including improving thescope for procuring external financial support – toless agile companies.

Secondly, outperforming companies are mostly
responding to or anticipating expectations ofa broad mix of important external influences- shareholders, customers and (throughregulators) governments – rather than addressing
the issue of climate change as a broader
operational challenge. Not all of these influences
move in sympatico, but brand protection orenhancement does appear to be a common
thread. Where projects are undertaken mainlywith a view to enhancing a company’s credibility,
a disproportionate focus on ‘easy wins’ byprioritising action on internal and immediate
indirect emissions (Scope 1 and 2) misses theopportunity to make all contributors to the value
chain improve their performance.

regarding the recycling of packaging andhardware. Almost no efforts have been madeby any telecom sector regulators regarding key
issues such as power utilisation and it has beenleft to the industry itself to self-regulate anddevelop its own measures.
A suite of standardised metrics is needed toquantify environmental impacts, as ad hoc
initiatives - such as carbon trading, green bonds
and carbon offset initiatives - serve only to
distort the overall picture. As all companies arenow, to differing extents, technology companies,
governments need to work with all sectors toclearly define the ways and means by which
technology can be employed to make real gains
in climate change impact mitigation.

Finally, it is notable that – with a few exceptions
where telcos are the lead participants ingovernment-developed ‘digital-first’ economictransformation plans – regulation and policy
currently have little to no influence over thesector’s role in climate change mitigation/
adaptation efforts. Sector-specific regulations
touching on this area are still mostly confined
to controlling radiation emissions from highfrequency radio systems or outlining standards

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework17Transport

Figure 6. Transport Index composition

Transport Index
Using the CCIF, the Transport
Index seeks to capture theextent to which this sector’s
companies’ operations,investments and strategies
fall in line with the Paris Agreement goals of
mitigation, adaptation, and contribution to
the transition. A fourth vertical – Financial
Capability – was also added to the CCIF to assess
a company’s financial strength and ability todeliver on its climate objectives.

TRANSPORT INDEX

Mitigation

Contribution

GHG
Emissions

Renewables
Strategy

Waste & Water
Management

CapitalAvailability

GHG Curbs

Capex

Emergency& Disaster
Management

CapitalSustainability

Tech Readiness

Energy Source

CapitalEfficiency

Sustainability
Approach

Supply Chain
Greening

Leverage

Mitigation
Assessing a firm’s carbon footprint is an
important part of the scoring for Mitigation. Thisis viewed in conjunction with an assessment of
the GHG reduction targets and energy efficiency
policies and initiatives. Sustainability strategies
depend on contributions and commitments
to community spend, whilst tech-readinessmonitors the use of automation, e-commerceand digitalization. As new smart logistics options
and more big data enhancements are adopted
in the industry, climate-friendly adaptations will
be easier to introduce into the sector as this will
enable better monitoring, green-auditing of value
chains and cost suppression.

Contribution
Complying with higher vehicle engine standards,
renewing fleets with electric vehicles, boosting
renewable energy use and reducing reliance on
raw materials will require large capital outlays.
This needs to be the focus of investment in thetransport sector and will highlight some of what
is required within Contribution.

Adaptation
Most companies report well on Mitigation andContribution especially on investment in low
carbon technologies and revenue from green
sources. There is, however, limited quantifiabledata on the physical risks around climate change,
especially at a company level.
The scoring of adaptation is based on a company’s
exposure to physical climate risks in the countries
in which it operates and the willingness and abilityof key stakeholders to adapt to climate change.
The former is proxied by how firms are managing
water, integrating waste reduction strategies in theiroperations, particularly surrounding packaging
and the degree to which regulatory changes
are driving faster progress in waste reduction
and management. Waste management within
the transport sector has been and continues tobe extensively regulated by national and local
agencies. Regulations around the banning of
non-biodegradable packaging materials is puttingpressure on companies, which could increase
operating costs, particularly in locations where
green alternatives are not locally produced.

Context: Transport sector faces
challenging decarbonisation path
Currently, the transport sector is highly
dependent (99%) on non-renewable fossil fuels,the combustion of which results in the emissionsof air pollutants. For companies in this sector,
increasing the share of cleaner conventional andalternative fuels and the greater use of electricvehicles for road transport have become key
decarbonisation priority areas. They need to as
in line with the Paris Agreement and the UNs
Sustainable Development Goals (SDGs), countries
across the globe are tightening measures andregulations particularly surrounding the energy
and transport sectors in order to meet theirrespective climate change objectives.
The transport sector faces a challenging
adjustment to a low carbon economy,
particularly in Asia. Latest data from the Global
Carbon Project shows that Asia’s share of global
CO2 emissions stood at 56% in 2019 and 58% in
2020, with China accounting for 50.9% of Asia’s
CO2 emissions in 2019 and India representing
12.7% of emissions from Asia. Overall, thetransport sector is the second largest contributor

Adaptation

Capability

to GHG emissions, accounting for 16.2% of global
emissions, after ‘energy used in industry’ which
accounts for 24.2%, according to the latest datafrom the World Resources Institute. Over 90% of
overland freight movements occur via road, while
rail and inland waterway transport accounts for asmall share of regional cargo movement.
Within the transport sector, road transport,
which accounts for 11.9% of annual global GHG
is the largest emitter, with 40% of emissions
being attributable to road freight, while 60%
stems from passenger vehicles. This means that,
if all stakeholders, globally, could electrify thewhole road transport sector, and transition toa fully decarbonised electricity mix, the global
reduction in emissions will be considerable.
Firms that will likely lead the charge in thisregard will largely be based in more advanced
economies, benefitting from strong state support(in the form of incentives and regulations),
green industry cluster development (throughvertical and horizontal supply chain integration)and improving hard infrastructure (in theform of renewable-energy-based backbone
infrastructure and increasing proliferation ofvehicle charging stations). This also infers thatfirms with a high reliance on road freight andlimited diversification options in the form of
air, rail and water transport face a higher costpressure in the years ahead to decarbonise theirroad-reliant fleets.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

18Firms offering flexible multimodal solutions –covering air, ocean, road and rail freight – arewell-positioned to lower their emissions in
the near term through route and freight mode
optimisation and further diversification awayfrom ICE vehicles. Aviation accounts for 1.9% ofannual global GHG, followed by shipping (1.7%),
rail (0.4%) and pipelines (0.3%). Road vehicles
account for nearly three quarters of transport
CO2 emissions, and, while low in comparison,emissions from aviation and shipping continue torise (see chart 8).
Consequently, incentives and regulations
geared to reduce emissions and improve air
quality have tightened, particularly in major
cities across the Asia region.

Green transition will gain traction withregulatory push
Cleaner, greener fuel use, particularly in thetransport sector was one of the key issues on theagenda for UN climate talks in Glasgow (COP26)
as leaders met to discuss emissions cuts andnet-zero commitments. There are three major
aspects to commercial emissions reductions
strategies that firms will pursue in the near term:
1. Reducing the use of fossil fuels with higher
emissions and making modifications to existing fleetswith the use of bridging fuels (such as LNG, biofuels)
2. Increasing the use of hydrogen-based andelectric vehicles
3. Improving efficiency of cargo movement
through the use of automation that will
streamline resources and optimise routeselection (to reduce unnecessary trips.)
That said in the road sector, governments arepushing transport firms to use cleaner fuels
and reduce emissions to a greater extent thanobserved in the aviation and shipping sectors,
where greener fuel technologies are more
nascent and/or still in prototype phases. Railtransport accounts for a small share of regionalcargo movement with over 90% of overland
freight movements occurring via road.

43

2
CO2 emissions in Gt• Regulatory fines and sanctions
are becoming more commonplace.
These can include restrictions on
dirtier (high sulphur) fuels, fines forolder vehicles, surcharges on the use ofICEs, the application of higher carbon
taxes, alternate-day car bans and theimplementation of ICE bans in favour of
EVs and vehicles powered by cleaner fuelssuch as hydrogen.

Chart 8: Transport sector CO2 emissions in Gt by mode in the Sustainable
Development Scenario, 2000-2030

Passenger
road vehicles

Road freightvehiclesShipping

1

Aviation

Other

Rail
0

20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
1
20 8
20
20 e
25
20 f
30
f

• Incentives have been geared to boost
the use of green fuels, low-carbon
alternative freight modes such as rail
and inland waterways, scrappage of oldvehicles and the adoption of EVs.

Note: e= estimate; f= forecast. Source: International Energy Agency, International Council On Clean Transportation

Electric vehichles: key step in greening
supply chains
As countries seek to reduce the impact of emissions
from transport on climate change and to comply
with the GHG reduction goals under the Paris
Agreement, targets for phasing out new ICE car
sales or registrations will be increasingly relevant
for contribution and mitigation efforts. While highemissions standards on ICE will impact investment
decisions in the short term, the longer-termtransition to zero-emission vehicles is necessary
to reach these goals. Overall, the national andsub-national governments that have committed totargets for phasing out new sales or registrationsof ICE vehicles have sent a clear signal, even if it
is not currently possible (due to limitations in thematurity of required technologies) for the targets tobe implemented in the form of binding regulations.
Looking at the three largest vehicle markets bysales in Asia – China, Japan, and India – there is
not yet any strong commitment toward 100% new
zero-emission passenger car registrations or sales.
Indeed, the relatively slow pace of EV adoption
in major autos market in the Asia region, namely
Japan and India, will act as a major drag on theregion’s overall growth outlook over 2021-2030.
While India has stated its commitment to support
the local EV industry and has implemented some
supporting policies, the country’s limited domestic
EV supply chain and its relatively low-income
consumer base will remain a significant barrier tofaster EV adoption. Similar to India, Japan has also
stated its intentions to decarbonise its economy
however, it has yet to offer consumers solid
incentives to purchase EVs. However, Japan’s moveto aggressively seek carbon neutrality by 2050 andthe potential for an internal combustion engine(ICE) ban in the mid-2030s, offers the country’s still
nascent EV market significant growth potential.
Japan will still allow the sale of new hybrid electricvehicles (HEVs) after 2035.

Electric vehicle deployment has been growing
rapidly over the past decade in the region andelectric car registrations increased significantly
in 2020 and 2021, despite the pandemic-related
worldwide downturn in overall vehicle sales. The
Asia region’s EV market will continue to grow at afast pace as more countries in the region look to
support EV uptake, reduce emissions and attract
EV-related manufacturing investment. However,
the region’s EV sales will start to fall behind otherregions largely due to weak EV uptake in Japanand India. Fitch Solutions estimates that EV sales
in Asia expanded by 19.6% in 2021, up fromestimated growth of just 4.4% in 2020 and that
total EV sales in the region will reach a high of justunder 3.6mn units by the end of 2030, up from anestimated sales volume of just over 1.4mn units
in 2020. The region’s EV sales will be primarily
driven by China as Fitch Solutions estimates thatthe country accounted for 91.9% of all EV sales
in Asia in 2020. China will remain the regional
giant when it comes to EVs due to the availabilityof affordable EV options, rising incomes, theproliferation of charging infrastructure and theexistence of supportive incentives for autos
manufacturers. Meanwhile India and Japan(two of the largest vehicle markets globally)
are still in the very early stage of EV adoption.
India specifically will struggle to support EV
adoption given its lack of EV charging stations, its
low-income population and the limited local EV
supply chain. That said, we expect the Chinese
EV market share in Asia to drop steadily, reaching
88.7% by 2030, as more countries implement
purchasing incentives and adopt carbon-neutrality
targets. South Korean EV sales will hold a market
share of 6.3% and New Zealand’s EV sales will takethird place in the region with a regional market
share of 1.9% by 2030.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

19Mitigation measures reducing emissions will also
generally lead to a combination of enhanced
operational efficiencies, increased use of
automation and tech-enabled methods toboost route optimisation and lower energy use.
Higher initial input costs (purchasing new vessels
or vehicles and establishing the supporting
infrastructure around these developments) will
be eventually offset by the reduced obligations
associated with carbon taxes, legal fines andthe reduced need for conventional fuels. Firms
with multi-modal freight avenues (i.e. thosethat are diversifying from relying purely on roadfreight) will also benefit from higher efficiency,
lower expenditures and increased revenues,
improving profitability overall. On the whole,those companies which scored best in the index
were those which not only not only had the mostdeveloped mitigation strategies, but were also
most successful in aligning their operations witha top-down sustainability approach, allowing
them to achieve deeper and more durable
decarbonisation trajectories.

3.5

China

Australia

3.0

Japan

Macau, China

2.5

Singapore

Hong Kong, China

India

Malaysia

New ZealandSouth Korea

Thailand

2.0
1.5
1.0
0.5
0

20
15
20
16
20
17
e
20
18
e
20
19
e
20
20
e
20
21
f
20
22
f
20
23
f
20
24
f
20
25
f
20
26
f
20
27
f
20
28
f
20
29
f
20
30
f

Companies in the transport sector have an
incentive to align themselves with the PCA goals,
largely driven by government regulations, which
will only increase following COP26. Several
governments across the region have alreadyraised vehicle emissions standards in recent
years and failure to meet relevant regulations
on engine standards will result in considerable
legal risks and fines. In addition, states such asSingapore are leading the pack in terms of rollingout restrictions/ outright bans on ICE vehicles in
the next two decades. In anticipation of tighter
policies largely geared towards curbing GHG,
firms need to move to green their supply chainsin order to reduce legal and reputational risks. To
reduce scope 1 emissions, scale is important in
confronting the emissions challenges and many
global firms, particularly in the capital-intensive
shipping sector, are forming partnerships andinvesting in their own cleaner energy options
in order to lower costs, as national regulations
and IMO rules tighten. When it comes to vehicle
emissions, and EV adoption across different
countries, businesses face the challenges of theuneven availability of adequate EV incentive
structures and charging infrastructure gaps. In
addition, while China is leading the charge in
EV sales, the baseload energy used to powervehicles will be largely coal-fired power-based,
which limits scope 2 and 3 advantages comparedto locations such as South Korea, New Zealandand Japan with lower emissions from their power
generation facilities.

Chart 8: Asia - Electric vehicle sales by location, 2015-2030

Million Units

Conclusion: Robust investment
in new fuels and clean technologies
will support transition

Source: Fitch Solutions

For firms in the transport sector, key reporting
aspects of their respective decarbonisation
strategies include the level of detail andcompleteness of their decarbonisation plans, theintended reporting mechanisms and frequency,
the use of carbon credits (international offsets),
GHG coverage (countries, regions, cities) and
Scope 3 coverage – ensuring the company’stransition covers the full value chain, including
downstream and upstream processes. In
developing this index, there were several data
issues to negotiate: low frequency, limited
availability, quality concerns and a lack ofstandardisation all presented themselves asproblems. Where data was lacking, companies
were penalised on the basis that full transparency
is critical to assessing and achieving progress
towards the Paris Agreement goals. The data that
was available often relied heavily on self-reportingby the companies themselves, raising questions
around the adequacy of their data collection
processes and methodologies. A related issue
is that of standardisation; companies reportingon the same indicator would often do so using
different metrics, measured against different
baselines and over different time horizons, allrendering like-for-like comparisons difficult.
Overall, our index highlights a number ofpotential actions that transport firms need toemphasise across all of the Paris Agreement’s
pillars. The findings from the index andour analysis show that the highest-scoring
companies, particularly for the contribution
and mitigation pillars, are mainly based in theadvanced economies that have implemented
stricter regulations on emissions and these firms’
supply chains also have a presence in several
countries as well. Transport firms would be best

served by applying the decarbonisation rulesof the strictest jurisdiction they operate in toboost their green credentials. In order to do this,the first step is to ensure adequate reportingof sustainability data and activities across all
locations where a firm operates.
Meeting the objectives of the Paris Agreement
will be better served by the provision oftimelier, more granular and more standardised
indicators, safeguarded by third party verification
procedures. The gap in reporting standards
between mitigation and contribution on the
one hand and adaptation on the other remains
significant, and companies need to show
investors, lenders and other key stakeholders
more clearly how they are planning to adapt to
the needs of a low-carbon economy.
The best way for companies to capitalise onopportunities in the transport sector and tackle
the climate challenge is to begin:• Investing in EVs, and engine technologies that
employ greener fuels.
• Investing in supporting infrastructure such as
charging stations and additional technologicalimprovements on vehicle and shipping fleets inparticular to accommodate greener fuel use.
• Diversifying transport modes away from fossilfuel-reliant road freight and increasing use ofrail, inland waterways and cleaner maritime
transport to benefit from economies of scaleand cleaner readily available freight options.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

20

Energy

Figure 7. Energy Index composition

Energy Index
Using the CCIF, the Energy
Index seeks to capture theextent to which this sector’s
companies’ operations,investments and strategies
fall in line with the Paris Agreement goals of
mitigation, adaptation, and contribution to
the transition. A fourth vertical – Financial
Capability – was also added to the CCIF to assess
a company’s financial strength and ability todeliver on its climate objectives.

ENERGY INDEX

Mitigation

Contribution

Adaptation

Capability

CarbonPricing

Clean Energy
Sales

Adaptive
Measures

CapitalAvailability

Emissions
Intensity

Clean Energy
R&D

Climate Change
Vulnerabitlity

CapitalSustainability

Carbon Mitigation Approach

Capex

Water Usage

CapitalEfficiency

Mitigation
Mitigation is measured across a number ofindicators as shown above. Where possible,
the Index uses quantitative data points tocompare performance across companies. Thishas been augmented by some more qualitative
assessments, either to adjust the scores where,
due to data issues, direct comparison was notpossible, or where the data did not fully reflect acompany’s performance.
Given the sector’s large contribution to overall
GHG emissions, efforts by oil and gas companies
to reduce both the emissions intensity of theiroperations and their absolute emissions levels
will be critical if the objectives of the Paris
Agreement are to be met. Oil demand has yet
to peak, while gas demand will likely continue
growing for a decade or more. In light of expected
and substantial further production gains, it
becomes all the more imperative that the sector
takes immediate action to curb its carbon
footprint. Partly as a result of this, companies
have so far focused principally on mitigation in
their efforts to align with the Agreement.
In the main companies have so far targeted
direct emissions. Typically, mitigation strategies
have included:• the divestment of emissions-intensive assets;• the streamlining of portfolios to improve
economies of scale, exploit operational synergies
and yield productivity and efficiency gains;• equipment upgrades and process
improvements;• electrification and the switch to renewables topower operations;• carbon offsetting; and• the deployment of digital technologies.
Although many of these approaches require
some initial capital outlay, in the main they
will also lead to lower expenditures and higher
profitability over time, boosting the bottom line,
as well as reducing emissions. In focusing on
mitigation, companies typically do not have to

Net ZeroTargetLeverage

Energy Use

stray far from their core competencies. Mitigation
measures are generally low risk, often relatively
low cost and can yield near-term financial
gains in the form of, for example, lower energy
requirements, reduced wastage and improved
operating efficiencies.

