ACKNOWLEDGMENTS

AUTHORS:FUNDERS:The technical assistance for thecurrent version of ACT was provided
by:
ECO2 Initiative,
I Care & Consult
and Carbone 4.

ACT Framework | ACT Initiative | Version 1.1 | page 2

Contents
1.

INTRODUCTION ...................................................................................................... 5

2.

PRINCIPLES ............................................................................................................ 6

3.

SCOPE ..................................................................................................................... 7
3.1. SCOPE OF THE DOCUMENT ................................................................................................... 7
3.2. SECTOR SCOPE ...................................................................................................................... 7

4.

BOUNDARIES .......................................................................................................... 8

5.

FRAMEWORK METHODOLOGY................................................................................ 95.1. ASSESSMENT FRAMEWORK ................................................................................................. 11
5.2. INDICATOR FRAMEWORK..................................................................................................... 125.3. DATA SOURCES.................................................................................................................... 14

6.

ASSESSMENT ....................................................................................................... 17
6.1. BENCHMARK ........................................................................................................................ 176.2. WEIGHTING .......................................................................................................................... 20
6.3. ASSESSMENT GUIDELINES .................................................................................................. 23

7.

RATING ................................................................................................................. 26
7.1. PERFORMANCE SCORING .................................................................................................... 26
7.1.1.

PURPOSE AND APPROACH .......................................................................................................................... 26

7.1.2.

GUIDANCE TO THE PERFORMANCE SCORING .......................................................................................... 26

7.2. NARRATIVE SCORING .......................................................................................................... 27
7.2.1.

PURPOSE AND APPROACH .......................................................................................................................... 27

7.2.2.

GUIDANCE TO THE NARRATIVE SCORING ................................................................................................. 27

7.3. TREND SCORING .................................................................................................................. 31
7.3.1.

PURPOSE AND APPROACH .......................................................................................................................... 31

7.3.2.

GUIDANCE TO THE TREND SCORING ......................................................................................................... 31

7.4. FEEDBACK REPORT ............................................................................................................. 33
7.5. DATA COMMENTARY............................................................................................................ 33

8.

SOURCES .............................................................................................................. 35

9.

GLOSSARY ............................................................................................................ 36

APPENDIX 1: THE TRANSITION ..................................................................................... 44
SCENARIOS FOR THE TRANSITION .............................................................................................. 46

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APPENDIX 2: QUALITY ASSURANCE PROCESS - PRINCIPLES ...................................... 48
METHODOLOGY DEVELOPMENT PRINCIPLES .............................................................................. 48
9.1.1.

GISR ................................................................................................................................................................ 49

9.1.2.

ISEAL ............................................................................................................................................................... 51

9.1.3.

ISO ................................................................................................................................................................... 54

9.1.4.

ISO 14080 ........................................................................................................................................................ 55

METHODOLOGY IMPLEMENTATION PRINCIPLES ......................................................................... 58

APPENDIX 3: MATURITY MATRIX ON NARRATIVE SCORING CRITERIA ....................... 60

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1. Introduction
Over the past 15 years, carbon accounting has become a must for organizations mindful of the climate impactof their activities. Indeed, many of them voluntarily disclose their GHG emissions and management practices
by responding each year to CDP’s questionnaire or reporting to other voluntary/mandatory schemes.
However, as revealed in CDP’s annual reports, accounting and GHG emissions disclosure practices can differ
from one company to another, and global emissions are still growing despite companies’ commitments.
In parallel, new concepts, needs and tools have emerged that should help reverse this trend: Science-Based
Targets, Carbon Management System, carbon pricing, new metrics for investors and so on. It is time to move
forward and to enhance reporting practices to see which companies are really moving to a low-carbon
pathway and who can be trusted.
In this context, an increasing number of initiatives have been proposed with different purposes, goals andtarget audiences. The strength of the ACT initiative is that it adopts a holistic approach to assessing how
ready a company is to transition to a low-carbon economy: the level of ambition of the climate strategy isanalysed against the low-carbon benchmark relevant for the company, as well as the actions that thecompany effectively takes in response to this strategy.
The degree of early action undertaken now and in the short-term will be a major determining factor in thecosts of the transition in the long-term (See Appendix 1: The transition). A key characteristic of short-termchange towards a low-carbon economy in business is that in the next couple of years it is going to be largely
voluntary, with impactful and globally-aligned government regulations unlikely. The degree of this voluntarycommitment also provides insights into the overall commitment of business to the transition. The ACT
methodologies will contribute to these insights by assessing the present willingness and ability of companies
to dedicate themselves to a low-carbon future. One of the starting points for the ACT project is therefore toassess to what extent companies are willing, and can state publicly that they are willing, to transition to a lowcarbon economy.
However, measuring the ability of companies to transition to a low-carbon economy is very complex. In manycases, it requires a complete turnaround of the fossil-fuel based systems that the world and its economy has
been built on for centuries. There needs to be a clear determination to take on this daunting task, from allactors in society, among which business is an integral part.
To help businesses set targets compatible with 2°C (or beyond) climate change scenarios, the Sectoral
Decarbonization Approach (SDA) [1] was developed. The SDA is based on the principle of convergence of
all companies in a sector towards a shared emissions target in 2050 (or beyond). While the SDA gives
direction and a target to achieve, the ACT methodologies employ a holistic approach, taking into account all
feasible quantitative and qualitative indicators that can provide insight regarding a company’s current andfuture ability to reduce its carbon emissions and maximise its contribution to the low-carbon transition. All
information gathered is consolidated into a rating, which provides an overall metric of the low-carbonalignment. The wider goal is to provide companies with specific feedback on their low-carbon alignment in
the short and long terms.

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2. Principles
The application of principles is fundamental to ensure that low carbon transition-related information is trueand fair. The principles are the basis for, and will guide the application of, requirements in the present
methodology.
TABLE 1: PRINCIPLES FOR IMPLEMENTATIONRELEVANCE - Select the most relevant information (core business and stakeholders) to assess low
carbon transition.
VERIFIABILITY - The data required for the assessment shall be verified or verifiable.
CONSERVATIVENESS - Whenever the use of assumptions is required, the assumption shall err on theside of achieving a 2°C (or beyond) maximum temperature rise.
CONSISTENCY - Whenever time series data is used, it should be comparable over time.
LONG-TERM ORIENTATION - Enable the evaluation of the long-term performance of a company while
simultaneously providing insights into short- and medium-term outcomes in alignment with the long-term.

➔ RATIONALE
The indicators, metrics and rating developed and selected by the methodology
development team will be evaluated against these principles. If they are not inalignment or are not consistent with these principles, the indicators, metrics or
rating may be rejected or adapted to bring them into alignment.
Appendix 2: Quality Assurance Process - Principles presents the complete“landscape analysis” carried out for the selection of the principles.

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3. Scope
3.1. SCOPE OF THE DOCUMENT
This document presents the generic ACT framework. It includes requirements, rationales and guidance forassessment and rating for all sectors. It enables a deeper understanding of the underlying architecture andreasoning behind the ACT approach; however, it does not provide the details required to understand how
individual sectors will be assessed under ACT. It is intended to be used in conjunction with the ACT sector
methodologies to supplement them and give the necessary background to their development.
The ACT sector methodologies1 describe the sector-specific requirements, rationales and guidance. They aredeveloped in compliance with the ACT guidelines for the development of sector methodologies [2] that
describe the governance and process of such development, as well as the required content for such
documents.

3.2. SECTOR SCOPE
A sector’s scope is defined as the list of activities that are included in the sector. Sectoral business activities
may be described based on relevant existing nomenclatures such as ISICS, NACE, etc.
Different activities correspond to different sector emissions that might need to be approached differently.
Guidance will be provided separately for cases in which a company has multiple activities in multiple sectors.

1

Sector methodologies published in parallel of this document: Auto, Electric utilities, Retail (Versions 1.1).

The Building sector methodology is under development and should follow shortly (Version 1.0).

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4. Boundaries
The reporting boundaries of the ACT methodologies for a given sector shall be determined by the sector’s
most significant emissions sources, according to the principle of Relevance. These significant emissions
sources can be located all along the value chain of the organization. This means that both direct and indirect(value chain) emissions shall be included when relevant.
The temporal boundaries of the ACT methodologies for a given sector shall be determined by the need for
past, present and future related information on the organization. The degree of past information that shall be
included is determined by that which is necessary to infer the required trend for appropriate assessment.
Future information refers to any materials that relate to the time between the present and 2050. The futureboundary of ACT methodologies shall be appropriate to be able to include the vast majority of actions
necessary for a transition in the assessed sectors and take into account lifetime of high emitting assets (e.g.
coal plants for the electric utilities sector).

➔ RATIONALE
The boundary defines those areas of company activity and influence that themethodology will be applied to. This shall be contrasted with GHG inventories, forwhich organisational boundaries are based on a control/ownership approach of
the GHG sources and sinks (ISO 14064-1 and GHG Protocol). The present
methodology will not be strictly following this approach, because GHG inventorytaxonomies are focused on quantifying past and current emissions, which is too
limited for ACT’s scope - namely assessing all aspects that are relevant to align acompany with a low carbon economy, across the full extent of an organization, its
operations and its future.
The ACT boundary therefore potentially encompasses all operations of a company
and its entire value chain. The methodology aims to capture all significant sourcesof direct and indirect emissions (i.e. Scopes 1, 2 and 3), in order to fit a high shareof the company’s total emissions into the global emissions budgets on which thescenarios are based.

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5. Framework
methodology
The ACT methodology is presented in this chapter. The steps for applying the ACT assessment methods toeach company and its benefits are also explained.
The ACT methodologies build on the ladder that an organization follows towards reducing GHG emissions:
measurement, transparent reporting and making public commitments to mitigate climate change. The ACT
initiative has added a new layer of accountability to these already-established steps, and uses them as afoundation whilst also integrating these practices into the ACT methodologies themselves. These practices
mark the specific steps a company goes through when setting out to reduce its climate impact.

TABLE 2: STEPS TAKEN BY A COMPANY TOWARDS REDUCING GHG EMISSIONSMEASUREMENT

Measurement is the first step in reducing environmental impacts. A
complete inventory of GHG emissions helps organizations understand theiremissions profile and identify opportunities for emissions reduction.