Contribution
It is more difficult to assess contribution to
the transition on a purely quantitative basis. In
part this relates to issues of data availability,
given that companies do not tend to disclose
sufficiently granular data relating to clean energy
as a source of revenue and expenditure. Differing
opinions as to which products, technologies andservices are truly ‘green’ further complicates theprocess. Proxies were used for each company’scontribution using its overall capital expenditure,
the share of its total investments that are
funnelled into clean energy R&D and clean
energy sales as a proportion of total revenues.
Overall, less emphasis has been placed bycompanies on contribution to the transition thanon mitigation. Given the large role for oil and gas
in the primary energy mix and their dominancein certain sectors, such as transport, investment
in alternative energies to replace fossils fuels –either as drop in fuels, or via retrofitting or thedevelopment of new infrastructure – is crucial
to achieving the goals of the Paris Agreement.
Investing in these alternatives is also vital froma company perspective, as it will allow them todiversify away from the sale of oil and gas to end
users. Without this, they cannot hope to achieve
net zero emissions on a Scope 3 basis.

The Contribution vertical saw the largest
disparity in scores between the best and worst
performing companies. While most companies
have at least some mitigation strategy in place,
active contributions to this transition are lessubiquitous. Contribution to the low carbon
transition can take a variety of forms, butcommon examples are investments in renewablegeneration capacity, electric mobility, hydrogen,biofuels and e-fuels, carbon capture and storageand energy efficiency. Some companies would
add natural gas to this list, but that inclusion
is contentious and we have omitted it for the
purposes of this Index. Natural gas is generally
less emissions-intensive than oil or coal, but isa significant source of global GHG emissions.
Switching to natural gas can, in some cases, yield
meaningful emissions reductions, but it can also
divert resources away from cleaner energies and, if
emissions are unabated, may lead to carbon lock-in.

Adaptation
The scoring of adaptation is based on acompany’s exposure to physical climate risks
in the countries in which it operates and thewillingness and ability of these countries to adapt
to climate change. The former is proxied by thelevel of water stress and the risk of droughts,
floods, cyclones, tsunamis and earthquakes. The
latter is proxied on a range of social, political,
legal, institutional and economic indicators, aswell as assessments of operational and projectlevel risk factors.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

21

The use of country rather than company-levelindicators reflects the paucity of company data
and reporting surrounding adaptation. Thosecompanies with operations in high-risk markets
with low adaptive capacity are substantiallymore vulnerable to physical climate risks, which
could meaningfully impact on their operationaland financial performance over time. Reducing
their presence in these markets or investing in
defensive measures would help manage thisexposure, but few companies have adequately
addressed the issue to date.
Physical climate risks are difficult to quantify
over a multi-decade horizon and involve a
considerable degree of uncertainty. While
companies are facing far greater scrutiny inregards mitigation, little attention has been
paid to their adaptive investments or capacity.
Improving resilience can take any number offorms including:

Table 4. New energy alternatives and level of maturity
Alternatives

Description

Technological
Maturity

Advanced Biofuels

Liquid fuels derived from non-foodbased feedstocks, such as agriculturalresidues or municipal waste

Low

Green Hydrogen

Hydrogen produced via electrolysis
using renewable power sources

Medium-Low

Blue Hydrogen

Hydrogen produced via steam methane
reforming with the application of
capture technology

MediumHydrogen-Based Fuels

Fuels such as ammonia

Medium-Low

Carbon Capture, Utilisation,and Storage

Technologies to capture carbon
emissions on site for reuse or storage

MediumDirect Air CaptureTechnologies that capture carbon
dioxide directly from the ambient air forreuse or storage

Very Low• applying higher design and construction
standards for infrastructure in areas vulnerable
to hurricanes and cyclones;• building flood defences in areas prone to flooding;• establishing fire breaks in areas at higher riskof wildfires; or• investing in desalination capacity in areas ofhigh-water stress.
In many cases, companies report on business
continuity plans and crisis risk management
procedures, but information on investments toimprove their resilience to climate change is sorely
lacking. This may reflect the greater emphasis
placed on mitigation by governments, investors
and consumers or the higher degree of uncertainty
around physical climate risks, or indeed theasset-level nature of adaptive investments.

Context: Energy sector faces challenging
adjustment to low carbon economy
Given its highly emissions-intensive businessnature, the oil and gas sector faces a challenging
adjustment to a low carbon economy. Indeed, itstraditional business model now has limited room
to run and those companies that fail to divorce
their revenue growth from their emissions growth
will see their profitability fall and balance sheets
degraded over time.
However, adjusting to the transition breeds
opportunity as well as risk. Companies thatcan secure a lasting role in the low carbon
economy will profit from access to new products
and services and create for themselves a more
resilient business model. But this adjustment
will be challenging. Companies must shift awayfrom their core competencies and venture into

new and often quite nascent technologies (seetable above). Moreover, the traditional oil and gas
business will remain the key source of funding
for these new ventures over at least the coming
one-to-two decades. Companies will have towalk a tightrope, as they wind down investmentin the former, while ramping up spending on thelatter. The large upfront capital requirements
typical of many oil and gas projects, the longlived nature of the asset base and an increasingly
uncertain legal and regulatory outlook only serve
to complicate the issue. Most companies have
yet to embark upon this path, with the majority
continuing to target long-term growth in their oil
and gas production, combined with substantial
declines in emissions intensity. The European
majors are an exception, with BP a notable
example, committing to a 40% reduction in its oil
and gas output by 2030, as capital expenditure is
redirected towards low carbon business lines.

Corporate laggards face missed
opportunity and greater risk
The extent to which companies are currently
committing to the transition varies considerably,in part reflecting a wide disparity in the energy
policies in place across different markets andregions. The European Union has among themost stringent of regulatory environments,
including rigorous permitting processes, highdisclosure requirements, often unfavourable

fiscal terms and, in some cases, outright banson oil and gas activities. This contrasts sharply
with the policies in place across many markets in
the Middle East, Africa, Asia and Latin America,
which continue to actively promote expansionof the sector. Of these latter regions, sustainableenergy policies are generally more advancedin Asia and a number of the major economies– including China, Japan, Indonesia, South
Korea, Australia, Thailand and Malaysia – havecommitted to achieve net zero emissions by
2050-2070. However, Asian countries continue toemphasise a substantial increase in the role forgas over the long term and it is not uncommon tosee ambitious renewables targets set alongside
ambitious targets for oil and gas production
growth. Many countries continue to enact fiscal
and regulatory reforms, in an attempt to draw
increased investment into both the upstream
and downstream industries. As a rule of thumb,those countries in which oil and gas plays a more
important role in the economy tend to have
weaker environmental protections in place andcreate less impetus for change. Nevertheless,many companies active in those countries are
beginning to develop their own strategies in
response to the Paris Agreement.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework22

On the right is a snapshot – taken from Fitch
Solutions’ Sustainable Energy Policy Index –that highlights how the different regions scorein terms of the extent to which their domestic
policies are in line with the Paris Agreement.

Chart 9. Regional energy policy scores by Paris Agreement NDCs

Domestic energy policy is not the only driveraccelerating the transition and policies canimpact across borders. The oil and gas sector
is highly globalised and those companies thatare lagging on their climate commitments may
face reduced access to markets abroad, heavier
discounts on their products sold and a higher
cost of capital, raising expenditure and reducing
revenue. Climate-related litigation against oil
and gas companies has also been expanding
exponentially and legal and reputational risks
will only rise with time, in line with a growing
awareness of climate issues, enhanced reporting
requirements and more established legal
precedents. Moreover, increased cross-bordercooperation, under the auspices of the Paris
Agreement, should lead to a more robust policy
and regulatory environment at the global level.
An effective international carbon pricing scheme,
stronger climate-related funding initiatives andcross-border carbon tax adjustments could allmaterially impact on the financial performanceof even those companies operating in low
regulation markets. Ultimately, the onus is oneach individual company to move its strategy
in line with the goals of the Paris Agreement,
to maximise the potential benefits from thetransition and minimise the risks that they face.

5

Conclusion: Higher reporting standards
urgently needed
The Energy Index sheds light on the stark
divergence in performance across different
companies and in different markets. As a group,
the European-based integrated energy companies
have notably outperformed players from otherregions, underscoring the importance of an
appropriate policy backdrop and strong reporting
requirements. The EU has among the mostextensive non-financial disclosure requirementsof any market globally and continues to expand
them. This, combined with a high level of public
scrutiny, encourages companies to develop
their strategies in line with the goals of the Paris
Agreement, even though many of their operations
are based in markets with significantly weakerenvironmental regulations.
Companies incorporated in low regulation
jurisdictions were more likely to appear towards
the bottom of the Index. These companies
often face less regulatory oversight, weakerenvironmental assessment processes, fewer
environmental mandates (such as emissions
intensity caps), and enjoy continued fiscal
support for fossil fuel investments. Overall, thisgives them substantially less impetus to change

7
6

4
3
2
1
0
Middle East

Africa

LATAM

Asia

EuropeN. America

Source: Fitch Solutions
Note: Scores are out of 10: higher scores denote domestic
policies more in line with Paris Agreement goals.

their behaviour. While policy holds substantial
sway over company performance, other factors,
such as the quality of corporate governanceand responsiveness to consumer preferences,
shareholder pressure and market forces are also
very much in play.
Companies have an incentive to align themselveswith the Paris Agreement. On the one hand, it
pre-empts tighter policies and regulations as they
evolve. It also bolsters the public’s perception ofthem and reduces legal and reputational risks.
Moreover, it benefits the company from a purely
business perspective. To date, these gains havebeen most apparent in regards of mitigation.
The mitigation measures discussed above
have generally led to a combination of higher
operational efficiencies, reduced downtime,
lower energy use and lower energy input costs.
This, compounded by the lower costs associatedwith carbon taxes and emissions trading
schemes, can both cut expenditures and increase
revenues, improving profitability overall. On thewhole, those companies which outperformed
were those which not only not only had the mostdeveloped mitigation strategies,but were also
most successful in tilting their business awayfrom their core oil and gas activities into clean
energy products and services. This opens up
new revenue streams in new markets, positions
the company for more stable and sustainable
revenue growth, and allows them to achieve
deeper decarbonisation on a Scope 3 basis.
In developing this Index, there were many data
issues to negotiate: low frequency, limited
availability, quality concerns and a lack ofstandardisation all presented themselves asproblems. Where data was lacking, companies were
penalised heavily on the basis that full transparency
is critical to assessing and achieving progress

towards the Paris Agreement goals. The data that wasavailable often relied heavily on self-reporting by thecompanies themselves, raising questions around theadequacy of their data collection processes and themethodologies they apply.
A related issue is that of standardisation:companies reporting on the same indicator would
often do so using different metrics, measured
against different baselines and over different time
horizons, all rendering like-for-like comparisonsextremely difficult. Meeting the objectives of theParis Agreement would be better served by theprovision of timelier, more granular and more
standardised indicators, safeguarded by third
party verification procedures. A shift away fromScope 1 & 2, to Scope 3 reporting would also bebeneficial, given that the bulk of emissions in theoil and gas sector are incurred downstream, rather
than through the companies’ own operations.
Perhaps the most interesting finding was the wide
gap between the reporting on mitigation andcontribution on the one hand and adaptation on
the other. The oil and gas sector is heavily exposed
to physical climate risks, both chronic and acute.
This is due to a number of factors, including thetypically long lifespan of its infrastructure, thetendency for operations to be located in areas witha high degree of vulnerability to extreme weather
events, the globalised nature of the industry’s
supply chains and its large energy and waterrequirements. Oil and gas companies have alreadyincurred heavy losses related to extreme weather
events and these are only likely to increase infrequency and severity over time. Despite this,
discussion of physical climate risks is minimal
and, in most cases, it remains unclear as towhether companies are adequately internalising
the threat of these risks, or making the necessary
investments to mitigate or manage them.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework23

3. The Carbon Trust: Company case studies
The Carbon Trust systematically tested andapplied the Framework on selected companies,
assessing their performance against the threeobjectives of the Paris Agreement: Climate
Mitigation, Climate Adaptation and Contribution
to the Transition. Case studies about thecompanies were developed to demonstrate how
the CCIF can be used. The companies shortlisted
for these case studies were selected based on
their efforts in public, internationally recognised
climate-related rankings, or coalitions.

Summary findings
This analysis compiles company case studies
from the following sectors: autos, basic
industries, energy, healthcare, technology &electronics, telecom, transportation, and utilities.
These companies were among some of the
progressive organizations incorporating climate
mitigation and adaptation strategies in theiroperations. The geographies covered include
China, India, South Korea, and Singapore. Key
findings are outlined below.
1. Greater focus on renewable energy and GHG
measurement. Most of the sampled companies
adopted climate mitigation strategies by procuring
renewable energy and measuring and reporting atleast Scope 1 and Scope 2 GHG emissions. Fewercompanies have set 1.5-degree science-basedtargets and/or publicly committed to net zero goals.
2. More efforts needed to devise andimplement detailed adaptation measures.
Most of the sampled companies conducted
physical climate risk assessments. However, few
companies incorporated financial analyses andimplemented measures to respond to these risks.
In addition, while many companies disclosed
their climate mitigation plans, few companies
focused on long-term climate adaptation plans.
3. Growing investment into green
technologies and integration of circular
economy in operations: Most companies
focused on optimizing energy consumption acrosstheir products and services through investments
in energy-efficient technologies. Continuous
research and development initiatives for exploring
green technologies in most of the sampled
sectors were observed. Life cycle assessment wasalso a commonly observed practice among thecompanies identifying and managing material
consumption across their portfolios.

3.2 Methodology
Company selection: The nine sample companies
were selected from a database of companies
that were featured or ranked in SBTi, CDP,
RE100, Global 100, TCFD supporters and the TPI.
Companies that achieved a CDP score of “F” or“N/A” were omitted during the selection process.

The companies selected for analysis are listed
below in Table 5. Some companies have been
anonymized at their request.

own assets only versus those that havealso considered their value chain in theirclimate risk assessments. The scoring also
differentiates between qualitative assessment
and quantitative assessment of the risk

Company interviews: The case studies capture
publicly available information which are verified
by the company. Where there was little public
information, interviews were held to better
understand the company’s short- and long-termplans and climate motivations.
Scoring: Under the CCIF, companies that
perform strongly on one or two objectives areclassified as B-List, and companies that perform
strongly on all three objectives are classified as
A-List. The Carbon Trust’s scoring methodology
consists of a customised questionnaire basedon the Carbon Trust’s Climate Leadership
Framework (CLF) as well as the Transition
Pathway Initiative (TPI). The questions are
separated into the three objectives of the Paris
Agreement, addressing the key considerations
for each objective noted by the CCIF. Recognizingthat addressing climate change is a journey formost companies, the questions were designed todifferentiate the extent of which each company isaddressing each objective. As examples:
Climate Change Mitigation: The scoring
system will give different scores to companies
that have set targets for their own operations
only and those that have included their value
chain in their target setting. The scoring also
considers whether a company has a clear
implementation plan to start its journey formeeting climate targets.
Climate Change Adaptation: The scoring
system will give different scores to companies
that have assessed physical risks for their

Contribution to transition: The scoring
system will consider whether the company
has a plan to estimate the enablement impact
of its products and services. The scoring also
differentiates between a company that has
publicly disclosed any quantitative indicators
for their contribution.
As the case studies cover a wide range of sectors,
the total number of questions applicable foreach selected company may not be the same.
Each applicable question is assigned a score on ascale of 1 to 4, with 4 being the best performance.
A-Listers are identified as companies whose
total score fall within the top one-third of the
maximum score applicable to them, and those
whose total score achieved lie below thisthreshold are determined to be B-Listers.
The Carbon Trust’s scoring methodology seeks
to be complementary to existing rankings andcoalitions in providing a holistic view of areas
where Asian companies can go further in terms ofclimate mitigation, adaptation, and contribution
to the transition.7

Case studies
The following case studies present a snapshot ofcompanies’ climate performance using the CCIF
and the Carbon Trust’s scoring methodology andinclude the Carbon Trust’s recommendations on
next steps for achieving the main objectives of
the Paris Agreement.

Table 5. Companies featured in the case studies
Company

SectorHeadquarters
location

Greentech Company (Anonymized)

Technology & Electronics

China

Dr. Reddy’s Laboratories Limited

Pharmaceuticals,
Biotechnology & LifeIndia

ICT Company (Anonymized)

Information & Communications
Technology (ICT)China

Mahindra & Mahindra Ltd.

Automotive manufacturing

India

Samsung SDI Co. Ltd.

Technology & Electronics

South Korea

Singapore Telcommunications
Limited (Singtel)

Information & Communications
Technology (ICT)Singapore

TCL Electronics Holdings Limited

Technology & Electronics

China

Vena Energy

Energy & Utilities

Singapore

Zuellig Pharma

Pharmaceuticals,
Biotechnology & Life

Singapore

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

24

Greentech
Company(Anonymized)
Headquarters: China

Paris Agreement
Objective

Greentech Company: Current Climate Actions

Climate Change
Mitigation

Committed to ambitious goals related to carbon neutrality andscience-based targets.

Sector: Technology & Electronics• Aims to reach carbon neutrality within its operations by 20228 andacross its supply chain by 2028 and has set a net zero target by 2040
across both its operations and supply chain.

About the company: The company is a
Greentech business which designs, sells, andoperates smart wind turbines, AIoT-powered
batteries and AIoT operating systems. The
company was ranked among the Top 10 of the2019 ‘World’s 50 Smartest Companies’ by the
MIT Technology Review. It leverages a global
network of R&D and engineering centres across
China, and the rest of the world. It joined theglobal ‘RE100’ initiative and committed to 100%
renewable electricity by 2025.

• It is also a member of the Business Ambition for 1.5 campaign,
advocating an urgent call to action from a global coalition of UN
agencies, business, and industry leaders, in partnership with theRace to Zero.
Measured the company’s carbon footprint across the global
operations under its direct control and supply chain.
• The company reports its greenhouse gas (GHG) emissions in 2020
(tCO2e) broken down by Scope 1, Scope 2 (Location-Based), Scope 2(Market-Based) and Scope 3.

Analysis: The company potentially falls
under the B-List classification upon
applying the CCIF and Carbon Trust’s
scoring methodology.
The company has made strong efforts thatalign to the “Climate Mitigation” objective of
the AIIB-Amundi Climate Change Investment
Framework but can improve in efforts aligningto the “Climate Adaptation” objective. Its focus
on supporting a low-carbon economy also
contributes strongly to transition. A strong
science-based target aligned to 1.5 degrees,
Scope 3 target setting, and physical climate
risk analysis and management would be theimportant next steps.