TRANSPARENT

Transparent reporting consistent with climate standards is essential to

REPORTING

achieving a low-carbon economy. Stakeholders can hold transparent
organizations accountable for their performance, and sharing information
brings opportunities to collaborate along the value chain. Both effectively
reduce climate impact.

PUBLIC

Public commitments provide a clear sense of direction to an

COMMITMENTS

organization and its stakeholders. Setting science-based targets anddefining the appropriate means to achieve them lays out the pathway tomeaningful climate action. Once companies have prepared a baseline of
GHG emissions data and are reporting it transparently, the next step is to
reduce these emissions, or to mitigate climate change in other ways.

ACCOUNTABILITY

Accountability is needed to ensure that companies’ commitments
deliver the low-carbon economy. ACT assessments use climate scenarios
to define the specific level of ambition required for each sector. The ACT
assessment process checks the organization against this science-based
benchmark to produce the ACT rating.

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The ACT framework consists of an assessment framework to outline a consistent path and a set of common
rules for the development of the methodologies and an indicator framework to set the basis for identifying
the most relevant indicators for assessing a business climate impact. ACT methodologies shall use the ACT
framework to ensure consistent application of the ACT principles to the different sectors and fulfil the needfor consistent accountability to different stakeholders.

➔ RATIONALE
The first step in any GHG reduction plan is to measure and create a baseline ofwhat current GHG emissions are for an organization. Without accurate andcomparable measurement methods, companies cannot identify opportunities for
reduction, benchmark their progress against each other, and track reductions
made in emissions over time. The quality of the measurement is also critical for
ACT methodologies, or indeed any assessment methodology, as it forms the basis
for reasonable analysis and comparison.
Transparency on GHG emissions is a prerequisite to the development of sharedaccountability for reducing them, which the ACT project has identified as critical toreducing carbon emissions in the economy. Stakeholders can hold companies
accountable for the GHGs they emit, and transparency allows investors tocompare companies and provides the opportunity to make more climate-friendly
investment decisions. Finally, exposing data to external scrutiny is a powerfulincentive for companies to ensure that it is accurate, so transparency can also
drive improvements in data quality. While the ACT assessment process is private
and the information disclosed by companies during this phase is confidential, theanalysis also takes into account publicly available data reported voluntarily bycompanies.
The creation of GHG reduction targets provides clarity of purpose to theemployees within an organization. This allows for realistic and achievable plans toenable emissions reduction whilst maintaining business performance. Initiatives
range from the adoption of science-based emissions targets to the removal ofcommodity-driven deforestation in supply chains. Thus, public commitment is alsoa prerequisite to shared accountability.
The ACT methodologies aim to shed light on whether company commitments areadequate and on track to be met, and whether broader company performance on
reducing emissions is on the correct pathway. The analysis looks at recent actions,current performance, and uses information on this and the company’s strategic
future direction to predict its future climate performance. This is vital for verifying
individual corporate contributions and commitments to climate change mitigation,and to emphasize the urgency with which we need to act globally to reduce climatechange.

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5.1. ASSESSMENT FRAMEWORKAs a starting point, the ACT Assessment framework proposes five guiding questions as the basis to steer thedevelopment of ACT methodologies and create consistent ACT ratings across sectors.

1

2

3

4

5

What is the

How is theWhat is theWhat has the

How do all thesecompany planningcompany planningcompany doing atcompany done inplans and actions

to do?

to get there?

present?

the recent past?

fit together?

TRANSITION PLAN

LEGACYPRESENTCOMMITMENTCONSISTENCYFIGURE 1: ACT ASSESSMENT FRAMEWORKThe assessment framework shall remain similar for the development of all ACT methodologies. The first 4
questions express the dynamic vision of companies in a transition state as proposed by ACT. From thecommitment (Q1) ACT will evaluate the associated means that are going to be deployed (Q2) and are alreadyin place (Q3, Q4) and subsequently validate that business models are accordingly linked (Q5).

➔ RATIONALE
The key question to begin our assessment is “What does the company propose
to do to transition to a low-carbon future?” In order to assess this, a particularfocus will be placed on companies’ explicit targets in terms of reducing carbon
emissions. A target is one of the fundamental indicators of the readiness fortransition. Use will be made of science-based methodologies to assess how
appropriate the strength and the length of the target are.
Once we know where the company wants to be in the future, and how far in the
future that is, we should seek to understand how the company proposes to getthere. The key question is then “How does the company plan to do it?”: thecompany’s plans will need to be disclosed and interpreted with particular
ACT Framework | ACT Initiative | Version 1.1 | page 11

emphasis on what is under direct control, such as the carbon-intensive nature of
its investments and products. Next to this we consider those aspects it can only
influence indirectly, such as the impacts of the value chain, or policy or
regulations.
While the companies’ intentions and plans to achieve them are extremely
important, past actions and current performance will also be considered. The key
questions then relate to “What is the company doing now?” and “What has thecompany already done?”. To a large extent, the answer to these questions not
only determines how much a company still has to do, but also how credible it is
to expect that it will achieve its goals.
Finally, from the 4 questions discussed above a fifth key question then emerges,
which is “Is the company able to continue to earn profits” or, better put, “To what
degree is the transition integral to (and integrated into) its business model”?

5.2. INDICATOR FRAMEWORKACT relies on the development of indicators, which provide insight regarding the readiness of an organization
to transition. To help this development, a separate set of indicator modules is used next to the 5-question
ACT assessment framework. All ACT indicators come from applying the five questions to information onvarious aspects of company operations. As we cannot collect information about the future, ACT instead relies
on information from the present and recent past to answer the five questions. ACT prefers comparable andverifiable data, and it looks at various spheres of a company’s operations, products and external influence togather information on it. While the 5-question framework largely follows a chronological pathway from thepast towards the future, these modules bring together the indicators across the relevant aspects of company
operations to answer each of the 5 questions.

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TABLE 3: ACT INDICATORS OVERVIEWACROSS SECTORS
PAST
1. TARGETS

PRESENT

FUTURE

Company

Timeline of

Alignment of

performance onemissions reduction

emissions reduction

existing targets

targets

targets with climate

CORE BUSINESS PERFORMA NCE

INVESTMENT

science
2.MATERIAL

Historic trend in

Carbon intensity of

Future locked-in

INVESTMENT

direct emissions

current asset baseemissions of current
asset base

3.INTANGIBLE

R&D expenditure

Current R&D

R&D directions &INVESTMENT

trendsexpenditure in low-

investment incarbon technology

transition plan

4.SOLD

Historic trend in

Present-day actions

Projected emissions

PRODUCT

indirect emissions

and interventions tointensity of products

reduce embedded

in-use and ofemissionsproducts to be sold in

PERFORMANCE

the future
5.MANAGEMENT

Trend inLow-carbon scenario

Strategic low carbon

management

testingtransition plan

Supply chain

Supply chain

Forward-looking

engagement

engagement level &supply chain strategy

performance trenddepth& risk assessments

Previous campaigns

Engagement with

Activities andto promote low-clients to promote

proposals for moving

carbon products

low-carbon products

customer demand to

incentives for nonfossil fuel technology

INFLUENCE

6.SUPPLIER

7.CLIENT

low-carbon products
8.POLICY

Policy engagement

Company policy on

Alignment of

ENGAGEMENT

history & public

engagement withtransition plans withpositionstrade associations

NDCs and otherpolicies

9.BUSINESS

Experience with

Integration of circular

Development ofMODEL

running low-carbon

economy principles

future low-carbon

business models

in current businesscompatible businessmodel

modelsACT Framework | ACT Initiative | Version 1.1 | page 13

By relating the five questions to the information available on a company’s investments, actions, and strategy,
a set of indicators shall be developed for each sector to benchmark a state of alignment with low-carbon
transition, and measure how far away companies are from that state. Indicators can be a mix of sector-specificand common elements, and the weighting attributed to each indicator can vary across sectors. This reflects
the fact that different sectors have different sources of emissions, and different actions to take to transition to
the low-carbon economy.

➔ RATIONALE
To support the development of indicators to answer the 5 questions, ACT uses a
secondary framework that aids the methodology developers in identifying
indicators that together could provide enough information for a full organizational
assessment.
This framework introduces 9 distinct elements across the main categories oftargets, core business performance, influence and business model. Next, it
introduces a temporal element that looks for past, present and future-relevant
indicators for each of the 9 elements. Not every sector needs indicators in all 27
possible ‘indicator spaces’ that are created this way, but following this framework
and attempting to find indicators for each ensures that a holistic andcomprehensive picture of a sector is obtained.
Targets are the accepted quantitative formalization of company commitments andare the starting point of the indicator framework. The core business performance
section incorporates the main quantitative indicators on emissions measurement
and performance, and how investment decisions in the past and future ultimately
impact these emissions. Non-tangible investments are also included here. Soldproduct performance deals with indirect emissions measurements and the actions
the company takes to reduce them for all products the company sells. Finally, themanagement section includes all indicators that describe the company’s strategic
direction, as well as the level of expertise and management capabilities withrespect to the low-carbon transition. The influence section covers indicators thatlook at the way the organization engages with the outside world, and how it
attempts to change its internal and external policies to develop its low-carbon
strategies.

5.3. DATA SOURCES
To carry out a company level assessment, many data points need to be gathered which can be sourced fromvarious locations. ACT methodologies shall rely on voluntary data provision by companies as well as external
data sources. External data sources shall be preferred where the data are reliable, streamline the process,ensure fairness, and provide additional value for checking, validation and preparation of the analysis narrative.
ACT analyses and scores shall be based on consideration of a complete set of information on raw company
data or indicators. Indicators may be reported directly by companies. Indicators may also be calculated,modelled or otherwise derived from different data sources supplied by the company. Following the“verifiability” principle for methodology development, preference shall be given to data that is verified,
ACT Framework | ACT Initiative | Version 1.1 | page 14

verifiable or can be validated in some way. Data sources requested by an ACT methodology may bequantitative or qualitative in nature, as may be the indicators selected. Lastly, ACT ratings should beaccompanied by information on the credibility of the data used to produce them.
Data collection requirements shall be driven by the methodology development principles (relevance,
verifiability etc.) but also by practical considerations. For example, when choosing between two data formats,it may be necessary to select one which is more widely used within an industry than one which is little used
but more relevant to the project requirements. The sector methodology shall contain the full data request as
an appendix or as a separate document.
To ensure transparency, methodology developers shall also publish a concise data request summary for
public access and company engagement purposes.