• Over 90% of its GHG emissions in 2020 came from indirect sources
across the supply chain.
Utilised an internal carbon pricing (ICP) tool to price in thecost of emissions in their current and future operations andinvestments.
• ICP tool that is benchmarked to different markets allows for futuretransition risk to be priced into investment decision making for projects.
Climate Change
Mitigation &Contribution to
the Transition• The following factors are contributing to
China’s energy transition: the planned
restriction on coal consumption, thedecreasing costs of wind and solar energy
sources is supporting renewable energy
supply; and on the demand side, theincrease in the use of distributed energy
sources including rooftop solar PV systems
and electric vehicle fleets is emerging ascomplement to utility-scale renewableenergy generation.

• Lifecycle footprint of its wind turbine in China has set anindustry benchmark.
• They are also conducting carbon emission footprint of otherproducts, such as solar panels and for their digital division –electronic devices.

Context for technology & electronics sector:• China has pledged to achieve carbon
neutrality before 2060 and peak emissions
before 2030.

Conducts lifecycle assessments and carbon footprinting forother products.

Climate Change
Adaptation

Made efforts to increase the resilience of its assets to climatechange and encouraged suppliers to move to areas where there
is lower likelihood of climate hazards.
• Majority of its operations are in Asian geographies that tend to havemedium to high climate change risk affected by physical risks suchas flooding, rising sea levels and typhoons.

Contribution toTransition

Dedicated its Research & Development (R&D) efforts towards
the areas of renewable energy, carbon management, energy
efficiency, renewable energy certificate and carbon trading.
• The company mentions that 100% of its revenue stream stems
from products and services designed for a low-carbon and climate
resilient economy.
• The company utilises a carbon management AIoT software throughout
their operations and this helped to reduce overall carbon emissions.
Over 300 organizations are using the software worldwide, out of which
100 companies are within the company’s own value chain, helping tomanage more than 1 billion tons of carbon emissions.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework25Challenges and key learnings
1. Proactively implement internal carbon
pricing as internal decision-making tool.
The company recognises that it could be
affected by carbon pricing across Asia
geographies where its largest manufacturing
plants are located. While it has not been
directly impacted by carbon taxes, thecompany adopts a forward-looking
perspective by using internal carbon pricing
as a tool to evaluate any new investments,
allowing for future financial costs of emissions
to be priced into decision making today.

Paris Agreement
Objective

Greentech Company: Future Climate Plans9

Climate Change
Mitigation

Reduce and offset projected emissions in 2022.

Adopt a two-pronged approach to reduce GHG emissions acrossits supply chain.
• Internally: Focus on product optimisation for instance, refine productdesign to enhance energy performance; reduce emissions fromproduct usage; as well as source lower-carbon production materials.

2. Setting robust and ambitious targets
supports climate ambitions of internal andexternal stakeholders.
The company announced its goal to reachcarbon neutrality within its operations by 2022
and across its supply chain by 2028. It has
also raised its ambition further by committing
to set a science-based target aligned with
the Paris Agreement to limit global warming
to 1.5°C. These are positive steps in the right
direction and serve to align sustainability
efforts both internally and externally towards
a common goal.
3. R&D efforts in low-carbon transition isimportant to remain competitive.
Although 100% of the company’s revenue
stream stems from products and services
designed for a low-carbon and climate
resilient economy, it continues to focus its
R&D efforts on renewable energy, carbon
management, energy efficiency, renewableenergy certificate and carbon trading. This
ensures that the company continues to be
relevant and competitive in the futureclimate-vulnerable markets.

• This is in line with its goal to reach carbon neutrality within its
operations by end of 2022. A variety of measures will be adopted
including reducing its own energy usage and emissions, increasing
green electricity consumption, and purchasing carbon credits.

• Externally: Help its supplier partners explore energy-efficient
opportunities to reduce the carbon footprints of their manufacturing
operations over time.
Set both near term SBTi targets and target date for net zerocommitment, including Scope 3.
• Building on its carbon neutrality goal for 2022, net zero goal for 2040,
and scope 3 footprinting, the company has a good foundation and isplanning to submit its SBTs by end of 2022 .
Paris Agreement
Objective

Carbon Trust’s Recommendations

Climate Change
Mitigation

Engage value chain partners more to enable detailed Scope 3
target setting.
• Setting detailed Scope 3 targets can support the company in meetingits transition goals for electrified transport across logistics partners.

Climate Change
Adaptation

Improve quantitative assessment of its supply chain’s exposure
to physical risks.
• Besides encouraging suppliers to move to areas where there is lower
likelihood of climate hazards, the company could further assess
its supply chain’s exposure to physical risks and the likely financial
impacts under various climate scenarios.
• This information could enable better assessment of the investments
needed to increase the resilience of its supply chains and engage
strategically with suppliers in high climate risk areas.

Contribution toTransition

Consider setting short- and long-term targets to phase out
products and services which are not aligned with the lowcarbon transition.
• The company could assess what its climate targets would mean for
its products and services and consider setting short- and long-termtargets to ensure that products and services not aligned with the
low-carbon transition are phased out.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework26Dr. Reddy’sLaboratories
LimitedHeadquarters: Hyderabad, Telangana, India

Paris Agreement
Objective

Dr. Reddy’s: Current Climate Actions

Climate Change
Mitigation

Set a near term target aligned with the SBTi’s target-setting criteria.

Sector: Pharmaceuticals, Biotechnology
and Life
About the company: Established in 1984, Dr.
Reddy’s Laboratories Limited (Dr. Reddy’s)
is an Indian multinational pharmaceuticalcompany that manufactures and markets
pharmaceuticals in major markets across 65
countries including India, USA, Russia, andEurope. The company is structured aroundthree global businesses (i) Global Generics(GG), (ii) Pharmaceutical Services and Active
Ingredients (PSAI) and (iii) Proprietaryproducts & others. Dr. Reddy’s portfolio of
products and services include APIs, custom
pharmaceutical services, generics, biosimilars
and differentiated formulations.

• Dr. Reddy’s commits to reduce scope 1 and 2 GHG emissions by
50.2% per million USD revenue by FY2031 and reduce scope 3
absolute GHG emissions by 12.5% within the same timeframe.
• It aims to achieve carbon neutrality in direct operations(Scope 1 and 2) by 2030.
Implemented renewable energy and energy efficiency
initiatives to reduce their overall energy consumption.
• The company aims to achieve RE100 by 2030.
• Close to 30% of Dr. Reddy’s power consumption was generated
through solar energy in FY2022. The company has also set an aim
to procure renewable power for at least 50% of their electricity
consumption by FY2025.

Analysis: Dr. Reddy’s potentially falls
under the B-List classification upon
applying the CCIF and Carbon Trust’s
scoring methodology.

• Dr. Reddy’s has phased out high-carbon fuels in some of theiroperations and moved towards br
iquette-based boilers.

Dr. Reddy’s has made significant efforts thatalign to the “Climate Adaptation” objectives of
the AIIB-Amundi Climate Change Investment
Framework and can further their existing efforts
to align to the “Climate Mitigation” objective
by updating their Science-based targets tothe latest ambition. While pharmaceuticalcompanies have challenges in meeting“Contribution to Transition” objectives, Dr.
Reddy’s can continue investing in technologicalinnovations to help reduce emissions in theirdirect operations and supply chain.

Embedded circular economy considerations into the waste
generated in their direct operations and working on postconsumer plastic waste recycling.
• 100% of non-hazardous waste in FY2022 was upcycled as fuelfor cement factories. All of Dr. Reddy’s manufacturing facilities inIndia achieved zero waste to landfill in FY2022 and 99% of global
hazardous waste was sent to cement industries and recyclers for coprocessing and recycling.
• In FY2021, 1270.5 metric tons of post-consumer plastic waste wascollected back for upcycling and recycling in India. Dr. Reddy’s aims toachieve 100% waste neutrality (including plastic waste) in India by 2025.

Context for pharmaceutical sector:• The pharmaceutical sector is one of thefastest-growing sectors in India. The country is
one of the leading suppliers of generic drugs
and ranks as the third largest producer ofactive pharmaceutical ingredients (API) in the
global market.10 Pharmaceutical companies inIndia have started looking into incorporating
sustainability into their core business strategy
before the onset of the pandemic and while
the pandemic response had some impact onprogress, the sector still recognises the urgent
need for climate action.11• The industry struggles with several
challenges to address climate change, themajority of which relate to procurement anddevelopment.12 Pharmaceutical products
undergo significantly stringent R&D stages for
new products. The costly retesting and new
regulatory approval present barriers to thenchange the components, packaging, anddelivery model of pharmaceutical products.

• On top of reporting its annual greenhouse gas emissions for
Scope 1, Scope 2 and Scope 3, Dr. Reddy’s is one of the first Indian
pharmaceutical companies to have approved science -based GHG
emission targets. The targets set are aligned with a well-below
2-degree Celsius ambition.

Climate Change
Adaptation

Conducted detailed climate risk and opportunities analysis thatcovers their plants critical suppliers and analysed the potential
financial impacts.
• Dr. Reddy’s performed a climate risk analysis using
recommendations from the TCFD. The risks and opportunities with
its associated financial impacts were studied.
• Increased water consumption and constrained water supply areamong the most critical risks identified. To mitigate water security
risk, Dr. Reddy’s continues to undertake water conservation initiatives
in line with the target to achieve 100% water positive goal by 2025.
• Dr. Reddy’s evaluated ICP to estimate the impact to future
investments and to help them prioritize emission reduction projects
that have clear financial advantage.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework27

Challenges and key learnings
1. Setting a clear carbon emissions reduction
strategy aligned with Science-Based Target
and publicly disclosing carbon emission
performance and strategy.
The company has set aggressive targets forachieving water neutrality and claims to be theonly Indian pharmaceutical company to haveset carbon emission targets for Scope 1 and2 based on the SBTi. Dr. Reddy’s operational
initiatives are well integrated with its
sustainability goals and address reduction inraw material consumption, and conservation
and reduction in energy and water usage.
The company is publicly disclosing its
carbon emissions performance and strategy
through several CDP reports, scoring “B” inClimate Strategy, “A” in CDP-SC (supply chain)disclosure, and “A-” in Water Security in FY2021.
2. Making water pricing a core factor acrossbusiness and investment decisions.

Paris Agreement
Objective

Dr. Reddy’s: Future Climate Plans

Contribution toTransition

Investing into new and innovative technologies to address
technology disruption risks.
• According to Dr. Reddy’s FY2020-21 Sustainability Report, technology
disruptions is one of the emerging risks identified that will havethe most significant impact to its business. To address this risk,
Dr. Reddy’s plans to invest in new and innovative technologies
in renewables and energy efficiency, electricity storage, green
chemistry, and other digital advances in the pharmaceutical sector.
• Dr. Reddy’s initiated lifecycle analysis for some of their products, withspecial emphasis given to improving the efficiency of solvents, whichis the primary raw material. Through investing into green chemistrystudies, Dr. Reddy’s aims to reduce or replace hazardous solventswith greener solvents.

Paris Agreement
Objective

Carbon Trust’s Recommendations

Climate Change
Mitigation

Commit to a 1.5-degree target, and set long term science-basedtarget and net zero target date
• In July 2021, the SBTi has raised the minimum climate ambition incorporate reduction target setting to align with 1.5-degree above
pre-industrial levels. Leaders across the healthcare industries haveset a 1.5 degree near term targets, and several have also committed
to setting a longer-term net zero target.

As a company operating in the pharmaceuticalsector, Dr. Reddy’s operations are highly
vulnerable to climate change and unpredictable
weather events necessitating resilienceplanning. The company is highly dependent
on raw materials like water. They devised aninternal water pricing mechanism to promoteresource efficiency and establish a lower carbon
footprint through the responsible use of water.
This internal pricing system has become part ofall major activities from FY2021.
3. Reduce emissions from logistics anddistribution chains and invest in climate resilience.
To address greenhouse gas emissions andimprove climate resilience, the pharmaceuticalindustry can prioritise emissions reduction fromlogistics and distribution as well as responsible
waste management linked to packaging
materials for products. Investment in sites’
resilience is also key to preparing for extreme
weather and patching vulnerabilities which
could close plants, such as flood barricades,
emergency power generators, and keeping
critical digital infrastructure on higher floors.

Engage value chain partners more to enable deeper Scope 3
target setting and develop a time-bound implementation plan
• Dr. Reddy’s can further engage with value chain partners to on scope
3 emissions reduction target setting, especially in transitioning toelectrified transport with its logistics partners and formulate a timebound implementation plan to track progress.
Contribution toTransition

Measure energy savings and carbon emission reduction arisingfrom low-carbon investments• Quantifying the reduction in GHG emissions from low-carbon innovations
like green solvents is an important next step in giving stakeholders visibility
to how Dr. Reddy’s is reducing its overall GHG emissions.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

28ICT Company(Anonymised)
Headquarters: China
Sector: Information and communications
technology (ICT)Paris Agreement
Objective

ICT Company: Current Climate Actions

Climate Change
Mitigation

Measured and set carbon emission target covering Scope
1 and 215 for 2020.
• Measured and disclosed its Scope 1 and Scope 2 emissions (t-CO2e)in 2020 in its 2020 Sustainability Report. Bureau Veritas provided
independent assurance of the Sustainability Report.

About the company: The company is aleading global provider of informationand communications technology (ICT)
infrastructure and smart devices. They havenearly 200,000 employees and operate inover 170 countries and regions, serving morethan three billion people around the world.
Through open collaboration and innovation,
they establish industry and ecosystemalliances, support global open-source projects,
and drive breakthroughs in key technologies.

• In 2016, it established a Scope 1 and Scope 2 carbon emission
intensity target for 2020 pertaining to reducing carbon emissions per
million RMB of sales revenue by 30% compared to 2012 (the baseyear) and exceeded this target.
Adopts renewable energy sources in its operations and is in theprocess of transitioning to all electric vehicles.
• The company built PV plants at three of its campuses. It has publicly
disclosed that electricity usage from renewable energy sources
reduced 188,000 tons pf CO2 equivalent emissions.

Analysis: The company potentially falls
under the B-List classification upon
applying the CCIF and Carbon Trust’s
scoring methodology.

• Integrating ICT with PV technologies so that solar power can begenerated more efficiently.
Encouraged suppliers to reduce carbon emissions.

The company has made notable efforts
to align to all three objectives (“Climate
Mitigation”, “Climate Adaptation” and“Contribution to the Transition”) of the
AIIB-Amundi Climate Change Investment
Framework. The Carbon Trust noted the needfor more efforts on Climate Mitigation and
Adaptation indicators.

• The company has incorporated sustainability requirements into its
end-to-end procurement process. This ranges from supplier admission
and qualification to selection, performance evaluation, and portfolio
management into its procurement strategy and processes.
• In 2020, the company encouraged its top suppliers to calculate theircarbon emissions, set carbon emission reduction targets, develop
plans, and implement programmes. within a year, all had measured
their carbon emissions and >90% of these suppliers had establishedemissions reduction targets and were implementing initiatives toreduce their emissions. The company has also publicly disclosed thecarbon emission reductions by its suppliers between 2019 – 2020.

Context for ICT sector:• The ICT sector’s carbon emissions are set tocontinue growing beyond 2025, where peakemissions are expected for sectors such as
steel, non-ferrous metal, and cement.
A 2021 report by Greenpeace East Asia foundthat electricity consumption from data centres
and 5G base stations in China is set to riseby approximately 289% between 2020 and
2035.13 The report also predicted that by 2035,
emissions from digital infrastructure in China
are expected to reach 310 million tonnes.14• The ICT sector needs to take active steps
towards decarbonization to support China’s
ambition of peaking carbon emissions
before 2030 and attain carbon neutrality
before 2060. This could be achieved for
instance, by powering data centres via
renewable energy sources and optimisingenergy use in their products and services
through smart technologies.

Embeds circular economy concepts in its direct operations andsupply chains.
• Sources renewable materials, including recycled aluminium, tin, gold
cobalt, for use in manufacturing and is exploring the possibility ofencouraging suppliers to use high-quality renewable materials andreduce their reliance on the mining of minerals.
• Built a global recycling program for device products and scaled up
their product trade-in program and had processed 4,500 tons ofsmart device e-waste by the end of 2020.
Climate Change
Adaptation

Considers climate related hazards prior to building a campus.
This is managed by the administration department who considers
climate related hazards as a key criterion for their choice of location
to build a campus.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework29Challenges and key learnings
1. Lack of clear methodology and criteria to define
green technologies can hamper companies’
assessment of their contribution to the lowcarbon transition.

Paris Agreement
Objective

ICT Company: Current Climate Actions

Contribution to
the Transition

Focuses on energy savings in its products and services.

As the ICT industry is an enabling industry,
their contribution to low-carbon transition
is dependent on whether their products areused in technologies classified as “green”. The
absence of clear methodology and criteria todefine green technologies present challenges
for ICT companies to track the volume of green
technologies used in their operations. Supply
chain issues also complicate this determination.
Additionally, transition targets, pathways andmetrics do not exist for all sectors and the SBTi
is one of the few organisations which haveexamined the transition pathways for the ICT
sector.16 Further work is needed to increaseknowledge and best practices for the ICT sector
to assess and scale up their contribution to the
low-carbon transition.

• Its lifecycle assessment revealed that for network equipment, thecarbon footprint generated in the use phase comprise 80-95% of thetotal, while for devices, the carbon footprint linked to raw material
selection phase makes up 80-95% of the total. Therefore, thecompany is focusing on improving the network equipment’s energy
efficiency and the devices’ resource efficiency.
• The company applies intelligent technologies to wireless networks toanalyse network co-coverage, enabling power saving across a wider
network. It also integrated optical modems and routers into one
product to maximize energy savings.
• In 2020, about 80% of its revenue was generated fromlow carbon products.
Empowers green and low-carbon development of society via
continuous digital technology and product innovation.
• It contributes to build energy-efficient infrastructure by developing
a full range of green ICT infrastructure solutions covering green sites,
green networks, and green operations.

2. Establishing a structured supplier engagement
programme can support reducing carbon
emissions across the supply chains.

• It integrates digital technologies and power electronics to promote
green energy adoption. By the end of 2021, its digital power solutions
had helped customers generate 482.9 billion kWh of green electricity.

The company incorporates environmental criteria
into its procurement strategy and processes,
ranging from supplier qualification, selection,
review, performance management, and inselection of materials. Besides encouraging its top
100 suppliers to calculate their carbon emissions,set carbon emission reduction targets, develop
plans, and implement programmes, it conducts
environmental internal audit on suppliers andtracks their performance using an evaluation
scorecard. As the supplier’s score affects theirshare in the company’s procurement, this createsa financial incentive for suppliers to prioritise
decarbonisation efforts and align with thecompany’s environmental criteria.

• It has been leveraging digital technologies to enable the low carbon
transformation of various industries, such as transport energy, andconstruction parks.