➔ RATIONALE
Suitability considerations for data are its accessibility, comparability, difficulty ofcollection, and level of adoption industry-wide. Whether its production or collection
is supported by a pre-existing standard (thus enhancing comparability andcredibility) is also a consideration. Data should contain an appropriate level ofdetail for the purposes of the assessment and must be available over anappropriate time scale where required. For example, annual data is probably more
appropriate than monthly or quarterly data. The key data points used forbenchmarking should also be available on an appropriate geographic scale, andfor an appropriate scope, for example covering all operations of the company.
The analysis may also consider the credibility of data provided as part of theassessment process. For example, if data is incomplete, cannot be validated or isinconsistent (whether internally inconsistent or inconsistent with other data
sources) this will hamper the effectiveness of the assessment procedure and thecredibility of the resulting rating. It is therefore important that ACT ratings areaccompanied by a means to communicate the level of confidence in the rating. It
is for this reason that ACT also stipulates the publication of a data request
summary to all participating companies as well as publicly for all other relevant
stakeholders.
Company data could also be considered less credible due to reputational
concerns. There are three main reasons why a company may receive a score
downgrade due to reputational concerns:→ Any behaviour directly impacting climate performance, such as
deceptive or fraudulent emissions testing or reporting.
→ Other serious issues that call into question the credibility of datareported. This relates to the overall credibility of any datareported by the company, which could be damaged by incidents
such as accounting scandals or evidence of fraud.
→ Extremely serious incidents that call into question the credibilityof the management of the company, thus undermining
confidence in its ability to deliver on its strategy or transition
plan.

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In addition to data provided by companies, it may be necessary to gather datafrom external sources for benchmarking purposes or to support the methodology
rationale and development. This data should respect the project and methodology
development principles. Preference shall be given to data from credible, reliable
and well-known sources that has been validated or peer-reviewed, that is openly
available (in accordance with the “transparency” principle) and that is relevant tothe scope of the project.
Data about the company or its performance from third-party sources may also be
considered as part of the assessment process. This could be to supplement,
validate or support data provided by companies. It could also be used to form thebasis of part of the assessment on its own, without reference to data provided by
the company. The sector methodologies will provide guidance on the type, amountand level of detail of the data required for the assessment, for both data suppliedby companies and that found from external sources.

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6. Assessment
For any reference to an existing methodology, benchmark, database or other type of background informationin the ACT methodologies (Framework and sector methodologies), the most recent publication or version ofthis source shall be used at all times. Thus, whenever a new version of a referenced source is available andprovides the updated contents relevant for ACT, it shall be used instead of the referenced version.

6.1. BENCHMARKThe fundamental target to achieve for all organizations is to contribute to not exceeding a threshold of 2°C
global warming compared to pre-industrial temperatures. This target has long been widely accepted as acredible threshold for achieving a reasonable likelihood of avoiding climate instability, while a 1.5°C rise has
been agreed upon as an aspirational target.
The 2-Degree Scenario (2DS) has been the main and most ambitious climate scenario in the International
Energy Agency (IEA) Energy Technology Perspectives (ETP) works for years. In the IEA ETP 2017 [3], themore ambitious Beyond-2-Degree scenario (B2DS) was first proposed in order to limit the rise of global
temperature by 1.75 degrees by 2100. More ambitious scenarios such as the IEA B2DS are also encouraged
to be adopted as benchmarks.
From a more general point-of-view, sector benchmarks may be changed from the 2DS scenario to anotherrelevant low-carbon scenario depending on the availability of geography-specific, context-specific, futurerelevant scenarios, or future updates of the 2DS scenario – and possibly to explore higher ambition
requirements. In this case, the ACT assessment report shall disclose which low-carbon background scenario
has been used. This also adds some flexibility to the assessment of specific companies and to the use of themost up-to-date or more ambitious (e.g. IEA ETP B2DS) scenarios.
Thus, each company shall be benchmarked according to globally and/or nationally acceptable and credible
benchmarks that are aligned with the boundaries of the methodology. If the methodology is only applied to a
local sample, the associated benchmarks shall still be compatible with global low-carbon scenarios.

QUANTITATIVE BENCHMARKS
To assess company targets and emissions trends for quantitative indicators, global emissions scenarios shallbe translated into target pathways at the company level via the Sectoral Decarbonization Approach (SDA)[1]. This approach is broken down into three elements:→ Establish an underlying emissions scenario (aiming for a global low-carbon pathway)→ Disaggregate scenarios at the sectoral level→ Apply an allocation mechanism for companies per sector
Not every sector for which an ACT methodology may be wished to be developed has an equally advanced
SDA. Therefore, in situations where the SDA methodology is not applicable, best practice approaches shallbe applied with proper scientific foundations.

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QUALITATIVE BENCHMARKS
Qualitative benchmarks shall be based as much as possible on low-carbon scenarios that are used in thequantitative indicators of the methodology. In cases where this is not possible, the methodology developers
shall base the benchmarks on scientific understanding or expert knowledge of the required practices andtraits that signify an organization in transition.

➔ RATIONALE
Extensive pathway modelling for the 2° target has been undertaken by numerousorganizations. For instance, the IEA ‘Energy Technology Perspectives 2-Degree
Scenario’ (ETP 2DS) scenario and the ‘Representative Concentration Pathways’(RCP) 2.6 scenario assessed by the IPCC. In the IPCC fifth assessment report(AR5), a cumulative emissions budget of 550 to 1,300 GtCO 2 over the years 20112050 was reported as necessary for a high likelihood of staying below 2° warming.
A scenario envelope was brought together to illustrate a range of pathwaysaligning with this budget. This envelope is shown in Error! Reference source notfound. The scenarios were modelled using the Global Calculator [4], an open
source model developed through a consortium of international organizations.
The Sectoral Decarbonization Approach (SDA) [1] is a widely-adopted
methodology for equitable translation of global carbon budgets to company level
carbon budgets and decarbonization pathways 2. It allows the methodology
developers to take into account specific sector and geographic challenges todecarbonization, which should ensure a fair treatment of all companies in any ACT
methodology anywhere in the world.

2

The SDA approach uses the estimated future company activity growth as an input to the company

benchmark pathway definition. In the context of ACT, the company benchmark pathway definition uses theassumption that the company activity trend is the same as the sector activity trend in the future.

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FIGURE 2: GLOBAL EMISSIONS SCENARIO ENVELOPE EXTRACTED FROM [4]There are three main approaches to allocating emissions targets at the company level:CO N VERG ENCE O F CARBO N IN TEN SITY - In this mechanism, it is assumed that the carbon

intensity of a company converges towards the low-carbon carbon intensity of the sector at a ratethat ensures the corresponding sectoral carbon budget is not exceeded. The rate of convergenceof a company is a function of its initial carbon intensity of the company, the low-carbon intensity ofthe sector, and the growth of the company relative to the growth of the sector.


CO MPRESSIO N O F CARBO N IN TEN SITY - In this allocation mechanism, it is assumed that

all companies within the same level of disaggregation (i.e. sector, region or globally) reduce theircarbon intensity at a uniform rate that would ensure their respective low-carbon budget is notexceeded. The rate of compression in this mechanism is a function of a decreasing carbon budget
and the expected level of activity for the sector or region. Activity should be expressed, in the caseof power, using a physical indicator such as GW.h.


CO N TRACTIO N O F ABSO L U TE EMISSIO N S - With this allocation mechanism, all companies

within the same sector, region, or globally (in the case of an aggregated emissions scenario)
reduce emissions at the same rate, e.g. 80% of the 2015 base.

The most common starting point for our analysis is the convergence of carbon intensity, which is also
employed by the SDA. Contraction of absolute emissions is more appropriate for heterogeneous sectors, forwhich determining a meaningful measure of intensity is less straightforward. Compression of carbon intensity
does not discriminate between different companies by past and present performance. This could potentiallyallow for a company that has not yet implemented measures to benefit from a focus on hitherto unpicked ‘lowhanging fruit’. Convergence of carbon intensity puts a higher burden on companies with more intensive asset
bases. The modeling of company allocations will enable each mechanism to be compared.

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6.2. WEIGHTING
Each module and indicator in the methodology shall have a number of points allocated to it. The relative
numbers of points for each indicator, or weighting, shall be determined on a sector-by-sector basis. In general,higher weightings are given to questions/issues which have greater relevance for that specific sector toachieve the low-carbon transition.
The selection of weights for both the modules and the individual indicators was guided by the following set ofprinciples:
TABLE 4: GENERAL PRINCIPLES FOR THE ASSIGNMENT OF WEIGHTINGS TO ACT INDICATORS AND MODULESPRINCIPLE

EXPLANATIONVALUE OFThe value of the information that an indicator gives about a company’s

INFORMATION

outlook for the low-carbon transition is the primary principle for the selectionof the weights.

IMPACT OF

A high impact of variation in an indicator means that not performing in such

VARIATION

an indicator has a large impact on the success of a low-carbon transition, andthis makes it more relevant for the assessment.

FUTURE

Indicators that measure the future, or a proxy for the future, are more relevant

ORIENTATION

for the ACT assessment than past & present indicators, which serve only to
inform about the likelihood and credibility of the transition.

DATA QUALITY

Indicators that are highly sensitive to expected data quality variations are not

SENSITIVITY

recommended for a high weight compared to other indicators, unless there isno other way to measure a particular dimension of the transition.

Weighting has to be assigned at module level and at indicator level. Based on the above principles, thefollowing paragraphs provide guidance for the assignment of weightings first at the level of the modules, andthen at the level of the indicators.