3. Innovations to realise energy savingsin products and services add
environmental benefits.
The ICT sector’s innovations enable other sectors
to achieve power savings and reductions incarbon emissions. This amount of reduction
can exceed the emissions reduced directly fromthe ICT sector. Results from the Company’s
lifecycle assessment for its network equipment
and devices led to a focus on improving the
network equipment’s energy efficiency and thedevices’ resource efficiency – both of which are
critical steps to the low-carbon transition. One
of its energy-saving solution applies intelligent
technologies to wireless networks to analyse
network co-coverage, enabling power saving
across a wider network. As more ICT companies
invest in energy-saving innovations, theenvironmental benefits could be achieved among
the users of their products and services as well.

Paris Agreement
Objective

ICT Company: Future Climate Plans

Climate Change
Mitigation

Setting carbon emissions reduction target for 2025
• The company plans to reduce the carbon emissions (Scope 1 andScope 2 GHG emissions) per unit of sales revenue by 16% by 2025
compared with 2019.
• The company is considering the possibility to align these targets to
the SBTi requirements in the future.

Paris Agreement
Objective

Carbon Trust’s Recommendations

Climate Change
Mitigation

Publicly commit to and set a science-based target.

Climate Change
Adaptation

Improve the assessment of its operations’ and supply chain’s
exposure to physical risks.

• The company had set carbon intensity reduction targets andmet them. Setting a science-based target not only informs its
decarbonisation strategy but also strengthens its existing supplierengagement and set an example for suppliers to emulate.

• The company can consider assessing physical climate risks
associated with its operations and supply chains by conducting
climate scenario analysis. The analysis can cover the higher-end of
the warming scenarios and evaluate the potential financial impacts
when these risks materialize in the short-, medium- and long-term.
• This enables the company to invest strategically towards climate
resilience and adaptation.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework30

Mahindra &Mahindra Ltd. (M&M)
Headquarters: Mumbai, India
Sector: Autos manufacturer
About the company: Mahindra and Mahindra
Ltd. is the world’s largest producer of tractors
and a leading manufacturer of utility vehicles
in India. It is the flagship company of one of
the largest industrial federations in India – theMahindra Group – with operations in both ruraland urban areas. M&M’S products and services
include SUVs, electric vehicles, commercial
vehicles, two-wheelers, and tractors that areclaimed to be robust and fuel-efficient.
Analysis: M&M potentially falls under the
B-List classification upon applying the CCIF
and Carbon Trust’s scoring methodology.
M&M has made notable efforts that align tothe “Climate Mitigation” and “Contribution to
the Transition” objectives of the AIIB-Amundi
Climate Change Investment Framework. It
has set a Science-Based Target, a Net Zerotarget and the EP100 (Energy Productivity100) target. The company has been tracking
and disclosing its revenues from investments
into green technologies and businesses. The
company can, however, improve in its efforts
under the “Climate Adaptation” objective by
broadening the range of climate scenarios
assessed and in turn, the likely financial
impacts on its operations and supply chains.
Context for auto sector:• The autos industry is a key driver of
economic growth, contributing 7.1% to theoverall Gross Domestic Product (GDP) and
49% to the manufacturing GDP in India. The
Automotive Mission Plan of the Governmentof India aims to raise the contribution of theautomobile sector towards India’s GDP to 12%
and grow employment generation to 50 million.
• In India, the transport sector is the thirdlargest CO2 emitting industry, with roadtransport contributing to more than 90%of the sector’s CO2 emissions.17 As India’s
economy develops, vehicle ownership levelhas increased leading to a rise in emission
levels on the road.
• To curb emission levels in India’s transport
sector, a shift towards hybrid and electricvehicles (EVs) is crucial. Current efforts areunderway through three key drivers:
1. The first driver is government intervention
to lower the barriers to the adoption of EVs.
For instance, a scheme (FAME-II) to promote
faster adoption and manufacturing of hybrid
and electric vehicles offers upfront incentives
on the purchase of EVs and supports theParis Agreement
Objective

M&M: Current Climate Actions

Climate Change
Mitigation

Measured and set reduction targets covering emissions in i
ts value chain.
• Measured and disclosed its Scope 1, Scope 2 and Scope 3 emissions(tCO2e ) between 2017 to 2021 through its Sustainability Report 2020-21.
• The SBTi has approved M&M’s near-term well below 2°C target to cut
Scope 1 and Scope 2 GHG emissions by 47% per equivalent productunits by 2033 from a 2018 base year and to reduce Scope 3 GHG
emissions by 30% per sold product unit by 2033 from a 2018 baseyear. M&M has also committed to a Net Zero target.
• In line with its SBT emission reduction roadmap, M&M has decided onan emission reduction target of 4.1% year-on-year for the next 15 years.
It has also committed to be carbon neutral by 2040 and uses GHG
removal offers in the form of sequestration through tree plantation.
Adopted various measures to double the energy productivity of
its operations.
• First company in the world to commit to doubling its energy productivity
by 2030, signing on to The Climate Group’s EP100 programme.20• One of M&M’s subsidiaries, Mahindra Heavy Engines Limited (MHEL)
also committed to EP100 and achieved a doubling of its energy
productivity 21 years ahead of its 2041 target.
• In the last three years, M&M’s facilities were awarded 13 Green
Building certifications, for their energy saving efforts.
Fosters circular economy by minimising the use of materials,
reduce the waste generated and promote the continual useof resources.
• Leveraging on technology and innovation to find better processes andreduce material consumption. For instance, the use of PU paint for
sheet metal through highly durable, solid PU Resin System & Polymer
Di-Isocyanate technology results in material saving, cost reduction,
product quality improvement as well as a lower carbon footprint.
• Of the 20 locations across M&M’s operations, 14 of them haveachieved zero waste to landfill goal. The company established atarget to recycle 70% of total hazardous waste generated in FY21 andto cap hazardous disposal to 30%. It also surpassed the hazardous
waste disposal to landfill target for FY21, achieving 469 MT waste
disposal against the target of 1,025 MT for FY21.
• M&M runs Cero Recycling, a Joint Venture between Mahindra Accelo and
MSTC (A Government of India Enterprise) to purchase scrap cars fromindividuals and institutions and recycle them at its facility in Greater Noida.

deployment of charging infrastructure. While thescheme disbursed just under 10% of the targetedamount in November 2021, it has improved
significantly since June 2021 as the subsidies
given per two-wheeler were doubled.18
2. The second driver is the improvements inbattery chemistry resulting in lower costs ofbattery production. This contributes to lower
prices of electric vehicles which increases
consumers’ appeal for electric vehicles.

manufacturing and marketing of the vehicle,
companies are now going beyond to include
direct sales to consumers, set up of charging
infrastructure and offering financing options.19
These range of services lower the barriers for
EV adoption, and may contribute towards
achieving critical mass for EVs in India.

3. The third driver is the shift in business models
towards a “full stack approach”. From a previously
vertical-focused approach, with emphasis onCompanies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

31

Challenges and key learnings
1. Setting SBTs covering its Scope 1, Scope 2
and Scope 3 emissions and committing to a
net zero target ensures that the company has
made a credible commitment on its climate
initiatives across its entire business.
Autos is an energy-intensive industry and its
business operations are vulnerable to risks
associated with seasonal monsoon, risingenergy costs, uncertain access to raw materials
as well as changing consumers’ tastes andpreferences. M&M has disclosed SBTiapproved targets to cut Scope 1, Scope 2, andScope 3 GHG emissions which are consistent
with reductions required to keep warming towell-below 2°C. This allows the company toassess the progress of its climate initiatives
and communicate credibly to external
stakeholders. According to the SBTi website,
M&M has also committed to a net zero target.

Paris Agreement
Objective

M&M: Current Climate Actions

Climate Change
Mitigation

Maintains sustainable supply chain management andprocurement policies.
• Regularly evaluates the sustainability of existing technology of their
suppliers and conducts environmental and social assessment using
its internal balance scorecard.
• Partnered with the Institute for Sustainable Communities &Symbiosis Institute to train 3,873 suppliers. 14 suppliers had
implemented energy projects, achieving 1,912 tons of CO2 savings.

Climate Change
Mitigation &Contribution to
the Transition

Introduced an internal carbon price (ICP) which helps to direct
investments towards greener projects.

Climate Change
Adaptation

Assessed the physical risks and transition risks related to its
direct operations and supply chain.
• The physical risks identified include abundant rainfall, flooding, anddrought risks. The company also considered transition risks arising fromgovernment regulations as well as new products and technologies.

2. Quantifying contribution to the transition by
establishing an ICP and monitoring revenues
from and investments into green technologies.
In 2016, M&M became the first Indian company
to announce an ICP of USD10 per ton of carbon
emitted. Pricing carbon can be an important
tool for businesses to reduce not only theircarbon footprint but also address the risks
arising from tightening government regulations
on GHG emissions. In M&M’s case, the funds
raised are then invested in renewable energy,
including solar, wind, heat recovery systems,
and energy efficient motors. The company
tracks its revenues from and investments intogreen technologies. This is essential not only
to facilitate the low-carbon transition but also
to remain competitive in the Indian market as
electric mobility becomes more prominent.

• First Indian company to introduce an ICP of USD10 per ton of carbon
emitted. The funds raised are then invested in renewable energy, including
solar, wind, heat recovery systems, and energy efficient motors.

• The COVID-19 pandemic has also influenced consumers’ preferences,
opting for personal vehicles over shared mobility arrangements.
Contribution to
the Transition

Invests in green technologies to drive transition, tracks
its investment contributions and the revenue generated
from these investments• M&M invested approximately INR320m (USD4m) in energy efficiency
improvement and renewable energy technologies.
• M&M is the parent company of subsidiaries with specific green
businesses such as Mahindra Lifespaces, Mahindra Electric
Mobility Limited, Mahindra Susten and Mahindra EPC. These green
businesses generate green revenues estimated at USD600m (3-4% of
the Group’s total revenue).

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework32

3. Deploying ultra-low emission vehicles
require robust charging infrastructure.
At the country level, there is limited accessto robust charging infrastructure and highcarbon grid profile making it challenging forthe deployment of EVs. Nonetheless, M&M ispioneering ahead with the EV technology andis working with the Government of India under
the FAME-II scheme to invest in growing the
adoption of EV on Indian roads. M&M has also
partnered with Amazon India to fulfil its target
to have 10,000 EVs in its delivery fleet by 2025.

Paris Agreement
Objective

M&M: Future Climate Plans

Climate Change
Mitigation

Shift its directly contracted logistic transport to hybrid vehicles
and eventually electric vehicles.
• By 2030, M&M is looking to trial ultra-low emission vehicles for 30%
of its total fleet.
Plans to boost its green energy ratio through increasing solar
and wind power capacities.
• The share of renewable electricity of M&M has increased to 12.3% in
F22 compared to 9% in F21. M&M plans to increase solar and wind
power capacities to boost its green energy ratio.

Paris Agreement
Objective

Carbon Trust’s Recommendations

Climate Change
Mitigation

Establish a higher target to grow the share of solar and wind
power capacities as well as diversify into other types ofrenewable energy sources.
• To increase the proportion of renewable energy in its total energy mix
beyond solar and wind power, M&M could also explore tapping into
other sources such as green hydrogen in the near future where viable.

Climate Change
Adaptation

Enhance its scenario analysis to include 3°C and 4°C scenarios toassess the magnitude of the financial impacts to the company inextreme conditions.
• According to its Climate Change 2021 CDP questionnaire response,
M&M implemented a scenario planning exercise and considered four
different scenarios in a maximum 2-degree warmer world.
• Expanding the analysis to include 3°C and 4°C scenarios can deepen
M&M’s understanding of the potential financial impacts and in turn,allocate appropriate budgets in the future to make infrastructuralchanges to align with climate related hazards.

Climate Change
Adaptation

Enhance its scenario analysis to include 3°C and 4°C scenarios toassess the magnitude of the financial impacts to the company inextreme conditions.
• According to its Climate Change 2021 CDP questionnaire response,
M&M implemented a scenario planning exercise and considered four
different scenarios in a maximum 2-degree warmer world.
• Expanding the analysis to include 3°C and 4°C scenarios can deepen
M&M’s understanding of the potential financial impacts and in turn,allocate appropriate budgets in the future to make infrastructuralchanges to align with climate related hazards.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

33

Samsung SDI Co., Ltd.
Headquarters: South Korea
Sector: Technology & Electronics
About the company: Samsung SDI, a
subsidiary of Samsung Group, is the global
leader in the manufacturing of energy
storage and electronic materials technology.
Established in 1970, the company operates
in 27 countries and is a leading supplier ofLithium-ion battery, which is the current mostwidely adopted energy storage technology.
Its rechargeable Li-ion batteries are usedcommercially in consumer electronics,
low-carbon automotives and Energy Storage
Systems (ESS). The company endeavours into
the R&D of solid-state batteries technology
as well. Besides energy storage solutions,
Samsung SDI manufactures materials forsemiconductor manufacturing as well as OLEDand LCD display screens.

Paris Agreement
Objective

Samsung SDI: Current Climate Actions

Climate Change
Mitigation

Measured, reported, and set targets around its organizational
greenhouse gas emissions.
• Measured and disclosed its Scope 1, Scope 2, and selected Scope 3
categories GHG emissions (tCO2e) in 2021 in its 2021 ESG Report. For
Scope 3, only selected categories related to business travel, producttransportation, fuel energy and waste were reported.
• Set a target to reduce direct GHG emissions by 340,000 tCO2e byimproving LNG use intensity.
Committed to achieve 100% renewable energy by 2050.
Set a goal to achieve 100% transition to renewable energy for all its
operations globally by 2050 and created a roadmap for renewableenergy adoption leading up to 2050.
• The company plans to steadily increase their renewable energy portfolio
from 42% in 2025, 65% in 2030 and eventually to 100% in 2050, through
PPAs and purchase of renewable energy certificates (REC).

Analysis: Samsung SDI potentially falls
under the B-List classification upon
applying the CCIF and Carbon Trust’s
scoring methodology.
The company has made significant efforts related
to the “Climate Adaptation” and “Contribution toTransition” objectives of the AIIB-Amundi Climate
Change Investment Framework. Samsung SDI
has measured and reported its organizationaland value chain emissions and can consider
taking a step further to set science-based targets
aligned to 1.5-degree ambition to improve its“Climate Mitigation” efforts.

Embeds circular economy concepts in its direct operations.
• Works with service providers to recycle scraps from its manufacturing
process. These scraps are recycled into nickel sulphate and cobalt
sulphate which is then fed back into the process as raw materials.
• On top of driving waste reduction in their operations, the company
has taken a step further to set a waste recycling ratio of 80% amountrecycled versus amount discharged by 2025.
Climate Change
Adaptation• In accordance with the TCFD framework, Samsung SDI identified
both physical and transition climate-related risks to their business.
Based on the 2021 CDP report submitted, the company has also
analysed the associated financial impacts to the risks identified.

Context for technology & electronics sector:
South Korea has one of the biggest technology
players in the global market, manufacturing
both the software and hardware. The country
is a major global exporter of electronics
products to US, China, and EU markets21 and
it is positioned as one of the world’s leading
technologies innovators.
The electronics sector in South Korea willcontinue to grow at a rapid pace strengthened byexport demand for electronics products in fastgrowing emerging markets like China, India, and
ASEAN countries. However, research has reported
that the huge demand for Korean electronics has
led to a contribution of 8% of national greenhousegas (GHG) emissions in 201722. To meet Korea’s
goal of achieving carbon neutrality by 2050, large
conglomerates like Samsung SDI must contributeand commit to substantially cut their emissions in
the next decades.

Identified and reported physical and transitional climate risks
in direct operations and supply chain as well as its associatedfinancial impacts.

• Introduced internal carbon pricing system to forecast cost of annual
emissions, to set aside potential budget needed and to expand
efforts in lowering the risks through renewable energy deployment.
Contribution to
the Transition

Conducts R&D on new eco-friendly and market-leading products.
• The company is driving R&D for all-solid-state batteries and cobaltfree batteries. A potential successor to Li-ion batteries, all-solid-statebatteries has better performance as it can store more energy and is
fast charging. The technology is a potential game changer which will
help to drive the widespread adoption of EVs. Furthermore, solid-statebatteries have better environmental performance, requiring fewer
raw materials and can be produced without mined cobalt for raw
material23. Cobalt-free batteries are eco-friendly and price competitive
as well, which helps companies mitigate its raw material supply risks.
• Samsung SDI has also conducted an internal life cycle assessment
for its EV batteries to analyse its environmental impacts and conduct
further R&D to determine areas to lower emissions in the entire life
cycle of its products.

For the battery industry, the South Korean
government announced the development
plan in 2021 to drive innovation and accelerate
growth of the industry.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework34

Challenges and key learnings
1. Investments into research and development
for more efficient, lower carbon technology
helps company remain competitive.
In the face of rising demand for eco-friendly
products, Samsung SDI recognised the needto research new applications and technology
which enables better environmental
performance. The company invests in the R&Dof new market-leading products like solidstate batteries. This helps to keep company
competitive and reduce risks of stranded assets
due to green alternatives. The company’s
investment on innovation can in turn drive
widespread adoption of electric vehicles andenable avoided emissions when consumers
make the switch to a lower carbon vehicle.
2. Conduct product life cycle assessments to
identify scale of environmental impacts fromproduction to disposal.
Life cycle assessments identify greenhousegas emissions throughout a product’s life cyclefrom extraction of raw materials to productuse and disposal. It is an important toolthat can help companies determine areas of
improvement in their production processes.
In Samsung SDI’s case, the company will
adopt an extended cradle-to-grave life cycle
assessment for its EV batteries, instead of acradle-to-gate approach. The cradle-to-grave
methodology helps the company broaden its
scope of environmental impact assessment
into the end-of-life treatment of batteries,
aiding Samsung SDI in strategic planning of
measures to reduce its emissions.

Paris Agreement
Objective

Samsung SDI: Future Climate Plans

Climate Change
Mitigation

Plans to work with automotive Original Equipment
Manufacturers (OEMs) to develop a closed-loop resource
recovery system for end-of-life batteries.
• Samsung SDI is conducting research and development on the possibility
to reuse its end-of-service EV and ESS batteries for other applications.
Aims to switch to zero-emission cars for owned or leased
business vehicles and build corresponding charging
infrastructure by 2030
• Samsung SDI installed EV chargers and introduced EV buses in a few
of their worksites in South Korea.
• Joined K-EV100 led by South Korea’s Ministry of Environment tocommit to a shift to EVs.