WEIGHTING AT THE MODULES LEVELACT is organized around 9 modules and a top-down approach assigning clear weightings at the modules
level increases the clarity and the attractiveness of the ACT methodology.
When assigning weightings, the macro story of low-carbon transition for the sector should be considered andareas that are more significant for this change should be more heavily weighted.
Assigning weight at the modules level has to take into consideration the sector specificities regarding climatetransition, especially the positioning of the companies in the sector in the carbon value chain (are the strategic
GHG emissions in scope 1,2 or 3 of the company?).
In addition, the following comments can be added according to module specificities:

ACT Framework | ACT Initiative | Version 1.1 | page 20

TABLE 5: MODULE-SPECIFIC CONSIDERATIONS FOR THE ASSIGNMENT OF WEIGHTINGSTARGETS

Weighting of this module should take into account the complexity of assigningclear targets due to sector specificities

MATERIAL

Weighting should reflect the specific importance of the owned asset base in

INVESTMENT

the carbon performance of the sector

INTANGIBLE

Weighting should reflect the specific importance of R&D and technologies in

INVESTMENT

the low carbon transition (some sectors are more technology-dependent thanothers for the transition)

PERFORMANCE OF

Weighting should reflect the specific importance of the scope 3 emissions in

PRODUCTS

the carbon performance of the sector

MANAGEMENT

Weighting should be similar for all sectors in order to reflect the equal
importance of management for achieving the climate transition

SUPPLIERS

Weighting should reflect the specific importance of suppliers in the global
carbon performance, and therefore the key role of the company to influencethem regarding climate transition

CLIENTS

Weighting should reflect the specific importance of clients in the global
carbon performance and therefore the key role of the company to influencethem regarding climate transition

POLICY

Weighting should reflect the specific importance of regulation in the climate

ENGAGEMENT

transition of the sector, and therefore the key role of the company to influencethese policies

BUSINESS MODEL

Weighting should reflect the specific potential of new business models toachieve the climate transition

WEIGHTING AT THE INDICATORS LEVELAt the micro level of each indicator, the robustness of the indicator shall be considered. The weighting
assigned to indicators shall be assigned according to a list of criteria.
These criteria include:How well the indicator functions to measure real performanceHow the actions related to the indicator are advanced or mature

Whether the measure relates to an absolute measure of (climate) performance or a relative
benchmark. According to the ACT principles, absolute benchmarks are to be preferred and theweighting should reflect this.



The amount of data requested from the company: more requested data can be weighted moreheavily to encourage disclosureComplexity of data gathering: score allocation can provide an incentive for complex data collection

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

If the indicator is a proxy rather than a direct measurement, which uses second source data insteadof primary source data, how closely correlated or related to the desired measurement the proxy isshould be factored inData-driven or directly measured indicators

These same criteria may also be used at the modules level.
Indicators may indicate the presence of positive action, or just the absence of negative action. The latter isless closely associated with positive action and therefore should be underweighted.
Nevertheless, in some cases, indicators can be identified as very relevant but difficult to assess. In suchcases, a lower weighting should be allocated to reflect this difficulty of analysis. These cases might occur inthe following circumstances: lack of maturity of the methodology (e.g. absence of scenario/benchmark),difficulties in collecting information, difficulties in verifying collected information, etc.

➔ RATIONALE
For each indicator, there will be a maximum number of points that can be attained,
representing the denominator. The number of points awarded to the company canthen be represented as the numerator of a fraction. For example, if 2 points areavailable for a question, then possible scores for that question could be 0/2, 1/2,
or 2/2. The final score for a company can be represented as a fraction, for example
40/50 points, by calculating the sum of all numerators and denominators. It canthen be resolved to a percentage, 80% in this example. This system allows certain
questions to be excluded from the assessment of a specific company because
they are not relevant, without affecting the company results. For example, acompany could have a denominator of 45 rather than 50 if certain questions were
excluded from their assessment. A score of 36/45 is still a percentage score of
80%, the same as our previous example. However, if points were allocatedcumulatively, then the comparison would be between 36 and 40, giving a false
impression that the company scoring 36 had scored worse.

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6.3. ASSESSMENT GUIDELINESFIGURE 3: ILLUSTRATION OF COMPANY CLIMATE PERFORMANCE CONCEPTS

ACT will measure three gaps in the GHG emissions performance of companies, as visualized in Figure 3:CO MMITMEN T G AP – The difference between what needs to be done and what the company

says it will do (Q1).
H O RIZO N G AP – The difference between the average lifetime of the company’s production

assets (particularly carbon intensive) and the time horizon of its commitments. Companies withlarge asset lifetimes and small-time horizons do not look far enough into the future to properly
consider a transition plan. This gap links Q1 and Q2.


ACTIO N G AP – The difference between what the company has done in the past plus what isdoing now and what has to be done (Q1, Q2, Q3, and Q4). Companies with large action gaps havedone relatively little in the past and their current actions point to continuation of past practices.
This model closely follows the assessment framework presented above. It starts at the future, withthe goals companies want to achieve, followed by their plans, current actions and past actions.

The comparison of the company pathway versus the benchmark will essentially use 3 types of analyses:


TH E G AP METH O D will determine the gap, for a time horizon, between the company’s pathway

and the company’s low-carbon benchmark. It will assess the effort level requested.
TH E TREN D METH O D will compare the company’s past and current performance trend with thetrend that would be requested to achieve a given target.


TH E RATIO METH O D will compare climate information (e.g. CO2 emissions) cumulated overtime with requested thresholds and benchmarks. In practice, it is used to compare the future

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operational emissions from existing and planned assets (locked-in emissions) with the company’s
carbon budget over the same period of time.

It is important to note that, as visualized in Figure 3, all the pathways compared through the above methods
have their initial point either on the reporting year, or 5 years before the reporting year. More specifically, nouse is made of the notion of “base year”: this is deliberate as, although comfortable at first sight, this notion
poses complex questions in the context of ACT, both in terms of definitions and in terms of consistency
between indicators.

ASSESSING THE CONSISTENCY OF TRANSITION STRATEGIESClimate change is a systemic issue, where solutions will largely appear from the relationships between the
different subsystems from where it emerged: society, economy, and environment. A good reason to think ofclimate change as the result of a system is that the behaviour of systems can be deduced by their structure
and relationships, or deduced from the measuring of certain variables.
Companies are particularly important actors with strong interactions with these subsystems: economy,society, and environment. Furthermore, companies are systems themselves, with varied parts executing
different functions, structure, inter-relationships, capacity to adapt and purpose. In looking at their responses
to climate change, companies will be “systems in transition”, actively working to modify themselves to become“low-carbon systems”. We consider that there are 3 fundamental levers with which companies canadapt/respond to the “low-carbon transition” challenge, which are:

STRATEG Y: will correspond to a change in paradigm of the company’s mission, vision orbusiness model, which can imply a change in goals, structure and rules of how the company
operates. Changes at the strategic level offer the highest potential to quickly align the company
with the transition to 2°C or beyond. Incumbent companies expecting a “gradual” transition to a
low-carbon economy through a slow adaptation of their old paradigms to a new business reality
might get pushed out by new companies creating new (competing) markets (or changing theirparadigm) or positioning themselves in different ways more appealing to customers.


IN VESTMEN T: all companies need investment to survive. It is through investment that acompany renews its physical assets or acquires key intellectual or human capital. It is throughthese changes in capital that companies have the ability to “reinvent themselves” and change how
they organize themselves. Investments constitute a unique opportunity in time to align with the
low-carbon transition and can have long-lasting effects and create strong dependencies forcompanies’ future response in aligning with the low-carbon transition. As far as climate change isconcerned, GHG emissions and the transition, there are particular concerns with the physical asset
base with respect to technology change (RD&D in low-carbon technologies), locked-in emissionsof current (and future) investments [5] [6] [7] [8] and stranded assets.


MAN AG EMEN T: the managerial level corresponds to the different actions that companies cantake that try to address climate change issues through managerial incentive policies: GHG
reduction targets, how it deals with and organizes information (for example, how physical climate
risk is managed), changes in production systems in response to regulation or the threat of it, etc.
The three levers are linked and influence each other. While recognizing that all companies are “living systems”
trying to survive (make money) by adapting to their external environment, a company’s mission defined as“to maximize the return to our shareholders” is bound to lead to different goals, structures, information flows(and so on) than a company’s mission that is “to create a better everyday life for people”. The way a company
defines its mission and designs its business model will have a direct influence on its investment decisions
ACT Framework | ACT Initiative | Version 1.1 | page 24and management practices. Its investment decisions and management practices will impact its operations.
This approach mirrors, in a simplified way, the concept of “integrated thinking”, which is “the active
consideration by an organization of the relationships between its various operating and functional units andthe capitals that the organization uses or affects” [9].

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7. Rating
The ACT rating shall comprise:A performance score



A narrative scoreA trend score

These pieces of information shall be represented within the ACT rating as follows:a.

Performance score as a number from 1 (lowest) to 20 (highest)b.

Narrative score as a letter from E (lowest) to A (highest)c.

Trend score as either “+” for improving, “-” for worsening, or “=” for stable.

In some situations, trend scoring may reveal itself to be unfeasible depending on data availability. In this case,it should be replaced with a “?”.
The highest rating is thus represented as “20A=”, the lowest as “1E=” and the midpoint as “10C=”.

TABLE 6: EXAMPLE OF LOWEST, HIGHEST AND MIDPOINT FOR EACH ACT SCORE TYPE

LO W SCO RE S

MID SCO RE S

H IG H SCO RE S

1, E, -

10, C, =20, A, +7.1. PERFORMANCE SCORING
7.1.1. PURPOSE AND APPROACH
The performance scoring measures the degree of alignment with the requirements of a low-carbon economy
as measured by the limited set of performance indicators included in the ACT methodology.
The performance scoring shall be calculated mathematically from the points awarded to the participatingcompany for each indicator in the ACT scoring methodology according to the level of performance attained.
Points shall be awarded on a numerator/denominator system and then the fraction of points awarded
converted to a percentage, before being converted to a score between 1 and 20.

7.1.2. GUIDANCE TO THE PERFORMANCE SCORING
The sets of performance indicators and their associated weightings, as well as the associated module
weightings, are sector-specific by nature and are therefore presented in the ACT sector methodologies.
Each performance indicator measures the response of the company for all the activities of the company
assessed versus ACT. Thus, if the response of the company does not cover all the involved activities for a
ACT Framework | ACT Initiative | Version 1.1 | page 26

given indicator, then the score is adjusted downwards equal to the % coverage of the response, unlessotherwise specified in the sector methodology.

➔ FOR EXAMPLE
For the RT 1.1 performance indicator in the Retail sector (“Alignment of inclusive
Scope 1+2 emissions reduction targets”), the combined targets set by a company
should cover 100% of the inclusive Scope 1+2 emissions. If this is not the case,then the score is adjusted downwards equal to the % of the inclusive Scope 1+2
emissions covered by the combined company targets.

7.2. NARRATIVE SCORING
7.2.1. PURPOSE AND APPROACH
The narrative scoring summarises the full conclusions of the analysis, including performance score results
and narrative indicators, which are less fit to be analysed quantitatively, in a single letter from A (highest) to
E (lowest).
The analyst shall prepare an analysis narrative on the results of the analysis for the feedback report. The
narrative shall address the five ACT questions (presented in 5.1 Assessment framework) based on theinformation from the indicator framework.
While the performance scoring focuses on quantitative information, the narrative scoring has a holistic
approach and is based on additional and less quantifiable information, such as external data from sources asreputation platforms, news, financial data, etc.

7.2.2. GUIDANCE TO THE NARRATIVE SCORING•

GENERAL NARRATIVE SCORING ASSIGNMENT PROCESSThe narrative scoring has 3 steps:a.

The performance score insights summarize why a certain score has been assigned to each
module/indicator, and focus on the lower module scores where the most improvement can begained.

b.

Narrative indicators and accompanying data source verification. This consists of a review ofthe data available on the company. The considered data includes the data gathered for the
performance scoring, as well as data from other sources such as annual reports and investment
analysis prepared by third parties.

c.

Finally, the information gathered through the performance score insights and narrative
indicators should be analysed with the following four criteria in mind:
I. Business model and strategy
II. Consistency and credibility
III. Reputation
IV. Risk

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The analyst shall develop an analysis narrative, in which the five ACT questions shall be addressed, andassign the associated narrative score, ranging from A to E.

•

DETAILED NARRATIVE SCORING CRITERIA DESCRIPTION

To develop the analysis narrative and establish a score, the analyst shall review the data that is available on
the company according to the four criteria described in this section.
In general, the 4 criteria have the same importance in the analysis. However, there may be certain situations
where one of the 4 criteria should be assigned a higher weight than the others because there is evidence of
critical issues that could seriously hamper the company’s climate performance. It is up to the analyst to
consider each specific case and adjust the calculated score if needed by, for example, increasing the weightof one particular criterion.

➔ FOR EXAMPLE
A serious fraud event, which could affect the credibility of the company’s
management, could make the reputation criterion more impacting than the others.

BU SIN ESS MO DEL AN D S TRATEG Y

The Business model and strategy criterion will explore whether the company has experience in running a
profitable business from low-carbon activities and is adapting its business model.
Questions to be asked are the following:Is the company’s short-term strategic direction significantly influenced by decarbonization efforts?

Is the company’s core business model threatened by the transition? Is the company strategically
repositioning itself, e.g. as a service provider instead of manufacturer?



Are the company climate targets aligned with a low-carbon trajectory?

What are the foreseeable implications of meeting these targets? Do they pose significant
challenges either operationally, technologically, financially or other?



Are the company’s recent actions such as acquisitions and mergers in line with its targets?

Does the company invest R&D in those technologies that it places its faith in for the transition?

CO N SISTEN CY AN D CRED IBILITYThe Consistency and credibility criterion considers whether the company’s transition plan and accompanying
scenario analysis is consistent with its short and long-term business strategy.
Questions to be asked are the following:Do the company’s recent actions (present and past) show alignment with its climate strategy?

Does the company acknowledge climate change as an issue and does it advocate for a forwardthinking policy?

Is the company’s policy position and influence not in conflict with its own climate-related
communications?



Are there conflicting incentives in place that discourage a low-carbon transition in certain parts ofthe company?
ACT Framework | ACT Initiative | Version 1.1 | page 28Does the group (that the company is part of) have any conflicting activities that undermine its ability
to transition?

REPU TATIO N

The reputation criteria will explore whether there are any serious events in the company’s history that may
hamper its credibility towards the low-carbon transition, and therefore its credibility for receiving a higher ACT
assessment score. The analyst may refer to external data from reputation platforms (e.g. RepRisk).
Questions to be asked are the following:Is there evidence that the company’s behaviour directly impacts climate performance, such as
deceptive or fraudulent emissions testing or reporting?



Are there serious issues that call into question the credibility of data reported? This relates to theoverall credibility of any data reported by the company, which could be damaged by incidents suchas accounting scandals or evidence of fraud.

Have any extremely serious incidents, calling into question the credibility of the management’s
ability to deliver on the company strategy or transition plan, happened in the recent past?

Has the company previously made any public announcements on which it has failed to deliver,namely announcements related to climate and environmental performance?

RISK

The Risk angle considers specific indicators from the performance scoring and external information which
can help identify any major future risks that the company may face. External factors should also be explored,such as policy constraints or technological and cost barriers to the successful implementation of thecompany’s transition plan.
Questions to be asked are the following:

Does the company’s asset base/product portfolio show a lock-in to high carbon impact
technologies that is not consistent with the transition plan? Is there a risk of stranded assets andhow significant it is?

How reliant is the company on high-carbon activities for its profits?

Are there market or policy barriers in place that may block the successful implementation of aparticular strategic low-carbon direction?

Is the company’s technological direction high-risk/unproven/unidirectional/dependent on future
innovation that is yet to be realized?

•

QUANTITATIVE APPROACH FOR NARRATIVE SCORING BASED ON 4 CRITERIAThis section proposes a method for assigning the narrative score. The purpose is to improve fairness andcomparability of scores assigned by different analysts.
To produce the narrative scoring, the analyst should use the maturity 5-level matrix proposed in Appendix 3:
Maturity matrix on narrative scoring criteria. The matrix will help to evaluate the maturity of the company’s
low-carbon transition strategy across the 4 criteria.
The company’s maturity for each of the 4 criteria is then evaluated based on 5 levels defined as follow:

ACT Framework | ACT Initiative | Version 1.1 | page 29

a.

BASIC : the level of maturity is unsatisfactory, it seems that very important efforts are needed andthere is no evidence the company is taking any action.
b.

STAN DARD : the level of maturity is not yet satisfactory but there is evidence that the company isconsidering putting in place mechanisms to improve the situation.
c.

ADVAN CED : the level of maturity is satisfactory, the company is heading in the right direction but

still needs to demonstrate its capacity to transition.
d.

N EXT PRACTICE : the level of maturity is very good, the company has implemented goodpractices, showing signs of transformation toward low-carbon trajectories.
e.

LO W- CARBO N TRAN SITIO N ALIG N ED : the level of maturity is outstanding, there is reliable

evidence that the company’s performance is and will be aligned with a low-carbon trajectory.

Each criterion in the maturity matrix should receive a score from 0 to 4 according to the assigned maturity
level (Basic = 0; Low-carbon alignment = 4) and the total score should be calculated as the sum of the scoresindividually retained for each criterion:
𝑅𝑖𝑠𝑘

𝑇𝑜𝑡𝑎𝑙 𝑆𝑐𝑜𝑟𝑒 = 1.25 ∗∑𝑆𝑐𝑜𝑟𝑒𝑖

𝑖=𝑏𝑢𝑠𝑖𝑛𝑒𝑠𝑠 𝑚𝑜𝑑𝑒𝑙With this approach, the maximum achievable score is 20.
In specific situations where criteria should not be considered with equal importance for the narrative scoring,
the above formula may be adapted.
The alphabetical score can then be derived according to the table below, which illustrates how to convert the
total numerical score, as calculated above, to the retained letter-based ACT narrative score.

TABLE 7: DERIVING THE FINAL NARRATIVE SCORE BASED ON A LINEAR QUANTITATIVE SCORE
WITH A MAXIMUM OF 20 POINTS.

LETTERQUANTITATIVE SCORESCOREREQUIRED
16 to 20
12 to <16
8 to <12
4 to <8
0 to <4

ACT Framework | ACT Initiative | Version 1.1 | page 30

7.3. TREND SCORING
7.3.1. PURPOSE AND APPROACH
The Trend score aims to forecast changes in the company’s alignment with the low-carbon transition byanswering the following question: will the company’s ACT score improve, worsen or stay the same if repeatedin the near future?
The analyst should analyse the forward-looking information collected during the other parts of the ACT
assessment (Performance score and analysis narrative) looking for strong evidence that the company’s ACTscore will change, or not, in the near future. All possible major events, which have the potential to affect thecompany’s alignment to a low-carbon transition, should be considered for the trend scoring.

➔ FOR EXAMPLE
If an electric utility company is making important investments in new renewablecapacity, it is probable that its ACT score will improve in the short-term, whichshould count as positive.

7.3.2. GUIDANCE TO THE TREND SCORING
The trend scoring has 3 steps:a.

TREN D IDEN TIFICATIO N : Existing data infrastructure, data points and existing indicators thatprovide time-relevant information about a possible change or stability of a particular businessdimension should be identified. Indicators from the ACT performance scoring, which can have an
impact on the company’s future directions, can include: Future targets, Time horizon of targets,
Locked-in emissions, Trend in future emissions intensity, Mitigation R&D, Low carbon transition
plan, Business models, Sold product performances and so on.
b.

TREN DRESEARCH : External information from news sources, reputation platforms (e.g.

RepRisk) and other available reports that can indicate significant future changes with an impact
on the company’s low carbon alignment should also be consulted and considered when assigning
the trend score.
c.

TREN D SCO RE : The information gathered from the trend identification and research should beconsidered and combined into a consistent ternary score.

It is important to note that future-relevant information by itself does not provide robust insight into a possible
change. For that, information about the past, the present and the future needs to be combined.
In practice, to establish the trend score, the analysts should analyse the company’s direction by comparing
past/recent/current information with future expectations from the following angles:a.

Quantitative information about past performance versus emissions reduction targetsb.

Qualitative (and quantitative) information about the current business model versus the expected
future business modelc.

Lastly, a modifier to the score should be applied if changes in the above dimensions are causedby external or indirect internal factors and not by conscious choices or vice-versa.

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TABLE 8: EXAMPLES OF COMBINATIONS OF DATA AND INDICATORS THAT CAN PROVIDE AN INSIGHT
INTO THE FUTURE CHANGES IN THE COMPANY’S ALIGNMENT WITH A LOW-CARBON TRANSITIONINFORMATION LEVELDATA COMBINATIONSCOMPUTATI ON OF THE SCORECHANGE IN FUTURE

Past emissions performance

Ratio computation of target with past

EMISSIONS

compared with emissions

emissions performance (direct ternary).

reduction targets

Assesses whether future targets are
more ambitious than past performance.

Is it likely that the company’s
targets are able to affect the

Locked-in emissions future

Measures if the gap between projected

emissions trends?

impact compared with theemissions and the sectoral benchmark

sectoral benchmark

increases, decreases or stays
unchanged over time.