Paris Agreement
Objective

Carbon Trust’s Recommendations

Climate Change
Mitigation

Measure entire Scope 3 value chain footprint.
• Samsung SDI made efforts in the calculation and verification of
Scope 3 footprint in selected categories of product transportation,
fuel energy and waste. Their suppliers are also encouraged to reporttheir own Scope 1 and 2 footprints, which Samsung SDI has used toreport some of its Scope 3 categories in the 2021 CDP report.
• It is useful for the company to conduct a complete audit of Scope
3 footprint to identify hotspots and develop a targeted emission
reduction strategy.
Publicly commit to set near-term and long-termscience-based targets.
• Once the full value chain footprint is calculated, the next step is tocommit and set a near-term and long-term science-based target, which
not only informs the public about its decarbonisation strategy but also
strengthens its existing supplier engagement on climate action.

3. Technology & electronics manufacturing
companies are prone to physical climate risks
as processes are sensitive to temperature andhumidity changes.
The manufacturing of electronics products
typically take place in highly controlledenvironment with steady temperature andhumidity. Rise in frequency of extreme weather
conditions due to climate change can cause
an increase in operational costs to keep the
production facility at the same condition. It
is important for companies to analyse theassociated financial impacts of the climate
risks through the TCFD framework so they can
set aside sufficient budget in the coming years
in the event of a climate incident.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

35

Singapore
Telecommunications
Limited (Singtel)
Headquarters: Singapore

Paris Agreement
Objective
Climate Change
Mitigation

Sector: Telecommunications• Singtel has consistently reported its total carbon emissions(tonnes of CO2 equivalent) in terms of Scope 1, 2 and 3, which
are independently verified by Ernst & Young LLP since the 2017
Sustainability Report.
• Its decarbonisation roadmap includes renewable energy adoption
in its Singapore and Australian operations, in addition to ongoing
initiatives to upgrade mobile networks and phase out energy
inefficient types of equipment and facilities.
Implemented product stewardship.
• Partnership with Mobile Muster since 1998 to facilitate the recyclingof mobile devices and accessories
via its Optus stores.

Analysis: Singtel potentially falls under the
A-List classification upon applying the CCIF
and Carbon Trust’s scoring methodology.

Climate Change
Adaption• Developed an internal Sustainable Packaging Strategy with goalsaligned with Australia’s National Packaging Waste targets to makeall packaging 100 percent reusable, recyclable or compostable inAustralia by 2025.
Identified both chronic and acute risks27 to its direct operations
and supply chains and developed adaptation measures.
• Assessed these risks through climate scenario analysis for its Singapore
and Australian operations back in FY 2016.
• Conducted a pilot in Northern Rivers region, New South Wales,
Australia to refine the modelling and validate the material drivers
and assumptions that have an impact on the company’s financials.
The pilot exercise found that forest fires are expected to have thehighest financial impact on capital expenditure for asset repair or
replacement in 2030 and 2050.

Context for telecom sector:
Singapore has ambitions to transform into a“smart nation”. The Smart Nation strategy waslaunched in 2014 and the country has positioned
itself as a living test bed where companies candevelop and promote innovative urban solutions
in cooperation with the Singapore government25.
The high digital penetration in Singapore
together with the rising emphasis on digitalsolutions pave the way for the telecom sector
to grow in importance in both the economy
and the environment. On the other hand, data
centres account for a significant proportion ofenergy consumption while the products andservices offered by telecom companies could
lead to more waste and pollution to the naturalenvironment, including those linked to e-waste.

Established a Science Based Target in 2017 to reduce Scope
1 and 2 emissions by 42 percent and Scope 3 emissions by 30
percent between 2015 and 203026.
• Developed carbon reduction goals aligned with science-basedtargets methodology, and its carbon reduction targets wereapproved by the Science Based Targets initiative in 2017 in line witha well-below 2-degree scenario.

About the company24: Singtel is Asia’s
leading communications technology
group, providing a portfolio of services
from next-generation communication,technology services to infotainment to bothconsumers and businesses. For consumers,
Singtel provides integrated suite of services,
including mobile, broadband and TV. Singtel
also provides workforce mobility solutions,data hosting, cloud, network infrastructure,
analytics, and cyber-security capabilities tobusinesses. The Group has presence in Asia,
Australia and Africa and reaches over 740
million mobile customers in 21 countries. Its
infrastructure and technology services forbusinesses span 21 countries, with more than
428 direct points of presence in 362 cities.

Singtel has demonstrated strong efforts across“Climate Mitigation”, “Climate Adaptation”
and “Contribution to the Transition” of the
AIIB-Amundi Climate Change Investment
Framework. The Carbon Trust recommends
the company to assess its exposure to physicalclimate risks and potential financial impacts
across the value chain. These will help tobetter measure and assess the company’scontribution to the transition.

Singtel: Current Climate Actions• Implemented different adaptation measures such as back-up generatorsin Australia with the capacity to provide support up to six-seven days
independent of the general grid as well as Cell-sites on Wheels (COWs)
mobile base stations and Community Trucks in the event of bush fires andfloods to support connectivity for the local communities.
Contribution to
the Transition

Provide telecom services and greater connectivity which areenablers of the low-carbon transition.
• Singtel’s network, ICT services, and solutions enable its corporate
customers to telecommute and maintain productivity, while lowering
carbon emissions from reduced transportation.
• Its largest source of revenue related to green technology can be
attributed to its data centres. Besides regular upgrades and use ofenergy efficient technologies for existing data centres, new data
centres are certified to the highest prevailing Singapore standards
known as Greenmark Platinum. Older less efficient data centres
are progressively retired. Its 5G networks are reportedly more energy
efficient per unit of data traffic compared to legacy technologies.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework36Challenges and key learnings
1. The growing demand for energy could be
alleviated through more energy efficiency
measures especially when there are somechallenges in increasing procurement of
renewable energy in Singapore.
Singtel faced substantial challenges
increasing procurement of renewable energy
in Singapore where local renewable energy
supply is limited. The growing demand forenergy could be alleviated through energy
efficiency measures such as regular upgrades
and use of energy efficient technologies forexisting data centres and certifying new data
centres to the highest prevailing Singapore
standards known as Greenmark Platinum.
The deployment of 5G networks – comparedto legacy technologies – also contributes tohigher energy efficiency.

Paris Agreement
Objective

Singtel: Current Climate Actions

Contribution to
the Transition

Released its Sustainability-Linked Bond Framework, which is a
first for a telecom company in Asia Pacific.
• Under this framework, Singtel and Optus may issue sustainabilitylinked bonds (SLB) linked to the achievement of GHG reduction thatalign with targets approved by the SBTi.
• Optus, through its wholly owned subsidiary, Optus Finance, hasissued an AUD300m seven-year fixed-rate SLB in November 2021

Paris Agreement
Objective

Singtel: Future Climate Plans

Climate Change
Mitigation

Increase procurement of renewable energy for its operations.

• Interim target: to achieve 25 percent renewable energy by end 2025
for its Scope 2 needs in Singapore and Australia.

2. Setting science-based targets which coverboth direct operations and supply chains.
Setting ambitious, credible, and science-basedtargets is important to communicate thedirection of the company as well as to betteralign future climate action. Singtel’s efforts toachieve its SBT will have ripple effects by shaping
the way it operates and the suppliers it engages,
as well as form the basis of sustainability linked
financing performance targets.

• Has set one, three and five-year carbon and renewable energy
targets to shape its renewable energy PPA tenders to be issued tomarket in FY 2022.
Paris Agreement
Objective

Carbon Trust’s Recommendations

Climate Change
Adaptation

Moving beyond the pilot project to assess physical risks andfinancial impact on its value chain, key commodities, anddistribution routes.

3. Promoting best practices throughindustry associations.
Through its role on the GSMA28 Board and
its Climate Action Task Force, Singtel has
helped to shape the industry in embarking
on a landmark science-based sector-specificdecarbonisation pathway to reduce GHG
emissions and achieve net zero emissions by
2050. Moving forward, industry associations
can also promote regular dialogues with
policymakers to raise awareness around thelatest developments in topics such as energy
efficiency standards. This can inform and spur
more telecom companies to adopt the mostadvanced technologies and better addresstransition risks.

• This is a key step to reduce its exposure to extreme policy shock,assessed to be its most material source of transition risk. Singtel isalso planning to complete an internal carbon pricing project in FY
22 to better understand carbon tax policy scenarios and implications.

• Expanding this assessment to include its value chain, key
commodities and distribution routes will allow the company toarrive at a more holistic view of its climate risks exposure and thepotential financial impacts.
Contribution to
the Transition

Develop metrics for Scope 3 related efforts such as e-waste
recycling to better measure and assess the company’scontribution to the transition.
• Better measurement and disclosure improves accountability
to stakeholders.

4. Diversifying into green and sustainablefinancing options.
Drawing on Singtel’s experience with SLBs,
telecom companies can consider tapping into
the green and sustainable financing optionsin the market. This not only helps companies
to diversify their sources of financing but alsoenables the company to better achieve its
climate goals in the long run.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

37

TCL Electronics
Holdings Limited
Headquarters: China
Sector: Electronics

Paris Agreement
Objective

TCL Electronics: Current Climate Actions

Climate Change
Mitigation

Measured and reported its Scope 1 and 2 greenhouse gas
emissions.

About the company: Incorporated in 1999 in
China, TCL Electronics Holdings Limited (TCLElectronics) is a consumer electronics company
specialising in the R&D, manufacturing and salesof smart screens, mobiles, connected devices,
commercial displays, home products and other
IoT products. It has over 31,000 employees andoperates globally in 58 countries. In China,
TCL Electronics is the only company within theindustry that has a vertically integrated supply
chain. TCL Electronics aspires to become a global
leading smart technology company and is actively
investing in development of cutting-edge displays,
5G and AI-empowered consumer products.

• Measured and disclosed its Scope 1 and Scope 2 greenhouse gas(GHG) emissions (tCO2e) in 2021 in its
2021 ESG Report.
• Set a GHG emission intensity target (tCO2e per RMB10,000 output value) to
reduce 18% of Scope 1 and 2 emissions by 2025 from a base year of 2020.
Embeds circular economy concepts in its direct operations.
• Selects readily degradable and recyclable materials in productdevelopment stage and recycles electronic and packaging waste
generated back into its process. If there are remaining waste thatcannot be recycled or reused, TCL Electronics will hand over thewaste to qualified third parties to carry out recycling treatment.
• Built recycling programmes and events globally to encourage users of
their electronic goods to trade-in their old TV sets and mobile devices. The
company works with partners like its fellow subsidiary TCL Environmental
Protection Technology Co. and MRM, a recycling management company,
to recycle and reuse the scarce material in these devices.

Analysis: TCL Electronics potentially
falls under the B-List classification upon
applying the CCIF and Carbon Trust’s
scoring methodology.

• Requests suppliers to recover and reuse packaging materials like paper
carbons, cardboards, and plastic boxes.

The company’s efforts to design and manufacture
greener consumer electronics products is well alignedwith the “Contribution to Transition” objective of the
AIIB-Amundi Climate Change Investment Framework.
However, there is room for improvement across the

Climate Change
Adaptation• TCL Electronics has identified both acute and chronic physicalclimate-related risks as well as policy and reputational relatedtransition risks. The company has also analysed how these risks
would impact its own operations and its supply chain.

other two objectives. Related to “Climate Mitigation”, TCLElectronics should set science-based targets, and underthe “Climate Adaptation” objective, the company should
conduct a stronger climate scenario analysis.

• According to its 2021 ESG report, the company demonstrated thatit has put in place measures to prevent these risks by formulating
emergency plans in the event of disasters, upgrading factories
through process optimisation and low-carbon practices, andconsidering climate-related hazards as a key criterion for their choiceof location to build facilities.

Context for electronics sector:• Despite the Covid-19 pandemic, China’s
electronics market has maintained a steady
growth in the first quarter of 2022 with a 12.7%
growth year-on-year29. Specifically in theelectronics display market, China is the market
leader internationally, driven by its dominancein the LCD market30.
• Backed by strong demand for digitalproducts and government support, theelectronics and ICT sector in China is
expected to continue to grow. However,carbon emissions generated from theelectronics manufacturing industry is
predicted to increase alongside the sector’s
growth, which may hinder achieving
the country’s goals to peak emissions
before 2030 and attain carbon neutrality
before 2060. The Chinese government hasrecognised the need to decarbonise thesector and is planning to establish low-carbon
evaluation technology standards for electronic
products such as computers and LCD
televisions. The plan will also include otherstandards for carbon emission monitoring andcarbon neutrality management systems in theelectronics sector31.

Identified physical and transition climate risks and considers
climate-related hazards prior to building their facilities.

Contribution to
the Transition

Innovates to achieve energy savings in its products and services.
• The company prioritises low-carbon green design for its products andmanufacturing processes. TCL Electronics is the first company in China
which had its products, 10 TV models, certified by the Product Carbon
Label issued by China Electronic Energy Saving Technology Association.
• Aside from the product carbon label, some products manufacturedby the company have achieved China’s Energy Efficiency Standardof Level 2 in the China market and an Energy Star Rating of 8.0 in
the US Market.
• According to its CDP submission, about 66.7% of its revenue isderived from low-carbon products.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework38

Challenges and key learnings:
1. Innovating energy-efficient products can savecosts for companies and reduce emissions in
product development processes.
Digital technology is one of the key tools in thefight against climate change as it creates new
possibilities for carbon reduction. Innovations
in digital products can help to spearhead
efforts in global decarbonisation goals. The
World Economic Forum has reported thatthe industry has a potential to cut global
greenhouse gas emissions by 15%32. The
electronics and ICT sectors’ innovations
enable other sectors to achieve power savings
and reductions in carbon emissions. As
such, TCL Electronics prioritises investments
into low-carbon product design, not only
to achieve cost savings, but also to prevent
transition risks of assets being stranded. As
more electronics and ICT companies invest inenergy-saving innovations, the environmental
benefits could be achieved among the users of
their products and services as well.

Paris Agreement
Objective

TCL Electronics: Future Climate Plans

Climate Change
Mitigation

Evaluating the possibility of aligning its Scope 1 and Scope 2
emissions intensity reduction targets to the requirements of the SBT.
• SBT commitments were made by TCL Electronics’ subsidiaries,
Huizhou TCL Mobile Communication Co. and TCL King Electrical
Appliance (Huizhou) Co. in 2021 and 2022 respectively. The company
has reviewed its Scope 1 and 2 emissions and is planning to set a
1.5-degree SBT target at the group level.

Paris Agreement
Objective

Carbon Trust’s Recommendations

Climate Change
Mitigation

Set ambitious targets for renewable energy use.

• According to its 2021 ESG report, the share of renewable energy
in the total energy mix for TCL Electronics is 8% in 2021. The
company can tap on expertise from TCL China Star Optoelectronics
Technology (CSOT)’s green technology arm to further improvetheir renewable energy proportion. TCL CSOT is a subsidiary of TCL
Technology, which is TCL Electronics’ parent company.

2. Lack of a clear international standard andmethodology to define green consumer
electronics and ICT products can hamper
companies’ assessment of their contribution
to the low-carbon transition.
As electronics and ICT are enablingindustries, their contribution to low-carbon
transition is dependent on whether theirproducts are classified as “green”. The
absence of clear methodology and criteria todefine green technologies present challenges
for companies to track the volume of green
technologies used in their operations. As
such, electronics and ICT companies struggle
to assess their exact contribution to the
low-carbon transition. One way to overcome
this is to adopt the avoided emissions
framework to measure and report theenablement impact of each product. This will
help companies track how their products are
driving carbon reduction and ensure greater
stakeholder transparency when companies
report their findings.
3. Continuous engagement and review
with partners in the electronics supply chain
is a key to the success of reducing carbon
emission in the supply chains.
The electronics and ICT sectors typicallyhave large and complex supply chains, evenin TCL Electronics’ vertically integrated one.
Having a clear supplier review framework andincorporating environmental criteria into thereview can influence a greener supply chain anddrive reduction in emissions. TCL Electronics
adopts a rigorous review of its supply chain
through their “Regulations on the Management• In line with China’s national carbon reduction goals, the company
can consider committing to a RE100 target before 2030 and drive
reduction in Scope 2 emissions, which makes up 89% of its total
Scope 1 and 2 footprints.

Measure Scope 3 value chain footprint and publicly commit to
set a science-based target.
• Majority of a company’s overall GHG emissions typically lies in its Scope
3 value chain footprint. It would be useful for the company to measureand set reduction targets for its Scope 3 footprint so that it could
continue to establish itself as a climate action leader in the industry andinfluence its value chain partners to adopt carbon reduction strategies.
• The company has already set a carbon intensity reduction target for 2025.
The next step forward is to commit to and set a near-term and longterm science-based target which not only informs the public about its
decarbonisation strategy which sets an example for suppliers to emulate.
Climate Change
Mitigation &Contribution toTransition

Measure and report enablement impact of its “green” products.

Climate Change
Adaptation

Conduct detailed temperature-based assessment of its
operations’ and supply chain’s exposure to physical risks andthe associated financial impacts.

• The company has made considerable efforts in low-carbon
innovation of its products and could explore developing a model
to quantify the avoided emissions. This could help the company
provide transparent reporting for customer engagement and to
identify areas where company can pursue further innovations anddeliver greater avoided emissions.

• The company can consider assessing temperature-based climate
related risks and opportunities related to its operations and supply
chains, that are aligned to the higher-end of the warming scenarios.
It can also evaluate the potential financial impacts when these risksmaterialize in the short-, medium- and long-term.
• This would enable the company to invest strategically in climate
resilience of its operations and assets.
of Supplier Review” framework and evaluates its
suppliers monthly through a scoring system. As the
supplier’s score affects their share in the company’s

procurement, this creates a financial incentive
for suppliers to align with the company’senvironmental criteria.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

39

Vena Energy
Headquarters: Singapore
Sector: Energy (power generation)
About the company: Vena Energy is anindependent power producer (IPP) of renewableenergy. It owns, develops, constructs, operates,
manages, and commercialises renewableenergy projects in the Asia-Pacific region.
Headquartered in Singapore, the company has
a presence in Australia, India, Indonesia, Japan,
Philippines, South Korea, Taiwan, China, andThailand. Vena Energy’s portfolio consists ofsolar, wind and battery energy storage systemassets with over 18-gigawatts in operation,
construction, contracted, and development
stages. Vena Energy is a portfolio company of
Global Infrastructure Partners, a leading global
independent infrastructure fund manager in theenergy, transport, and water/ waste sectors.

Paris Agreement
Objective

Vena Energy: Current Climate Actions

Climate Change
Mitigation

Incorporates climate change performance as one of the KPIs forsenior executives.
• The volume of clean energy generation and installation performanceof new renewable clean capacities are linked to the KPIs of all senior
executives. This in turn impacts the remuneration of senior executives.
Measured and reported its Scope 1, 2 and 3 emissions. 37• The company measured and reported on its Scope 1, 2 and 3 emissions.
For Scope 3 emissions, the company has either tracked or estimatedthe carbon emissions stemming from manufacturing and transporting
renewable energy equipment and components, as well as the emissions
from services obtained for day-to-day operations.
• Most of the company’s Scope 3 emissions come from Category 2“Capital Goods Purchased” which captured the upstream (cradle-togate) emissions from its equipment purchases.
• Renewable energy generation across project portfolio results in
reduction in Scope 1 and Scope 2 emissions, comprising 0.05% and0.8% of the total GHG emissions avoided respectively.