(50%)
CHANGE IN BUSINESS

Company future vision:

Assessment of the differences between

MODEL AND STRATEGY•

the future vision of the company and

Low-carbon transition
plan•
Is it expected that thecompany’s transition plan andbusiness model can incite achange of direction toward
better alignment with the lowcarbon transition?

•

the company’s current business model.

Business model
indicators

Measure of the company’s change in

Strategic information on

its low carbon transition alignment, due

company’s future

to the expected developments in thebusiness model fromcompany’s strategy and business

reports or news

model.

Current business model:

(50%)
•

- Financial information on
current business model

CAUSE OF CHANGE(MODIFIER)

Optional dimension

Climate performance with

Measures whether changes in thefinancial/asset levelcompany’s short-term emissions were

information from externalcaused by external or indirect internalsources(e.g. growth) factors or by active
strategic choices. Allows formodification/correction of the score if
the outcome of the two first elements is
not in line with expectations.

The outcome of the above process should allow the analyst to devise a negative, positive or equal balance
for the trend score. In cases where the trend score cannot be assigned with enough confidence, such as
when information is not available or unreliable, a question mark (?) shall be assigned instead of the +, - and= ternary score.
The proposed scoring methodology is not binding and in certain cases different approaches may be needed:
the analyst shall choose the most appropriate scoring methodology according to the sector and companyspecific characteristics.

ACT Framework | ACT Initiative | Version 1.1 | page 32

7.4. FEEDBACK REPORT
Participating organizations shall receive a feedback report that contain all the relevant results of the ACT
assessment for a company. Each company shall be presented with this feedback report either in person or
remotely. The feedback report shall include the following elements:a.

PERFO RMAN CE, ANALYSI S AN D TREN D SCO RIN G RESU LTS. This is the communicationof the performance and narrative scores and shall be presented at least as a visual examination
at the module level. More transparency on the indicator level may be given at the discretion of theanalysts.
b.

CO MMEN TARY: This is a textual explanation of the performance, narrative and trend scoring

results, which shall focus on the main shortcomings identified in the company analysis that haveresulted in losses of points. It should also provide pointers and leads for short-term improvementof the score. The commentary shall be written in such a way that the report is standalone and does
not need a presentation to be useable by the organization.
c.

RATIN G H IG H LIG H TS: Depending on the level of detail in the ACT assessment, each feedback

report should contain relevant visual representations of (groups of) important indicators. These
examples may be similar for all companies in a particular sector, or they may be tailored to theorganization to make the feedback report more bespoke.

The feedback report should include more details on each indicator’s score to address the highlight priority
areas of action for each company. The confidential information explicitly indicated by companies shall not bereported in the feedback report.
To prepare the feedback report, the analyst may use the dedicated feedback report template provided by
ACT on the ACTproject.net website.

7.5. DATA COMMENTARY
The data commentary may be standalone or part of the feedback report. It shall be standalone when the
feedback reports are confidential. The analyst shall prepare a brief narrative on the type and quality of theinformation used for the assessment, which will aid data users to interpret the final results. Conclusions areprovided on the information used for the analysis; completeness of information, quality of information, data
sources used and verification status of data.
For reporting and verification, the guidance document developed within the ACT Initiative that aims to clarify
sectoral reporting requirements and provides verification guidance shall be consulted. In particular, forverification processes, GHG verification standards such as the ISO 14064-3 standards is proposed. However,since the ACT assessment covers more than just GHG emissions and targets, and also assesses otheractivities (e.g. R&D, strategies, management and business models), the verification of ACT reports entails alarger scope than just GHG verifications, and therefore requires additional information (e.g. forward-oriented
and/or not based on any specific standard).

ACT Framework | ACT Initiative | Version 1.1 | page 33

➔ RATIONALE:
The data commentary provides key information to users of the ACT rating on thenature of the information used to produce the rating. It is important that this is
standalone in the case where feedback reports are not publicly available. ACT
ratings are expected to be more widely available than the associated feedback
reports, which may contain confidential information. It is therefore imperative thatdata users of the ratings have access to this infrastructure note.

ACT Framework | ACT Initiative | Version 1.1 | page 34

8. Sources[1] “Sectoral Decarbonization Approach (SDA): A method for setting corporate emissions reduction targets
in line with climate science,” Science Based Targets Initiative, 2015
[2] “ACT Guidelines for the development of sector methodologies - Version 1.0”, ACT Initiative, 2018[3] "Energy Technology Perspectives 2017", IEA, 2017[4] "The Global Calculator," 2015. Available at: http://tool.globalcalculator.org/[5] “Commitment accounting of CO2 emissions”, Socolow, Robert H. and Davis, Steven J., Environmental
Research Letters, 9, 2014. Available at: http://iopscience.iop.org/article/10.1088/1748-9326/9/8/084018/pdf[6] “Assessing carbon lock-in”, Erickson, Peter; Kartha, Sivan; Lazarus, Michael and Tempest, Kevin,Environmental Research Letters, 10, 2015. Available at: http://iopscience.iop.org/article/10.1088/17489326/10/8/084023/pdf[7] “Future CO2 emissions and climate change from existing energy infrastructure”, Davis, S. J.; Caldeira, K.
and Matthews, H. D., Science, 329, 1330, 2010.
[8] “Existing infrastructure and the 2 C target - A letter”, Guivarch, Celine; Hallegarte, Stephane, Climatic
Change, 109:801-805, 2011[9] “The International <IR> Framework”, IIRC, 2013. Available at: http://integratedreporting.org/wpcontent/uploads/2015/03/13-12-08-THE-INTERNATIONAL-IR-FRAMEWORK-2-1.pdf[10] “Climate Change 2014: Mitigation of Climate Change. Contribution of Working Group III to the Fifth
Assessment Report of the Intergovernmental Panel on Climate Change”, Edenhofer, O., R. Pichs-Madruga,
Y. Sokona, E. Farahani, S. Kadner, K. Seyboth, A. Adler, I. Baum, S. Brunner, P. Eickemeier, B. Kriemann,
J. Savolainen, S. Schlömer, C. von Stechow, T. Zwickel and J.C. Minx (eds.), IPCC, Cambridge University
Press, Cambridge, United Kingdom and New York, NY, USA, 2014[11] “Assessing Transformation Pathways”, Clarke L., K. Jiang, K. Akimoto, M. Babiker, G. Blanford, K.
Fisher-Vanden, J.-C. Hourcade, V. Krey, E. Kriegler, A. Löschel, D. McCollum, S. Paltsev, S. Rose, P. R.
Shukla, M. Tavoni, B. C. C. van der Zwaan, and D.P. van Vuuren, 2014. In: “Climate Change 2014:
Mitigation of Climate Change. Contribution of Working Group III to the Fifth Assessment Report of theIntergovernmental Panel on Climate Change”, Edenhofer, O., R. Pichs-Madruga, Y. Sokona, E. Farahani,
S. Kadner, K. Seyboth, A. Adler, I. Baum, S. Brunner, P. Eickemeier, B. Kriemann, J. Savolainen, S.
Schlömer, C. von Stechow, T. Zwickel and J.C. Minx (eds.), IPCC, Cambridge University Press, Cambridge,
United Kingdom and New York, NY, USA, 2014[12] "Adoption of the Paris Agreement - Draft decision -/CP.21,", UNFCCC, 2015.

ACT Framework | ACT Initiative | Version 1.1 | page 35

9. Glossary
2 DEGREES (2°C)

A political agreement was reached at COP21 on limiting global warming to 2°C
above the pre-industrial level (COP21: Why 2°C?). A 2°C scenario (or 2°C
pathway) is a scenario (or pathway) compatible with limiting global warming to
2°C above the pre-industrial level.

ACT

The Assessing low-Carbon Transition (ACT) initiative was jointly developed by
ADEME and CDP. ACT assesses how ready an organization is to transition to a
low-carbon world using a future-oriented, sector-specific methodology (ACTwebsite).

ACTION GAP

In relation to emissions performance and reduction, the action gap is thedifference between what a given company has done in the past plus what it isdoing now, and what has to be done. For example, companies with large action
gaps have done relatively little in the past, and their current actions point tocontinuation of past practices.

ADEME

Agence de l'Environnement et de la Maîtrise de l'Energie; The French
Environment and Energy Management Agency (ADEME webpage).

ALIGNMENTThe ACT project seeks to gather information that will be consolidated into a ratingthat is intended to provide a general metric of the 2-degree alignment of a given
company. The wider goal is to provide companies specific feedback on theirgeneral alignment with 2-degrees in the short and long term.

ANALYST

Person in charge of the ACT assessment.

ASSESS

Under the ACT project, to evaluate and determine the low-carbon alignment of agiven company. The ACT assessment and rating will be based on considerationof a range of indicators. Indicators may be reported directly from companies.
Indicators may also be calculated, modelled or otherwise derived from different
data sources supplied by the company. The ACT project will measure 3 gaps
(Commitment, Horizon and Action – defined in this glossary) in the GHG
emissions performance of companies. This model closely follows the assessment
framework presented above. It starts with the future, with the goals companies
want to achieve, followed by their plans, current actions and past actions.

ASSET

An item of property owned by a company, regarded as having value and available
to meet debts, commitments, or legacies. Tangible assets include 1) fixed assets,such as machinery and buildings, and 2) current assets, such as inventory.
Intangible assets are nonphysical such as patents, trademarks, copyrights,
goodwill and brand value.

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BARRIER

A circumstance or obstacle preventing progress (e.g. lacking information on
supplier emissions and hotspots can be a barrier to companies managing andreducing their upstream Scope 3 emissions).

BASE YEAR

According to the GHG Protocol and ISO14064-1, a base year is “a historic datum(a specific year or an average over multiple years) against which a company’s
emissions are tracked over time”. Setting a base year is an essential GHG
accounting step that a company must take to be able to observe trends in its
emissions information (GHG Protocol Corporate Standard).

BENCHMARKA standard, pathway or point of reference against which things may be compared.
In the case of pathways for sector methodologies, a sector benchmark is a lowcarbon pathway for the sector average value of the emissions intensity indicator(s)driving the sector performance. A company’s benchmark is a pathway for thecompany value of the same indicator(s) that starts at the company performancefor the reporting year and converges towards the sector benchmark in 2050,
based on a principle of convergence or contraction of emissions intensity.

BUSINESS-AS-USUALNo proactive action taken for change. In the context of the ACT methodology, thebusiness-as-usual pathway is constant from the initial year onwards. In general,
the initial year – which is the first year of the pathway/series – is the reporting year
(targets indicators) or the reporting year minus 5 years (performance indicators).

BUSINESS MODEL

A plan for the successful operation of a business, identifying sources of revenue,
the intended customer base, products, and details of financing. Under ACT,evidence of the business model shall be taken from a range of specific financial
metrics relevant to the sector and a conclusion made on its alignment with lowcarbon transition and consistency with the other performance indicators reported.

CAPITAL
EXPENDITURE

Money spent by a business or organization on acquiring or maintaining fixed

CARBON CAPTURE
AND STORAGE (CCS)The process of trapping carbon dioxide produced by burning fossil fuels or otherassets, such as land, buildings, and equipment.

chemical or biological process and storing it in such a way that it is unable to affectthe atmosphere.

CDP

Formerly the "Carbon Disclosure Project", CDP is an international, not-for-profit
organization providing the only global system for companies and cities tomeasure, disclose, manage and share vital environmental information. CDP
works with market forces, including 827 institutional investors with assets of over
US$100 trillion, to motivate companies to disclose their impacts on theenvironment and natural resources and take action to reduce them. More than
5,500 companies worldwide disclosed environmental information through CDP in
2015. CDP now holds the largest collection globally of primary climate change,

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water and forest risk commodities information and puts these insights at the heartof strategic business, investment and policy decisions (CDP website).
CLIMATE CHANGE

A change in climate, attributed directly or indirectly to human activity, that alters
the composition of the global atmosphere and that is, in addition to natural climate
variability, observed over comparable time periods’ (UNFCCC).

COMPANY

A commercial business.

COMPANY PATHWAY

A company’s past emissions intensity performance pathway up until the present.

COMPANY TARGETPATHWAY

The emissions intensity performance pathway that the company has committed
to follow from the initial year on until a future year, for which it has set a
performance target.

COMMITMENT GAP

In relation to emissions performance, the difference between what a company
needs to do and what it says it will do.

CONFIDENTIAL
INFORMATION

Any non-public information pertaining to a company's business.

CONSERVATIVENESS

A principle of the ACT project; whenever the use of assumptions is required, theassumption shall err on the side of achieving 2-degrees maximum.

CONSISTENCY

A principle of the ACT project; whenever time series data is used, it should becomparable over time. In addition to internal consistency of the indicators reportedby the company, data reported against indicators shall be consistent with otherinformation about the company and its business model and strategy foundelsewhere. The analyst shall consider specific, pre-determined pairs of data
points and check that these give a consistent measure of performance whenmeasured together.

COP21

The 2015 United Nations Climate Change Conference, held in Paris, France from30 November to 12 December 2015 (COP21 webpage).

DATA

Facts and statistics collected together for reference and analysis (e.g. the data
points requested from companies for assessment under the ACT projectindicators).

DECARBONIZATION

A complete or near-complete reduction of greenhouse gas emissions over time(e.g. decarbonization in the electric utilities sector by an increased share of lowcarbon power generation sources, as well as emissions mitigating technologies
like Carbon Capture and Storage (CCS)).

DECARBONIZATIONPATHWAY

Benchmark pathway (See ‘Benchmark’)

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EMISSIONSThe GHG Protocol defines direct GHG emissions as emissions from sources thatare owned or controlled by the reporting entity, and indirect GHG emissions asemissions that are a consequence of the activities of the reporting entity, but occur
at sources owned or controlled by another entity (GHG Protocol).

ENERGYPower derived from the utilization of physical or chemical resources, especially toprovide light and heat or to work machines.

FOSSIL FUEL

A natural fuel such as coal, oil or gas, formed in the geological past from theremains of living organisms.

FUTUREA period of time following the current moment; time regarded as still to come.

POWER GENERATION

The process of generating electric power from other sources of primary energy.

PRIMARY ENERGY

Primary energy is an energy form found in nature that has not been subjected to
any conversion or transformation process. It is energy contained in raw fuels, andother forms of energy received as input to a system. Primary energy can be nonrenewable or renewable.

GREENHOUSE GAS(GHG)Greenhouse gas (e.g. carbon dioxide (CO 2), methane (CH4), nitrous oxide (N2O)
and

three

groupsoffluorinatedgases(sulfurhexafluoride(SF6),hydrofluorocarbons (HFCs), and perfluorocarbons (PFCs)) which are the majoranthropogenic GHGs and are regulated under the Kyoto Protocol. Nitrogen
trifluoride (NF3) is now considered a potent contributor to climate change and istherefore mandated to be included in national inventories under the United
Nations Framework Convention on Climate Change (UNFCCC).
GUIDANCE

Documentation defining standards or expectations that are part of a rule or
requirement (e.g. CDP reporting guidance for companies).

HORIZON GAP

In relation to emissions performance, the difference between the average lifetimeof a company’s production assets (particularly carbon intensive) and the timehorizon of its commitments. Companies with large asset-lives and small time
horizons do not look far enough into the future to properly consider a transition
plan.

INCENTIVE

A thing, for example money, that motivates or encourages someone to dosomething (e.g. a monetary incentive for company board members to set
emissions reduction targets).

INDICATOR

An indicator is a quantitative or qualitative piece of information that, in the context
of the ACT project, can provide insight on a company’s current and future ability
to reduce its carbon intensity. In the ACT project, 3 fundamental types ofindicators can be considered:

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→ Key performance indicators (KPIs);→ Key narrative indicators (KNIs); and→ Key asset indicators (KAIs).
INTENSITY(EMISSIONS)

The average emissions rate of a given pollutant from a given source relative tothe intensity of a specific activity; for example grams of carbon dioxide released
per MWh of energy produced by a power plant.

INTERVENTION

Methods available to companies to influence and manage emissions in their value
chain, both upstream and downstream, which are out of their direct control (e.g.
a retail company may use consumer education as an intervention to influence
consumer product choices in a way that reduces emissions from the use of soldproducts).

LIFETIME

The duration of a thing's existence or usefulness (e.g. a physical asset such as a
power plant).

LONG-TERM

Occurring over or relating to a long period of time; under ACT this is taken to mean
until the year 2050. The ACT project seeks to enable the evaluation of the longterm performance of a given company while simultaneously providing insights into
short- and medium-term outcomes in alignment with the long-term.

LOW-CARBONSCENARIO (ORPATHWAY)

A low-carbon scenario (or pathway) is a 2°C scenario, a well-below 2°C scenario
or a scenario with higher decarbonization ambition.

LOW-CARBON
TRANSITION

The low-carbon transition is the transition of the economy according to a low-

MANUFACTURE

Making objects on a large scale using machinery.

MATURITY MATRIXA maturity matrix is essentially a “checklist”, the purpose of which is to evaluate

carbon scenario.

how well advanced a particular process, program or technology is according to
specific definitions.
MITIGATION(EMISSIONS)

The action of reducing the severity of something (e.g. climate change mitigation

MODEL

A program designed to simulate what might or what did happen in a situation (e.g.

through absolute GHG emissions reductions)climate models are systems of differential equations based on the basic laws ofphysics, fluid motion, and chemistry that are applied through a 3-dimensional grid
simulation of the planet Earth).
PATHWAY(EMISSIONS)

A way of achieving a specified result; a course of action (e.g. an emissions
reduction pathway).

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PERFORMANCE

Measurement of outcomes and results.

PLAN

A detailed proposal for doing or achieving something.

POINT

A mark or unit of scoring awarded for success or performance.

POWER

Energy that is produced by mechanical, electrical, or other means and used tooperate a device (e.g. electrical energy supplied to an area, building, etc.).

RELEVANT /RELEVANCEIn relation to information, the most relevant information (core business and

RENEWABLE ENERGY

Energy from a source that is not depleted when used, such as wind or solar power.

REPORTING YEAR

Year under consideration.

RESEARCH AND
DEVELOPMENT (R&D)

A general term for activities in connection with innovation; in industry; for example,

stakeholders) to assess low-carbon transition.

this could be considered work directed towards the innovation, introduction, andimprovement of products and processes.

SCIENCE-BASEDTARGET

To meet the challenges that climate change presents, the world’s leading climate
scientists and governments agree that it is essential to limit the increase in the
global average temperature at below 2°C. Companies making this commitment
will be working toward this goal by agreeing to set an emissions reduction target
that is aligned with climate science and meets the requirements of the ScienceBased Targets Initiative.

SCENARIOThe Fifth Assessment Report (AR5) of the Intergovernmental Panel on Climate
Change (IPCC) presents the results of an extensive climate modelling effort tomake predictions of changes in the global climate based on a range ofdevelopment/emissions scenarios. Regulation on climate change-related issues
may present opportunities for your organization if it is better suited than its
competitors to meet those regulations, or more able to help others to do so.
Possible scenarios would include a company whose products already meet
anticipated standards designed to curb emissions, those whose products will
enable its customers to meet mandatory requirements or those companies thatprovide services assisting others in meeting regulatory requirements.

SCENARIO ANALYSIS

A process of analysing possible future events by considering alternative possible
outcomes.

SECTORALDECARBONIZATIONAPPROACH (SDA)

To help businesses set targets compatible with 2-degree climate change
scenarios, the Sectoral Decarbonization Approach (SDA) was developed. The
SDA takes a sector-level approach and employs scientific insight to determine the

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least-cost pathways of mitigation, and converges all companies in a sector
towards a shared emissions target in 2050.
SHORT-TERM

Occurring in or relating to a relatively short period of time in the future.

SCOPE 1 EMISSIONSAll direct GHG emissions (GHG Protocol Corporate Standard).

SCOPE 2 EMISSIONS

Indirect GHG emissions from consumption of purchased electricity, heat or steam(GHG Protocol Corporate Standard).

SCOPE 3 EMISSIONSOther indirect emissions, such as the extraction and production of purchasedmaterials and fuels, transport-related activities in vehicles not owned or controlled
by the reporting entity, electricity-related activities (e.g. T&D losses) not coveredin Scope 2, outsourced activities, waste disposal, etc. (GHG Protocol Corporate
Standard).

SECTORA classification of companies with similar business activities, e.g. automotive
manufacturers, power producers, retailers, etc.

STRATEGY

A plan of action designed to achieve a long-term or overall aim. In business, thisis the means by which a company sets out to achieve its desired objectives; longterm business planning.

SUPPLIER

A person or entity that is the source for goods or services (e.g. a company thatprovides engine components to an automotive manufacturing company).