Analysis: Vena Energy potentially falls underthe B-List classification upon applying the
CCIF and CT’s scoring methodolog

Integrates optimal efficiency and longevity in all stages of the
project lifecycle.

.Vena Energy has made efforts that align to the“Contribution to Transition” objective of the AIIBAmundi Climate Change Investment Framework
but can improve in efforts aligning to the “Climate
Mitigation” and “Climate Adaptation” objectives. A
strong science-based target aligned to 1.5 degrees,and deeper financial analysis on climate risks andmitigation would be the important next steps.

• Vena Energy recognizes the finite life of its renewable energy projects
and the importance of planning for the end-of-service life, eventhough the average life of its project portfolio is relatively young.
• Vena Energy’s integrated capabilities across the renewableenergy project lifecycle allow them to optimise development andconstruction costs, thereby lowering the levelized cost of energy for
its off- takers. This is critical in scaling up adoption of renewables andstrengthening climate mitigation in the countries where Vena Energy
has a presence.

Context for energy sector:
Although the Asia-Pacific region is a renewableenergy leader worldwide, the deploymentof renewables continues to lag from that of
traditional energy sources due to the economic
growth connected with fossil fuels. 85% of theenergy use in Asia-Pacific is derived from fossil
fuels and the region accounts for 50% of global
greenhouse gas emissions33. Asia-Pacific is among
the most vulnerable to the impacts of climatechange34. In the face of climate concerns andrisks from volatile energy prices due to recent
geo-political tensions, countries in the region arerecognising that more robust efforts are required
to accelerate the transition to renewables.
Hydropower remains the most adopted
renewable energy source for Asia Pacific region,
making up to 65% of the region’s renewableenergy share35. Solar and wind are also promising
renewable energy sources in driving the energy
transition. Governments in the Asia-Pacific region
have set renewable adoption targets to help
them move closer to achieving their broader
Nationally Determined Contributions (NDCs). With
these fiscal policies in effect, experts predict thatinvestments in renewable energy generation may
double to $1.3 trillion by 2030 from the previous
decade36. Power producers like Vena Energy
have a huge part to play in driving Asia-Pacific’s
renewable transition journey.

Climate Change
Adaptation

Assesses climate related risks and opportunities associatedwith its own operations and sites.
• During the development stage, multiple technical, feasibility andmarket assessments are carried out to assess the physical climate
risks of projects and define relevant mitigants to be put in place.
• Besides the geotechnical and geophysical studies which covers
investigation of soil consistency, groundwater levels, potential
hazards and conditions of the project site, physical risks fromextreme weather and natural disasters are also considered in theassessment of the project site.
• Budgets and contingencies are allocated during projects’
investment approval stage, based on Vena Energy’s comprehensive
assessments, which are informed by recommendations from third
party technical consultants.
• During operational phase, newly developed climate-related risks will beidentified as part of Vena’s active risk management framework and request
for budget can be made for risk mitigation actions on a need-to basis.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework40Challenges and key learnings
1. Adopting effective governance structure toensure climate change remains a core focusof the company.
Vena Energy’s Sustainability Committee is incharge of the development, implementationand monitoring of the company’s sustainable
development policies including those
associated with climate change andenvironmental management. In addition, theremuneration of senior executives in Vena
Energy is correlated with climate change
performance as evidenced in the KPIs of allsenior executives. For climate change to remaina core focus in the company, an effective
governance structure to oversee climate
mitigation, adaptation and transition as well as
linking climate change performance to senior
executives’ remuneration are critical steps toalign management’s incentives with long-term
shareholders’ and stakeholders’ interests.

Paris Agreement
Objective

Vena Energy: Current Climate Actions

Contribution to
the Transition

Leveraged green financing to further its sustainability ambitions.

• Pursuing technological innovation for battery energy storage systems.
• Vena Energy has been an early mover in the energy storage sector and iscurrently constructing two battery energy storage systems totalling 141MW
in Australia, which are expected to start operation between 2022 and 2023.
Paris Agreement
Objective

Vena Energy: Future Climate Plans

Climate Change
Mitigation

Working with suppliers to reuse and recycle dismantled
equipment and material where feasible, where planningfor future asset life extension is not viable and project
decommissioning is inevitable.

2. Prioritizing the development of energy storage
systems will be critical for long-term adoption
and scaling up of renewable energy systems.
The intermittent nature of renewables calls
for the need to develop and deploy energy
storage technologies such as battery storage
systems and green hydrogen solutions. Vena
Energy is already pursuing new technologicalinnovation for energy storage, including
battery systems and green hydrogen solutions.

• Vena Energy’s recoverable and recyclable materials are taken by third
party recyclers. Recoverable materials such as aluminium frames
were recycled to the maximum possible extent.
Contribution to
the Transition

Moving forward, companies involved inrenewable energy generation should integrate
circular economy considerations not only in
how it sources raw materials but also how it
manages the disposal of excess material andwaste. Achieving this effectively will involve
close collaboration with suppliers at different
stages of the companies’ operations.
4. Ensuring conducive policy environment
to support technological innovation in the
renewable energy sector.

Pursuing technological innovation for transportable energy
storage via green hydrogen solutions.
• Vena Energy has established a green hydrogen strategy acrossthe Asia Pacific region. In Australia, it is working together withinternational and local partners on an early development sitewhich obtained federal funding from the Australian government.
This site is expected to produce green hydrogen for both domestic
consumption in the first stage (2024/5), and for export to Japan
from 2026/7 onwards.

3. Working with suppliers to embed circular
economy considerations in operations.
Although renewable energy generation islargely sustainable, circular economy concept
is still relevant to the production of solar
panels, wind turbines and batteries . As part ofcircular economy considerations, Vena Energy
aims to integrate optimal efficiency andlongevity in all stages of the project lifecycle.
Planning for future asset life extension is a key
consideration, however, where this is not a
viable option and project decommissioning
is inevitable, Vena Energy aims to work in
partnership with its suppliers to reuse, recycle
and minimise the disposal of the dismantled
equipment and material where feasible.

• The company signed its first sustainability-linked Revolving Credit
Facility (RCF) of JPY52.8bn (USD500m) from eight lenders. The threeyear RCF was structured as a sustainability-linked loan and features
KPIs such as environmental impact, workplace diversity, and health& safety, contributing to the achievement of the SDG 13 “Climate
Action” and in line with Vena Energy’s Green Financing Framework.38

Paris Agreement
Objective

Carbon Trust’s Recommendations

Climate Change
Mitigation

Commit and set near term and long-term science-based targets
including Net-Zero targets.
• Setting science-based targets reflect the company’s climate ambitions
and helps to engage its suppliers in decarbonisation efforts as well.

Climate Change
Adaptation

Conduct climate scenario analyses and assess the potential
financial impact to the company when the identified climate
related risks materialise.
• This builds on its existing climate related risks and opportunities
assessment for its own operations and own sites and further
evaluates the potential financial impacts to the company.

Considering that Vena Energy’s portfolio consistsof solar PV, onshore wind, offshore wind, andbattery energy storage assets which are green
technologies in nature, the risk of Vena Energy’s
assets being stranded or unviable due to green
alternatives is minimal. Having said that, the falling
costs of renewable energy means that developers
need to take a forward-looking view by investing intechnological innovation to remain commercially
viable and competitive. In the case of Vena Energy,

the company is pursuing technological innovationfor energy storage, including battery systems
and green hydrogen solutions. To promotefurther technological innovation and fast track
the adoption of cleaner sources of energy,
comprehensive policy support across government
bodies will be critical. This is not only to introduce
more incentives such as subsidies to encourage
the use of hydrogen in different applications, butalso attract private-sector capital to invest in theinfrastructural solutions for hydrogen adoption.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework41

Zuellig Pharma
Headquarters: Singapore
Sector: Healthcare; Services and
Healthcare Technology
About the company: Zuellig Pharma is one of
the largest healthcare services groups in Asia.
The company provides distribution, digital andcommercial services to support the growing
healthcare needs in this region. Established ahundred years ago, Zuellig Pharma has grown
to become a USD13bn business covering
13 markets with over 12,000 employees.
These employees serve over 200,000
medical facilities and work with over 500
clients, including the top 20 pharmaceuticalcompanies in the world. In addition, thecompany launched the Zuellig Health
Solutions Innovation Centre to pioneer new
approaches towards healthcare challenges
including data analytics, commercial services,and patient and payor (insurers) services.

Paris Agreement
Objective

Zuellig Pharma: Current Climate Actions

Climate Change
Mitigation

Submitted a 1.5-degree near term science-based target alignedwith SBTi’s target-setting criteria and pending approval from SBTi.
• Along with publishing its first GHG report – distinct from its GRI
Sustainability Report – since 2020, Zuellig Pharma has aligned its
GHG reporting in 2021 to the GHG Protocol framework, expanded
its assessment across all relevant direct and indirect emissions
categories, sought the external assurance of Bureau Veritas on
its GHG emissions disclosures and set near term science-basedtargets for Scopes 1, 2 and 3.40 These targets cover both direct andindirect emissions, have been made public, and are currently underassessment by SBTi.
• Reduced its carbon emissions in 2021 by 7%.
Implemented renewable energy and energy efficiency
initiatives to reduce their overall energy consumption.
• Adopted renewable energy in its operations, increased its renewableenergy use by 75% in 2021 through solar installations in 5 of their 11
key markets, with an aim of having 70% of their main distribution
centres equipped with solar panels by 2030.

Analysis: Zuellig Pharma potentially
falls under the B-List classification upon
applying the CCIF and Carbon Trust’s
scoring methodology.
Zuellig Pharma has made efforts that align tothe “Climate Mitigation” and the “Contribution
to Transition” objectives of the AIIB-Amundi
Climate Change Investment Framework
through submitting a 1.5-degree near termscience-based target and conducting pilots
in sustainable technology solutions. Zuellig
Pharma could improve on efforts aligning to the“Climate Adaptation” objective by incorporating
temperature-based scenarios in physical risk
assessment and the associated financial impacts.

• Photovoltaic systems are being installed in selected operational sites
and distribution centres.
• Zuellig Pharma has also linked environmental performance indicators
to remuneration at the management level.
Climate Change
Mitigation &Contribution toTransition

To address greenhouse gas emissions andimprove climate resilience, the pharmaceuticalindustry needs to prioritise emissions reduction
from logistics and distribution as well as
responsible waste management linked to
packaging materials for their products. These
efforts must not only involve the company’s
direct operations, but also its supply chains.

• Digitalised its operations by deploying a new transport management
system (TMS) which enables the company to operate moresustainably in complex logistics networks and reduce emissions.
• Zuellig’s Pharma’s Korea team worked together with their logistics
providers to pilot their first electric truck for short-distance deliveries
in December 2021. A similar pilot has also been launched within
Zuellig’s own fleets in Thailand in March 2022.
• Developed the eZCooler, an energy-efficient cold chain packaging
solution that ensures the integrity of temperature-sensitive products
to the last mile of transportation. Its sophisticated phase-changematerial and vacuum insulation panels enable it to operate without
any reliance upon external energy sources. The eZCooler solution islighter than traditional cold storage packaging solutions, reducing
freight costs and reusable.

Context for pharmaceutical sector:
The pharmaceutical industry struggles withseveral challenges to address climate change,
the majority of which relate to procurementand development.39 Pharmaceutical products
undergo significantly stringent R&D stages
for new products. The costly retesting andnew regulatory approval present barriers tothen change the components, packaging, anddelivery model of pharmaceutical products.

Shifted to greener, more efficient logistics, including cold chain.

Climate Change
Adaptation

Performed physical risk assessment analysis in all
countries and sites.
• Collaborated with FM Global to undertake a company-wide
assessment of “high-risk” locations, which are material locations
highly exposed to natural hazards such as earthquake, floods, highwinds, etc., or situated near the ocean front without adequate
mitigation plans in the event of rising sea levels.
• According to its Sustainability Report 2021, Zuellig Pharma has run 56
climate risk assessments, simulations and trainings across the region
and all sites have performed an environmental risk assessment.
• The company also allocates budget to infrastructural changes toalign with climate-related hazards.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

42

Challenges and key learnings:
1. Reducing emissions in logistics and distributionlines of healthcare companies is critical.
Zuellig Pharma’s operations are highly
exposed to climate risks due to its presence
in 13 markets of which some are particularly
vulnerable to climate impacts due tothe geographical location. To reduce its
energy consumption within its logistics
and distribution lines, the company has
implemented energy efficient measures suchas energy efficient air-conditioning systems
or solar panel installations. Moreover, it hasleveraged technological innovations like the
eZCooler which is able to operate without any
reliance upon external energy sources, thereby
reducing energy consumption.

Paris Agreement
Objective

Zuellig Pharma: Current Climate Actions

Climate Change
Mitigation

Established a baseline for measuring its waste reduction from
responsible waste management initiatives.
• In 2021 Zuellig Pharma has reduced its waste emissions by 20%
through its 3R programmes.
• Zuellig Pharma has officially committed to achieve zero waste goingto landfill by 2030.
• Each of Zuellig Pharma’s markets has ongoing 3R – Reduce, Reuse
and Recycle – programmes to minimise waste to landfill.
• Evaluates and monitors suppliers’ environmental management
performance such as their 3R and waste management efforts.
Enabling transparency of its value chain to enable deeper Scope
3 target setting.
• In 2021 Zuellig Pharma has reduced its Scope 3 emissions by 10%.

2. Linking senior executive remuneration for
key environmental performance indicators
demonstrates strong commitment to action.
Zuellig Pharma has linked environmental
performance indicators, for example energy
consumption reduction, to remunerationconsiderations for some of the senior
executives. This provides a strong incentive forthe executive management to align company
operations with climate goals.

• 57% of Zuellig Pharma’s spend is managed through the formal
sustainability platform IntegrityNext, which considers thesustainability performance of suppliers in its selection process.
Contribution toTransition• Through the Greenovate Program, an internal Green Initiatives
incubator, Zuellig Pharma tracks the energy savings delivered by its
technological innovations.
• In 2021 the Greenovate Project has tracked 12,000 tons of avoided
carbon emissions and 4m kWH of energy savings.

3. Promoting best practices throughindustry associations.
Industry associations need to recognise their
key role in facilitating knowledge sharing
and collaboration in areas such as climate
action. At present, Zuellig Pharma is part of theseveral associations connecting corporates,
governments, and non-governmentalorganisations to improve energy efficiency,
fuel efficiency, reduce carbon emissions, anddecrease operational costs across the supply
chains. This can be an important channel
to promote the adoption of proven green
technologies to strengthen climate mitigation
and adaptation especially in Asian countries
which are vulnerable to climate impacts.

Tracks and measures energy savings arising from technologicalinnovations such as the eZCooler solution.

Paris Agreement
Objective
Climate Change
Mitigation &Contribution toTransition

Zuellig Pharma: Future Climate Plans
In Korea, Zuellig is planning to replace all short-distance delivery
vehicles with electric vehicles by 2025.
• This builds on the Korea team’s pilot of their first electric truck for
short-distance deliveries in December 2021.

Paris Agreement
Objective

Carbon Trust’s Recommendations

Climate Change
Mitigation

Set a long-term science-based target and net zero target date.

Climate Change
Adaptation

Enhance physical risks assessments• Leaders across the healthcare industries have set a 1.5 degree near term
targets, and several have also committed to setting net zero target.

• Provide clarity around the temperature-based scenarios in physicalrisk assessments and analyse the potential financial impacts to thecompany if climate risks materialise.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework434. Climate Bonds Initiative: Debt issuers analysis
Climate Bonds Initiative (Climate Bonds) applied
the CCIF to evaluate and quantify how well arange of companies are responding to climatechange risks across the three objectives of the
CCIF, with the aim of providing investors withinsights on their exposure to these risks.

Climate change adaptation:

Scoring

Climate Bonds measured this using the
ND-GAIN Index score.

All three indicators contributed to the total scoreof 55, but each indicator was weighted differently.

This index score covers the vulnerability ofcountries as well as their readiness to adapt.

Summary findings

This index score has the following levels:

The climate mitigation indicator carried the mostweight due to its relative importance: it measures
issuers’ understanding of the magnitude of theirtransition risks, and their ability to mitigate them via
appropriate plans, governance, and financing. The
mitigation score and its constituent indicators are
explored further in the dedicated section below.

This analysis compiles 483 issuers and covered 33
geographies. The key findings are outlined below.
1. No companies performed well across all
three CCIF objectives. Even among green bondissuers, this analysis did not identify any issuersthat did well on all three objectives of the CCIF:
mitigation (target-setting and strategies), adaptation(low risk exposure and/or adaptation plans andstrategies), and contribution to the transition(green revenues). However, a group of companies
are demonstrating encouraging detail in theirdisclosures especially around climate mitigation.
2. Best performers were characterized bygreen revenues, detailed climate mitigation
disclosures, and being in low-risk areas:
These companies contribute a total of USD466bn
of debt outstanding to the market as investment
opportunities. However, due to the unpredictable
nature of climate impacts, these companies
may nonetheless be exposed to climate risks if
they do not develop credible climate strategies
covering transition, adaptation, and resilience.
3. Most companies are subject to physicalclimate risks but are not taking actions
to manage them: Only 14% of companies
researched have an adaptation and resilienceplan in place, leaving the rest exposed topotential loss of financial value. This isparticularly relevant for EM companies,
as many of their domiciles already suffer
disproportionately from the physical impactsof climate change. Further planning andimplementation action is strongly recommended
to manage climate risks.

Level 0: Extreme risk
Level 1: High risk
Level 2: Medium risk
Level 3: Low risk
All the countries for this research fell within
Levels 1 – 3.

Contribution to the transition:
Climate Bonds measured this using the indicatorof % of green revenues.
Green revenues are revenues derived from green
business activities.
Green business activities are defined in the
Climate Bonds’ ‘Climate-Aligned Activity Tables’i
which include requirements for activities acrossthe following climate themes: Energy, Transport,
Water, Waste, Land Use & Agriculture.
It should be noted that Green revenue
assessments are limited by A) the availabilityof location-relevant and well-understooddefinitions of ‘green’ for key sectors, such asenergy, industrials, and materials, and B) lack ofdetail in company disclosures.

Based on the total score, issuers were categorised
into three groups: Laggards (0-10), Mid-tier (1124) and Leaders (>24)ii
In Climate Bonds’ view, “Leaders” can beconsidered to be “A-List” companies and “MidTier” companies, “B-List”.