TARGET

A quantifiable goal (e.g. to reduce GHG emissions).
•

The following are examples of absolute targets:ometric tonnes CO2e or % reduction from base yearometric tonnes CO2e or % reduction in product use phase relative tobase yearometric tonnes CO2e or % reduction in supply chain relative to baseyear•

The following are examples of intensity targets:ometric tonnes CO2e or % reduction per passenger.kilometre (alsoper km; per nautical mile) relative to base year

TRADE ASSOCIATIONometric tonnes CO2e or % reduction per square foot relative to baseometric tonnes CO2e or % reduction per MWh

Trade associations (sometimes also referred to as industry associations) are an
association of people or companies in a particular business or trade, organized topromote their common interests. Their relevance in this context is that theypresent an “industry voice” to governments to influence their policy development.
The majority of organizations are members of multiple trade associations, manyof which take a position on climate change and actively engage with policymakers

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on the development of policy and legislation on behalf of their members. It is
acknowledged that in many cases companies are passive members of tradeassociations and therefore do not actively take part in their work on climatechange (CDP climate change guidance).
TRANSPORT

To take or carry (people or goods) from one place to another by means of avehicle, aircraft, or ship.

TREND

A general direction in which something (e.g. GHG emissions) is developing orchanging.

TECHNOLOGY

The application of scientific knowledge for practical purposes, especially inindustry (e.g. low-carbon power generation technologies such as wind and solar
power, in the electric power generation sector).

TRANSITION

The process or a period of changing from one state or condition to another (e.g.
from an economic system and society largely dependent on fossil fuel-basedenergy, to one that depends only on low-carbon energy).

VERIFIABLE /VERIFIABILITY

To prove the truth of, as by evidence or testimony; confirm; substantiate. Under
the ACT project, the data required for the assessment shall be verified orverifiable.

WEIGHTING

The allowance or adjustment made in order to take account of special
circumstances or compensate for a distorting factor.

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Appendix 1: Thetransition
To fully understand the challenges underlying the transition to a low-carbon economy, it is important to put it
into the historical context of man-made CO2 emissions since the advent of the industrial revolution. For that
purpose, CO2 emissions scenarios are portrayed with historical CO 2 emissions3. One possible way emissions
can evolve in a way that is compatible with low-carbon transition scenarios during the XXIst century up to 2100
is portrayed here based on the underlying data from the RCP2.6 scenario of the IPCC AR5 4.

Past and future of Carbon emissions
10000

Emissions (MtC)

8000

6000

4000

2000

0
1700

1750

1800

1850

1900

1950

2000

2050

2100

2150

-2000
FIGURE 4: HISTORICAL CO2 EMISSIONS (BLUE) AND TRANSITION (ORANGE) IN ACCORDANCE WITH RCP2.6 SCENARIO

Scenarios can be distinguished by the long-term concentration level they reach by 2100. The underlying link
between scenarios that stabilize temperature below 2°C with a high degree of probability (>60%) is that3

For this purpose, CDIAC data on historical CO 2 emissions from fossil-fuels have been used. These do notcomprise all historical GHG emissions, but they constitute the large majority of emissions and clearly show thetrends and dynamics of GHG emissions. The original source of the data can be found at
http://cdiac.ornl.gov/trends/emis/tre_glob_2011.html
4

The chart reflects CO2 sources only. The original data sources are http://cdiac.ornl.gov/ftp/ndp030/CSV-FILES/global.1751_2011.csv and http://tntcat.iiasa.ac.at:8787/RcpDb/dsd?Action=htmlpage&page=welcome
from where the complete data set for the RCP2.6 scenario data has been downloaded.

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atmospheric concentrations do not exceed the range of 430-480 ppm in 21005. However, low-carbon
scenarios also have other important features in common, namely [1, pp. 418] 6:
The degree to which concentrations exceed (overshoot) the 450 ppm level before 2100. “The large
majority of scenarios produced in the literature that reach about 450 ppm CO 2e by 2100 arecharacterized by concentration overshoot facilitated by the deployment of carbon dioxide removal(CDR) technologies”.

Large-scale changes to global and national energy systems, which are inconsistent with both longand short-term trends.



Large-scale change is also likely relative to land-use-change. The different scenarios articulatevery different changes in the land surface, reflecting different assumptions of the potential forbioenergy production, afforestation, and reduced deforestation.



There is a large potential for energy efficiency to drive reductions, but these are insufficient bythemselves to constrain GHG emissions.



The next 15 years (2015-2030) will be determinant for the options for bringing concentrations to
the 450 - 500 ppm CO2e by the end of the twenty-first century. 2°C scenarios are characterized by2030 emissions roughly between 30 GtCO2eq and 50 GtCO 2e. Scenarios with emissions above
55 GtCO2e in 2030 are predominantly driven by delays in additional mitigation relative to what
would be most cost-effective and imply substantially higher rates of emissions reductions from2030 to 2050 and on CDR technologies in the long-term, with higher transitional and long-term
economic impacts. Studies confirm that delaying additional mitigation through 2030 has
substantially larger influence on the subsequent challenges of mitigation than delaying only
through 2020.



The availability of key technologies and improvements in the cost and performance of thesetechnologies will have important implications for the challenge of achieving concentration goals.
Early deployment of low-carbon technology is determinant for achieving 2°C, but equally largescale deployment of CDR technologies is relied upon in the second-half of the century in many
scenarios.



There is uncertainty about the potential of geoengineering by CDR or solar radiation management(SRM) to counteract climate change, and all techniques carry risks and uncertainties. No currently
existing technique could fully replace mitigation or adaptation efforts. Nevertheless, many lowGHG concentration scenarios rely on two CDR techniques, afforestation and biomass energy withcarbon dioxide capture and storage (BECCS), which some studies consider to be comparable withconventional mitigation methods. Proposed geoengineering techniques differ substantially fromeach other, but all raise complex questions about costs, risks, governance, social acceptance andethical implications of research and potential implementation.

5

IPCC 5th assessment report.

6This section presents the most relevant conclusions from the analysis of multiple scenarios carried out by the

IPCC for its AR5 and it closely follows material presented in the Executive Summary of Chapter 6 of the WG3“Climate Change 2014: Mitigation of Climate Change”.

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The AR5 reports7 in total 114 scenarios that extend to 2100 and result in CO 2e concentrations of 430-480
ppm, with radiative forcing between 2.3-2.9 W/m2 and cumulative emissions <950 GtCO2 for the period 20112100 and which generically correspond to the RCP2.6. Of these, 72 have an overshoot of greater than
0.4W/m2 relative to the radiative forcing in 2100. Note that the temperature ranges presented in AR5 are
harmonized, that is, they are derived from running in the same climate model (MAGICC) the GHG
concentration pathways resulting from the different scenarios 8. Overall the scenarios represent a probability
range of staying within 2°C of between 63%-88%, but considering only those scenarios with overshoot<0.4W/m2, the probabilities of staying within 2°C are within the range of 78%-88%9.
Given the set of common characteristics of low-carbon scenarios, it is important to portray some of theirpotential variations that might imply different transition options, namely:

Expected mitigation potential of each sector and respective costs and who is likely to bear them;Technological vs. societal mitigation options;Technology options and implied risks, namely the degree of dependence of CDR;Regional mitigation differences;

Population and economic growth and other assumptions of the models and their implications onother variables;Main challenges companies face in the transition and what might help overcome them (e.g. policy
environment);

Other drivers of change, beyond climate, that might be pushing companies in similar or opposite
directions.

SCENARIOS FOR THE TRANSITION
The fundamental target for all transition scenarios is a threshold of 2°C global warming compared to preindustrial temperatures. This target has long been widely accepted as a credible threshold for achieving areasonable likelihood of avoiding climate instability, while a 1.5°C rise has been agreed upon as an
aspirational target [10] [12].
Many transition scenarios aiming to describe a pathway to a global 2°C goal have been developed and could
potentially be used to assess the alignment of a business to a low carbon trajectory. These scenarios could
be classified by the model-type on which they are based including bottom-up, top-down or hybrid models andby their geographic (national vs. global) and sectoral (e.g. electricity) coverage and level of detail.
Extensive pathway modelling for the 2°C target has been undertaken by numerous organizations. For
instance, the IEA ‘Energy Technology Perspectives’ (ETP) 2DS scenario and the ‘Representative
Concentration Pathways’ (RCP) 2.6 scenario developed for IPCC. In the IPCC fifth assessment report, acumulative emissions budget of 550-1,300GtCO2e over the years 2011-2050 was reported necessary forstaying below 2°C to be likely. As there are many potential scenarios and pathways (e.g. the WEC World
Energy Scenario or the BP energy outlook etc.) for achieving this goal, a scenario envelope was determined.

7

See table 6.2 of [11], pp. 430.

8[11], pp. 430

9

See table 6.3 of [11], pp. 431

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These scenarios were modelled using the Global Calculator: an open source model developed through aconsortium of international organizations [4].
Contributing to each global emissions scenario are emissions reductions at the sectoral level. These will befurther investigated in the context of the methodology development. It will be essential to understand thedifferent technological and societal choices to be undertaken in each scenario and the interdependencies
between them. Likewise, consideration of the inertia built into the system – or system lock-in – will be most
relevant, as the rapid pace of decarbonization might not be compatible with the continuation of the deploymentof long-life and high-carbon assets.

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Appendix 2: Quality
Assurance Process Principles
METHODOLOGY DEVELOPMENT PRINCIPLES
Like for any methodology, the development of ACT needed principles that would be focused on the processof developing standards, as well as the recognition of additional principles that can reflect the data (or content)
required for the methodology, e.g. corporate GHG accounting data generated according to certain principles.
In order to be aligned with the GISR principles, we will call these principles “Content” principles.
To support the development process, suitable principles have to be agreed on. These principles were set
based on:

The experience of the project team in similar processes 10;

Existing best practice in the development of standards namely:→ The work done by the Global Initiative for Sustainability Ratings (GISR) in which CDP has
actively participated11. GISR has been set specifically to focus on the issue of sustainability
rating development and was thus considered to be particularly suitable for the ACT project;furthermore, CDP has been involved from the early stages of the project in the developmentof its principle framework, and so many of the best practices followed by CDP are alreadyreflected in their principles.
→ ISEAL alliance credibility principles12;→ ISO development principles13;→ ISO 14080 Principles (current version of November 15