Results
The following sections represent the results ofassessing debt issuers’ performance across theclimate mitigation, adaptation, and contribution
to transition objectives.
Issuer score groups and distribution
The issuer scores were distributed into 105
issuers (22%) in the leaders’ group, just over aquarter (132 issuers or 27%) classified as mid-tier,and more than half (51%) or 246 companies aslaggards. The full sample score distribution isshown in the chart below.

Chart 9. Distribution of issuers’ normalised scores
150

246
Leaders (A-List) (>24)
Mid-tier (B-List) (11-24)

120

Laggards (0-10)13290Methodology
The research covered a total of 483 companies
domiciled across 33 countries (EM Asia: 77%, Latin
America: 17%, Europe: 4%, Africa: 2%)

Climate change mitigation:

60

105

30

0

1. Paris-aligned targets

05
510
10
-1
15 5
-2
20 0
-2
25 5
-3
30 0
-3
35 5
-4
40 0
-4
45 5
-5
50 0
-5
55 5
-6
60 0
-6
65 5
-7
70 0
-7
75 5
-8
80 0
-8
85 5
-9
90 0
95 95
-1
00

Climate Bonds measured this using thefollowing indicators:

Number of issuers

Scope and scoring

2. Robust plans

Score band

3. Implementation action
i. https://www.climatebonds.net/market/climate-aligned/methodology
ii. The normalised scores for the categories: 24+ (leaders), 10 – 24 (mid-tier), and 0 – 10 (laggards)

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

44

Table 6. Summary of issuer performance against CCIF objectives
Issuergrouping

Mitigation

Adaptation
Share ofissuers withlabelled debt
outstanding

Averagenormalised
mitigation
score (max.
88/100)
Leaders

Mid-tier

Laggards

39.84

8.95

2.20

Analysis of the groups against the CCIF objectives
showed some differences, which are summarisedin table 6 and following sections.

Leaders
The smallest, highest-scoring group of companies
in the sample – the leaders – comprises issuers thatare highly engaged with integrating climate risk.
On average, even though they are in medium
or high-risk geographies, more than half have a
climate adaptation and resilience plan in place.
In addition, these issuers score high on climate
mitigation scores compared to other groups.
These issuers are also characterised by relatively
high average debt volume. They are also more
likely than their mid-tier and laggard peers
to have issued at least one labelled green or
sustainability-linked bond.
However, on average, they have slightly lower
green revenues than their mid-tier peers, andlabelled bond issuance may be used as amechanism to increase that share over time.
Though no issuer from the leaders group scoredperfectly on all the indicators – i.e., did not
yet meet all the objectives of the CCIF – thesecompanies are, on average, performing well acrossall the indicator groups and represent interesting
investment opportunities when considering
climate outcomes and risk management.

28%

16%

13%

Contribution
to transition

Physical risk level
split

Low

9%

Medium

33%

High

58%

Low

34%

Medium

48%

High

18%

Low

0%

Medium

74%

High

26%

Average debt
outstanding

Share ofissuers withadaptation
and resilienceplan in place

Average green
revenuepercentage

55%

80%

USD1.77bn

9%82%

USD640m

0%76%

USD2.1bn

Mid-tier

Laggards

The second-largest group, the mid-tiercompanies show some signs of market
engagement and progress towards higher climate
contribution as shown for example in the highest
average green revenue percentage of the groups
at 82%. They are characterised by relatively low
risk exposure from transition (already highly
engaged in green activities) and physical climate
impacts (more than a third are in low-risk
geographies, and close to half in medium risk
areas). This may help to explain why they provide
less disclosure on their climate plans and impacts
with only 9% disclosing an adaptation plan, andthe group overall scoring lower on mitigation
than the leaders. Mid-tier issuers also tap into
debt capital markets less than their peers: they
have raised on average USD640m with bonds,
and 16% of the group have issued labelled debt.
This may also be related to the lower levels of
disclosure: fewer instances of (large) issuances
require less resources to produce disclosure for.
Based on risk exposure and contribution to thetransition via green revenues, the mid-tier group
comprises companies that could be relevant fortransition investors, but the lack of disclosure
should be closely monitored to understand how
those companies more exposed to climate risk –transition and physical – are managing it.

The laggards’ group is the largest one in thisresearch sample. Despite these companies’
average green revenues being high, thesecompanies seem otherwise relatively disengaged
from climate issues based on their public
disclosure. They are exposed to medium andhigh physical risk from climate change, but none
provided disclosure related to an adaptation
plan. Similarly, their mitigation score is thelowest of the groups. They issue on average themost debt out of the groupings but have thelowest share of labelled bonds out of the groups.
Investors looking into these types of companies
could engage with them to push for additional
climate planning covering the full suite of risks,
and associated disclosure to be made available.
This will help with a more holistic assessment of
the climate profile of companies in the current
laggards group.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

45

Top 10 leaders
The top leaders from the sample of companies
operate across different sectors and come fromseveral geographies. Notably, not all have highgreen revenues, suggesting that they are still
implementing a transition towards low-carbon
business models.

Geographies: Regional performance
When assessing regional performance in moredetail, Latin America scores the best with anormalised average score of 33 out of 100. Europe
and Africa follow, with normalised averages of 25
points each. Asia totals the lowest (16/100).

Regional Distribution
On average, there is limited disclosure aroundclimate change mitigation, adaptation, andcontribution to the transition in Asia comparedto other EM regions included in the universe.
Asia is nonetheless home to the largest share ofcompanies included in our universe, and thus
constitutes the most representative sample. Africa
represents the least representative sample of theuniverse as it only accounts for three entities.

Table 7. Top 10 leaders from the research sample
Company

Normalised
Score

LocationGreen
revenues

Sector

Cia de Eletricidade do
Estado da Bahia SA

100.00BrazilHigh contributor(97%)

EnergyNeoenergia SA

100.00BrazilHigh contributor(97%)

EnergyCentrais Eletricas
Brasileiras SA

87.80

BrazilHigh contributor(97%)

EnergyCia Energetica
do Ceara

85.37

BrazilHigh contributor(98%)

EnergyAmpla Energia eServicos SA

85.37

BrazilHigh contributor(98%)

EnergyEnel Americas SA

80.49

Chile

Low contributor

EnergyEnel Chile SA

80.49

Chile

Low contributor

EnergyASE Technology
Holding Co., Ltd.

95.12

Taiwan,China

Low contributor

Industry

China Everbright
Environment Group Ltd.

92.68

China

High contributor
(97%)

Waste

Hyundai Motor Co.

90.24

South
Korea

Low contributor

Transport

Table 8. Regional overview
RegionNumber ofissuers

Share of sample

Average regional
normalised score

Latin America

82

17%

33

Africa

3

0.06%

25

Europe

24

5%

25

Asia

374

77%

16

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework46Performance on climate change mitigation
This section explores the companies that perform
best in their efforts to mitigate climate change
across the entire research sample.

Table 9. Issuers’ climate change mitigation performance summary
Mitigation
Indicator met

Number ofissuers

Target-setting
Just over half of the countries where companies
in the sample are domiciled have made acommitment to reach net zero by 2050, while
only 19% of companies have done the same.
This highlights that the climate ambitions of thecompanies included in our universe fall short oftheir governments’ commitments. In addition,
just over half of the companies with net zerocommitments have set science-based targets,
which accounts for only 10% of the sample.
Half of the top 10 mitigation performers haveminimum 75% green revenues (are financial
contributors to the transition). The top four
companies Neoenergia SA , Cia de Eletricidade
do Estado da Bahia SA, Centrais Eletricas
Brasileiras SA and China Everbright Environment
Group Ltd. are high contributors, while AB Ignitis
Grupe is the only moderate contributor. The
remaining half of the top 10 do not currently exceed
the 75% revenue threshold from green activities but
have developed credible transition strategies.
Both ASE Technology Holding Co., Ltd. andTaiwan Semiconductor Manufacturing Co., Ltd.
(both based in Taiwan, China) have set sciencebased emission reduction targets and havealso come to market with labelled green bonds,
thereby signalling to investors their intention totransition. Enel Generacion Chile SA has also set
science-based target, while Hyundai Motor Co.,
which has issued labelled green bonds, has not.

Emissions reporting
All top 10 mitigation performers report on
their scope 1, 2 & 3 GHG emissions. Overall,reporting on emissions across scope 1-3 is morewidespread compared to setting targets, with
22% of the companies currently providing dataon their emissions in their annual accounts or
integrated or sustainability reports.

Percentageof research
universe

Net zero target (2050 or sooner)

91

19%

Science-based target

52

11%

Scope 1 – 3 emissions disclosure

109

23%

Climate change governance mechanism

115

24%

Green bond issuance

70

15%

SLB issuance

3

0.06%

Table 10. Top 10 companies – climate change mitigation
Company

Normalised
score

LocationGreen
revenues

Sector

Neoenergia SA

87.80

BrazilHigh contributor(97%)

EnergyCia de Eletricidade do
Estado da Bahia SA

87.80

BrazilHigh contributor(98%)

EnergyCentrais Eletricas
Brasileiras SA

80.49

BrazilHigh contributor(98%)

EnergyChina Everbright
Environment Group Ltd.

87.80

China

High contributor
(97%)

Waste

AB Ignitis Grupe

75.61

Lithuania

Moderate contributor (79.5%)

EnergyCEZ AS

78.05

Czech
Republic

Low contributor

EnergyEnel Generacion Chile SA

73.17

Chile

Low contributor

EnergyASE Technology Holding
Co. Ltd.

87.80

Taiwan,China

Low contributor

Industry

Taiwan Semiconductor
Manufacturing Co. Ltd.

75.61

Taiwan,China

Low contributor

Industry

Hyundai Motor Co.

82.93

South
Korea

Low contributor

Transport

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework47

While this is encouraging, companies should
contextualise this against a net zero future
by defining credible transition strategies. To
date, 26% of the sample companies disclosed
a transition strategy or plan, while 24% haveestablished related transition governancemechanisms such as appointing dedicatedboard member and/or team responsible for
implementing their climate strategy.

Green bond and SLB issuance
Issuing labelled debt contributes towards
financing the transition to a low-carbon economy
and sends a positive signal to investors andstakeholders. Labelled bonds offer opportunities
to earmark funds to act on climate change andsupport transition plans. Only 15% of the sample
companies have so far issued labelled bonds;
this tracks the limited disclosure on transition
plans and implementation action. Green bonds
are the most common thematic instruments:
70 companies have issued at least one green
bond. Three entities issued sustainability-linked
instruments. Issuing labelled bonds is highly
encouraged also for those companies whosetransition strategies are not yet fully developed,
as the issuance process involves companies
green tagging their activities and assets and toinitiate the process of transition and physicalrisk assessment. Labelled bonds can also raisecompany profile, thereby providing access toa broader and stickier investor base. Labelled
instruments benefit from a greater degree oftransparency which can attract more funding,especially in emerging markets.

Issuer spotlight: Climate change mitigation

TSMC (ICT / technology & electronics)
Taiwan Semiconductor Manufacturing
Company (TSMC) is the world’s largest
semiconductor foundry. The semiconductor
industry is vital for the world economy and isalso known for its cutting-edge technologies
and some of the world’s most complex supply
chains, thus, TSMC’s climate change mitigation
and adaptation strategies are crucial for its
business success and the world economy.
TSMC has an internal sustainability committee
responsible for decarbonisation strategies
and performance monitoring. The company
is committed to short-term target of zero
emissions growth by 2025 and net-zero by
2050. TSMC also reports its scope 1, 2 and 3 CO2emissions. Within its CSR report, TSMC provides
clear CO2 projections, with established sciencebased targets for short, medium and longterms, which are externally verified by DNV GL.
TSMC has been a member of the Science Based
Target Initiative (SBTi) since 2017. With bothsound internal and external reporting in place,
TSMC is on track to reduce GHG in the coming
years and comply with a well-below 2˚C target
set by Paris Agreement.
TMSC seeks to lower their scope 1 emissions
by optimising gas quantity used in production
and deploys abatement equipment to treat
fluorinated GHG. To reduce scope 2 emissions,the company has taken measures such as theconstruction of LEED-certified green buildings,
purchase of renewable energy to power
production, as well as making their officespaces 100% reliant on renewable energy

supported by employment of next-generation
highly energy efficient production tools. To
address scope 3 emissions, the company
strives to reduce carbon footprint from raw
materials and optimise delivery schedules.
TSMC has partnered with third party advisors
to develop carbon negative technologies
and to obtain carbon credits. TSMC has
also kickstarted carbon trading systems in
China. This demonstrating the company’sawareness of carbon cost and ensuring thatthe company is on track to achieve its targets– their implementation actions demonstrate
the robustness of their strategies as well as
credibility and commitment.
TSMC also has a strong climate adaptation
strategy. The company follows the TCFD
framework for climate risk evaluationand identifies floods, droughts and risingtemperature as the main physical risks. The
direct financial costs from climate change
include asset damages and production
disruption. Annual emergency response
drill to test different climate scenarios havebeen conducted to manage the identified
climate-related risks. The company statesthat not a single day of their production wasinterrupted by climate disasters. TSMC has
also constructed reclaimed water plant for
one of their science parks and establishedcomprehensive water monitoring system as
the production of semiconductor chips isvery water intensive. Other measures include
elevating building foundation and engaging inenergy conservation.

Climate change adaptation performance
EM suffer disproportionately from the impacts ofclimate change. Identifying physical risks is pivotal
to assess whether business activities in high-risk
geographies will be slowed down or interrupted byclimate change related acute weather conditions.
Companies based in high-risk areas need todevelop credible transition strategies and enact
adaptation and resilience plans to continue theirbusinesses in the run to 2050. Similarly, investors
need to quantify physical related risks to assess
their risk exposure.

Table 11. Issuers’ adaptation performance summary
Climate change adaptation and resilience
Physical risk level

Number of issuers

Percentage of
research universe

Of which have
A&R plan in place

High risk

150

31%

39 issuers / 26%

Medium risk

279

58%

26 issuers / 9%

Low risk

54

11%

3 issuers / 6%

Most of the companies in the sample (58%) arebased in medium risk areas. Just over a third(36%) are domiciled in high-risk geographies,
and a smaller share of 11% reside in low-risk
geographies. Adaptation and resilience plans
can help mitigate some of the impacts of climatechange, especially for companies based in highor medium risk areas. Less than a fifth (19%) of
all the sample companies disclosed some typeCompanies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework48

of adaptation and resilience plan, indicating thatmost companies do not yet consider adaptation
and resilience as part of their climate transition
strategies. Out of the companies based inhigh-risk geographies, roughly a quarter (26%)
consider adaptation and resilience, while only
11% do so in medium risk geographies. The
equivalent figure in the lowest-risk areas is 6%.
In a warming world with significant uncertainty
on achieving a 1.5C or less than 2-degree future,credible transition plans should incorporate
investments into adaptation and building
resilience against intensifying climate impacts.
Half of the overall leaders in the sample (thehighest-scoring companies) include adaptation
and resilience plans in their public disclosure.

Issuer spotlight: Climate change adaptation

Sarawak Energy Berhad (Electric utility)
Sarawak Energy Berhad’s (Sarawak Energy) is avertically integrated electric utility and energy
development company in the Malaysian stateof Sarawak. The company serves an areawith almost three million people, playing a
key role in advancing Sarawak’s economic
and industrial growth and delivering on theirambition to reach developed status by 2030.
In 2019, for the first time in its corporate
reporting history, the company combined its
annual and sustainability report to present
financial and non-financial performance in an
integrated document. Integrated reporting isan effective way to communicate a company’scommitment to meet financial and socioenvironmental objectives. This generates longterm value for its shareholders and ensuresthat material risks are not being overlooked.
Sarawak Energy’ is a moderate contributor totransition with 75% of its electricity generation
coming from renewables; the remaining 25%
is based on thermal energy to ensure constant
supply on peak energy demand. In theabsence of segmented revenue disclosure, thismethod is an effective way of evaluating an
issuer’s exposure to green business activities .
The company has been on a decarbonisation
journey since 2011 and its renewable energy
share has escalated sixteen-fold (1623%) fromthe base year. This resulted in a 68% reductionof Sarawak’s CO2 emission intensity (which
now stands lower than the global average)
and it represents a significant contribution to
global climate change mitigation efforts.

Contribution performance to thetransition: Green revenues
Over 50% of the sample of issuers have greaterthan 75% green revenues, i.e., are financiallycontributing to the low-carbon transition:
178 companies (37%) are considered highcontributors (95%+ green revenues), and 75(15%) moderate contributors (75%+ green
revenues). The latter are less common in thesample because they tend to have diversified
business activities, some of which are not yet
green. Further, the disclosure on the greennessof activities tends to be limited, which makes therevenue assessment challenging. Conversely,
pureplays are more common in our universe
because they tend to operate in a single(potentially green) industry sector, whichfacilitates the screening of their activities.

The company is also committed tofurther embedding climate action into its
business strategy by implementing TCFD
recommendations. As part of its integrated
approach to climate action, the company
highlights the importance of assessing thebusiness’s future exposure to both transitionand physical climate-related risks anddeveloping strategic plans for future scenarios.
To this end, the company has conductedclimate scenario analysis for the Malaysianstate of Sarawak based on historical andforward-looking climate data, as well as
vulnerabilities and impacts by the World
Bank. This allowed for the identification ofrisks and opportunities related to Sarawak
Energy’s assets and services across the
supply chain for different time periods (short,medium-short, medium-long and long-term).
Risks and opportunities and their impacts
on the company’s business strategies andfinancial planning, have been listed in the
integrated report for different time horizons, inaccordance with TCFD and SBTi standards. For
instance, the company cites increasing cost ofcarbon and better carbon emission reportingas key risks and opportunities associatedwith their corporate activities. In addition
to the impacts such initiatives will have on
Sarawak Energy, the list includes a shift awayfrom non-renewable generation sources, thedevelopment of flexible system infrastructure
to integrate renewable energy and developing
best practices to manage climate-related risks.

Table 12. Issuers’ contribution performance summary
Financial contribution to transition
Indicator

Number ofissuers

Percentage ofsample95%+ green revenues (high contributors)

178

37%

75%+ green revenues (moderatecontributors)

75

15%

<75% green revenues (low contributors)

230

48%

Most of the companies in the sample with green
revenues are energy companies, with a total of
105 high contributors and 41 moderate ones.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

49

Water is the second most common revenue
theme with 45 companies followed by transport(28 companies), waste (25 companies) and land
use and agriculture (14 companies).
High and moderate contributors perform variably
on the overall scoring, indicating they are indifferent phases of integrating transition strategies.
Conversely, some low contributors have highquality climate strategies, indicating that green
revenues should not be used as the sole indicator
to assess climate-related risks for businesses orinvestors, or to identify investment opportunities.
They should be complemented by credible
transition strategies and adaptation and resilienceplans. Activities and assets categorised as green
can still be linked to high scope 2 and 3 emissions,which could result in contributor companies being
misaligned with net-zero objectives.
EM contributor companies need to understandtheir transition and physical risks in the run to
2050. The latter is particularly relevant as EM
suffer disproportionately from the physicalimpacts of climate change which can compromise
their financial value in the long term. Credible
transition strategies are those which include risk
management associated with changes in regionaland global climate policies, while adaptation andresilience strategies are pivotal to manage physicalrisks posed on assets and activities.
Contributor companies are also exposed tophysical risks; 35% of high contributors and 43%
of moderate contributors are in high-risk areas.
Only 18% of the former and 6% of the latter in highor medium-risk areas have developed sufficient
climate transition strategies, accounting for 29% of
the sample and USD178.7bn of debt. All companies
are urged to develop credible transition strategies
to increase their financial value and continue to be
relevant in a low-carbon future.
Labelled bonds represent great opportunities
for issuers to signal to investors their intention totransition. In our sample, moderate contributors
came to the market with the highest share oflabelled bonds – 16% of their outstanding debt.
High contributors labelled 12% of their debt,
while labelled issuance accounts for 8% of low
contributors’ debt. Green labelled bonds are
the most common: they account for 95% of thelabelled debt in the universe. There is more scopefor high contributors to issue in the green bondmarket because their business activities are mostly
already eligible under existing green definitions
and can thus be refinanced under the green label.

Issuer spotlight: Financial contribution to transition

China Everbright Environment Group Ltd.
(Energy, Waste, and Water)
China Everbright Environment Group Ltd.
(Everbright Environment) is a China-based
environmental solutions provider with subbusiness units including Environmental
Energy, Greentech, Environmental Water,which cover a broad range of pipelines
including waste-to-energy conversion,
renewable energy generation, waste
treatment, water treatment and technology
R&D. Everbright Environment is the largest
waste-to-energy investor and operator
worldwide. China Everbright has invested ingreen assets that include multiple wasteto-energy plants, solar and wind farms,
water treatment centres but also provides
services such as environmental planningand the restoration of ecosystems across
China, showing a diversified portfolio andcontributing to the world’s effort to transition
to a more climate resilient economy and meet
Paris-aligned goals.
In their CSR report, the company discloses its
current GHG emissions with a clear scope 1, 2
and 3 breakdowns. To ramp up their climate
mitigation efforts and become aligned withthe 2°C goal in the long-term, the company
keeps its decarbonisation strategy consistent
with International Energy Agency’s framework
which is aligned with Pairs Agreement. The
company is currently reviewing its longterm decarbonisation strategy: its emission
reduction target is currently under review andwill be announced in due course.
As an environmental solution provider anda high contributor through its green revenue
streams, Everbright Environment has goodpractices regarding the contribution to

Current low contributors could benefit the mostfrom labelling their debt. As highlighted in the“Green Bond Treasurer Survey” conducted by
Climate Bonds, the labelling exercise helps
issuers to understand the environmental
impacts of their activities by initiating the green
tagging process to identify low-carbon assets
and projects, and conversely identifying which
activities still need to transition and how. In
addition, the green label offers benefits suchas strengthened internal coordination between

transition as their business activities promotetransition to climate resilience. The company
has set up the Environmental Management
Committee, which is dedicated to minimising
the firm’s environmental impact and strengtheninternal reporting. The company’s CSR report
is verified by the Hong Kong, China Quality
Assurance Agency as a part of their externalreporting effort. Everbright Environment’s 2020
annual report also confirms that 100% of its
HKD 42.9bn of revenues are generated from
activities that contribute to climate changesolutions. For instance, their waste-to-energy
business processed tens of millions of tonnesof waste and converted to green electricity,
offsetting more than 15 million tonnes of CO2
emissions. China Everbright’s water stressmanagement business aims to recycle water;
this process can achieve a recovery rate of
80% through ultrafiltration, nanofiltration andreverse osmosis.
Everbright Environment is an active player
in the contribution to the transition. The
company engages in extensive technology
R&D, seeking to cut GHG emissions fromtheir activities. For example, they use selfgenerated renewable energy to power theoperations of their wind and solar farms,
at the same time reducing the purchase of
non-renewable energy for other businesssegments; this allows for reduction of scope
2 emissions. The company is also improving
the operational efficiencies of its green
electricity supply and waste treatment
centres as part of the increasing demand forsustainable waste treatment.

departments, and enhanced reputation andmarket visibility. These can result in a broader andstickier investor base, which is particularly criticalfor EM entities that attract limited investment fromdeveloped markets due to credit risk and ESG
concerns. Green bonds from issuers with credible,
transparent transition plans can help to increase
the flow of green investments into EM.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework50Appendix
Climate Bonds Initiative methodology
Climate Mitigation Indicators (adapted from Climate Bonds
Hallmarks of a credibly transitioning company)

Hallmark 1:
Paris-aligned targets

Hallmark 2:
Robust plans

Hallmark 3:
Implementation action

Hallmark 5:
External reporting

Currently, limited universally
agreed industry/sectoral
decarbonisation pathways areavailable to benchmark company
specific KPIs and associatedperformance levels. The targetsetting assessment is therefore
based on company specificdecarbonisation targets. Eachare assessed as a binary (yes/no)with an associated score.

Hallmark 2 aims to determine thecredibility of the targets/KPIs setting
process described in Hallmark 1.
This type of assessment will rest
upon a qualitative and binary (yes/no) assessment of a company’s
strategy towards decarbonisation:

Hallmark 3 reflects the action
undertaken to deliver on Hallmark 2

Hallmark 5 requires on i)
third party entities to provide
an independent verificationof the KPIs and strategy todeliver transition goals aswell as ii) annual reporting of
independently verified progressin terms of action taken andperformance against targets.

• Country level of the company
domicile commitment to
net-zero• Company commitment to netzero by 2050
• Decarbonisation strategy
based on key milestones• Short term (up to 2025)• Medium term (2025-2030)• Long term (2030-2050)• Company has transition roadmap/
strategy towards decarbonisation
publicly available• Company has a dedicatedfinancing plan (e.g. CapEx, OpEx,
M&A, R&D activities necessary fortransition strategy)• Company reports on investments
into new green activities in theirannual accounts• Company has issued labelledgreen bond
• Company has issued multiple
labelled green bonds• Company has issued
sustainability-linked bond(s)• Public disclosure of key
indicators across Hallmarks
1–3• Disclosure of current CO2
emissions:• Scope 1• Scope 2• Scope 3• Company has adequate
governance mechanism in place(Sustainability Department/Headof Sustainability/Board oversightof climate change)• Note: independent verificationof emissions data was not arequirement for this Hallmark
as part of this research project.

• Science-based company
specific KPIs
• Science-based company
specific KPIs verified

Note: Not included in this research• KPIs addressing all sources of
CO2 emissions:• Scope 1• Scope 2• Scope 3

Hallmark 4: Internal monitoring involves i) on-going re-evaluation
and recalibration of targets to reflect changing operating conditions andmarket developments and ii) tracking performance against selected KPIs
to monitor performance against the selected KPIs, and the delivery of theunderlying actions.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

51

Scoring framework- debt issuer analysis
Indicator
Contribution

Mitigation

Adaptation & Resilience

Number of points: Y

Notes

Country commitment to net-zero (Y/N)

1

Low contributor

0Moderate contributor

1

High contributor

2Company commitment to net-zero (Y/N)

2

Short-term commitment by 2025 (Y/N)

2

Scope 1

1

Scope 2

2

Scope 33

Medium-term commitment - 2025-2030 (Y/N)

3

Scope 1

1

Scope 2

2

Scope 33Long-term commitment -2030-2050 (Y/N)

1

Scope 1

1

Scope 2

2

Scope 3

3

Science-based targets (Y/N)

3

Target verifier2

Scope 1 emissions

1

Scope 2 emissions

1

Scope 3 emissions

2

Company transition roadmap/strategy available (Y/N)

1

Company dedicated transition financing plan inplace (Y/N)

2

Sustainability transition governance mechanism(dedicated Board member / team) in place (Y/N)

1

Report on investments into green assets (Y/N)

1

GB issuer (Y/N)

1

Multiple GB issuer (Y/N)

2

SLB issuer (Y/N)

0.5

Climate adaptation / resilience planin place (Y/N)

2-1 if country commitment is 1

Contingent on overall
company target-1 if no Scope 3 reporting

Notre Dame Index Score
Level 0 (extreme risk)

0

Level 1 (high risk)

1

Level 2 (medium risk)

2

Level 3 (low risk)

3

Max. total points(all scores normalized to 100)

55.5

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework52

Endnotes
1. Harrison, C., Climate Bonds Initiative. 2022. Green Bond Pricing
in the Primary Market, H2 2021. https://www.climatebonds.net/
resources/reports/green-bond-pricing-primary-market-h1-2022
2. Fitch Solutions, 2021. Fitch Solutions Pulse Survey 9. https://www.
fitchsolutions.com/long-reads/pulse-survey/pulse-survey-9
3. Climate Bonds Initiative, 2022. Climate Bonds’ Green Bond
Database. https://www.climatebonds.net/cbi/pub/data/bonds
4. AIIB-Amundi Climate Change Investment Framework, 2020. https://www.aiib.org/en/policies-strategies/framework-agreements/climatechange-investment-framework/index.html
5. Scope 1 emissions are direct emissions from owned or controlled
sources. Please refer to the GHG protocol for more information: https://
ghgprotocol.org/sites/default/files/ standards_supporting/FAQ.pdf
6. Scope 2 emissions are indirect emissions from the generation ofpurchased energy. Scope 3 emissions are all indirect emissions (notincluded in Scope 2) that occur in the value chain of the reporting
company, including both upstream and downstream. Please refer tothe GHG protocol for more information: https://ghgprotocol.org/sites/
default/files/ standards_supporting/FAQ.pdf
7. Data for all case studies was collected and assessed by Carbon
Trust in H1 2022
8 Data for all case studies was collected and assessed by Carbon
Trust in H1 2022
9. Data collected in 1H2022
10. Rana, K. and Sharma, S. K., 2021. Greening the Indian
Pharmaceutical Supply Chain: A Step Towards Sustainability.
https://ijpsr.com/bft-article/greening-the-indian-pharmaceuticalsupply-chain-a-step-towards-sustainability/
11. Nair, L., 2021. Express Pharma: Reaffirming commitment
to sustainability. https://www.expresspharma.in/reaffirmingcommitment-to-sustainability/
12. The Carbon Trust, 2012. A prescription for lower carbon medicine.
https://www.carbontrust.com/news-and-events/insights/aprescription-for-lower-carbon-medicine
13. Greenpeace East Asia, 2021. Electricity consumption from China’s
digital sector on track to increase 289% by 2035. https://www.
greenpeace.org/eastasia/press/6608/electricity-consumption-fromchinas-digital-sector-on-track-to-increase/
14. Ibid.
15. The GHG Protocol Corporate Standard categorises a company’s
greenhouse gas (GHG) emissions into three ‘scopes’. Scope 1
emissions refer to direct emissions that occur from sources thatare controlled or owned by an organisation. Scope 2 emissions areindirect GHG emissions associated with the generation of purchased
energy. Scope 3 emissions are all indirect emissions that occur in thevalue chain of the reporting company. Scope 3 emissions include all
sources outside of an organisation’s Scope 1 and 2 boundary. Source:
Greenhouse Gas Protocol FAQ. (n.d.). https://ghgprotocol.org/sites/
default/files/standards_supporting/FAQ.pdf
16. Climate Bonds Initiative, 2022. Transition Finance in China: Latest
development and future outlook. https://www.climatebonds.net/
files/reports/cbi_transition_china_eng_pdf.pdf
17. Singh, N., Mishra, T. and Banerjee, R., 2021. Emissions inventory
for road transport in India in 2020: Framework and post facto
policy impact assessment. https://assets.researchsquare.com/
files/rs-297185/v1/6b5bbc3e-2930-4898-8845-35b1d4a44b72.
pdf?c=1646463449

18. Chaliawala, N., ET Bureau, 2021. EV Push: FAME-II scheme
achieves just 10% target with 4 months left in original deadline.
https://economictimes.indiatimes.com/industry/renewables/evpush-fame-ii-scheme-achieves-just-10-target-with-4-months-left-inoriginal-deadline/articleshow/87989325.cms?from=mdr
19. Ibid.
20. Energy Productivity 100 (EP100) is a global initiative led by The
Climate Group and brings together more than 120 energy smart
businesses committed to measuring and disclosing their energy
efficiency improvements. EP100 is delivered as part of the We Mean
Business Coalition. Source: About EP100. (n.d.). Retrieved June 6,
2022, from https://www.theclimategroup.org/about-ep100
21. Biswas, R., IHS Markit, 2022. South Korean economy boosted
by strong exports. https://ihsmarkit.com/research-analysis/southkorean-economy-boosted-by-strong-exports-feb22.html
22. Yang, Y., Park, Y., Smith, T., Kim, T. and Park, H-S., 2022. Highresolution environmentally extended input-output model to assess
the greenhouse gas impact of electronics in South Korea. https://pubs.acs.org/doi/10.1021/acs.est.1c05451
23. PR Newswire, 2021. Solid-state battery with 50% environmentalbalance on short way to production. https://www.prnewswire.com/
news-releases/solid-state-battery-with-50-better-environmentalbalance-on-short-way-to-production-301302108.html
24. Disclaimer: The contents in this case study referenced information
as of Jan 2022 and does not include new businesses acquired after orsustainability reports issued after this period.
25. EDB Singapore, 2021. Singapore: Southeast Asia’s testbed for smart
city solutions. https://www.edb.gov.sg/en/business-insights/insights/
singapore-southeast-asia-s-testbed-for-smart-city-solutions.html
26. The GHG Protocol Corporate Standard categorises a company’s
greenhouse gas (GHG) emissions into three ‘scopes’. Scope 1
emissions refer to direct emissions that occur from sources thatare controlled or owned by an organisation. Scope 2 emissions areindirect GHG emissions associated with the generation of purchased
energy. Scope 3 emissions are all indirect emissions that occur in thevalue chain of the reporting company. Scope 3 emissions include all
sources outside of an organisation’s Scope 1 and 2 boundary. Source:
Greenhouse Gas Protocol FAQ. (n.d.). https://ghgprotocol.org/sites/
default/files/standards_supporting/FAQ.pdf
27. Acute risks are attributed to extreme weather impacting networkand operating infrastructure, particularly inundation and bushfires.
Chronic risks pertain to long-term changes in climate and weather
patterns, including rising mean temperatures and sea level.
28. The GSM Association is a global member-led organisation
representing over 750 mobile operators and more than 400
companies in the broader mobile ecosystem. GSMA convenes theindustry around a common agenda to unleash innovation to create
a positive business environment and to produce real societal change
on a global scale. The GSMA Board comprises of 26 members who
represent the largest operator groups and independents with
global reach. Source: GSMA membership. https://www.gsma.com/
membership/wp-content/uploads/2022/03/GSMA_Membership_
Brochure_March_2022.pdf
29. Xinhua, 2022. China’s electronics manufacturing industry posts
steady growth. https://www.chinadailyhk.com/article/265346#China’selectronics-manufacturing-industry-posts-steady-growth

30. ET News, 2022. China took over the No.1 spot in thedisplay market from South Korea. https://english.etnews.
com/20220414200001
31. Korea IT News, 2022. China’s MIIT plans to revise industry
standards to achieve peak carbon emissions and carbon neutrality.
https://enviliance.com/regions/east-asia/cn/report_5199
32. Khoury, Z. and Lee, J., 2022. The nexus of green and digital: An
opportunity or a challenge? https://blogs.worldbank.org/digitaldevelopment/nexus-green-and-digital-opportunity-or-challenge
33. IRENA, 2022. IRENA Asia and Pacific Overview. https://www.
irena.org/asiapacific34. McKinsey & Company, 2020. Climate Risk and Response in Asia.
https://www.mckinsey.com/business-functions/sustainability/ourinsights/climate-risk-and-response-in-asia
35. IEA, 2022. IEA Asia Pacific Renewable Energy Electricity Generation
by source. https://www.iea.org/regions/asia-pacific
36. Khasawneh, R., Reuters, 2022. Asia Pacific renewable investments
to double to $1.3 trillion by 2030. https://www.reuters.com/business/sustainable-business/asia-pacific-renewable-investments-double-13trillion-by-2030-woodmac-2021-06-22/
37. The GHG Protocol Corporate Standard categorises a company’s
greenhouse gas (GHG) emissions into three ‘scopes’. Scope 1
emissions refer to direct emissions that occur from sources thatare controlled or owned by an organisation. Scope 2 emissions areindirect GHG emissions associated with the generation of purchased
energy. Scope 3 emissions are all indirect emissions that occur in thevalue chain of the reporting company. Scope 3 emissions include all
sources outside of an organisation’s Scope 1 and 2 boundary. Source:
Greenhouse Gas Protocol FAQ. (n.d.). https://ghgprotocol.org/sites/
default/files/standards_supporting/FAQ.pdf
38. Vena Energy, 2021. Vena Energy signs a JPY 53bn SustainabilityLinked Revolving Credit Facility. https://www.venaenergy.com/
all_news/vena-energy-signs-a-jpy-53bn-sustainability-linkedrevolving-credit-facility/
39. The Carbon Trust, 2021. A prescription for lower carbon medicine.
https://www.carbontrust.com/news-and-events/insights/aprescription-for-lower-carbon-medicine
40. The GHG Protocol Corporate Standard categorises a company’s
GHG emissions into three ‘scopes’. Scope 1 emissions refer to directemissions that occur from sources that are controlled or owned
by an organisation. Scope 2 emissions are indirect GHG emissions
associated with the generation of purchased energy. Scope 3
emissions are all indirect emissions that occur in the value chain of
the reporting company. Scope 3 emissions include all sources outsideof an organisation’s Scope 1 and 2 boundary. Source: Greenhouse
Gas Protocol FAQ. (n.d.). https://ghgprotocol.org/sites/default/files/
standards_supporting/FAQ.pdf

Suggested citation: AIIB et al (2023), Companies and Climate Change, A
research application of the AIIB - Amundi Climate Change Investment Framework.
Design: Godfrey Design, Joel Milstead© Published by Climate Bonds Initiative, March 2023 www.climatebonds.net
Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser. Any reference to a financial organisation or
debt instrument or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.
The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or otherwise of any debt instrument or investment product and no information within this communication should be taken
as such, nor should any information in this communication be relied upon in making any investment decision. Certification under the Climate Bond Standard only reflects the climate attributes of the use of proceeds of adesignated debt instrument. It does not reflect the credit worthiness of the designated debt instrument, nor its compliance with national or international laws. A decision to invest in anything is solely yours. The Climate
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Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework53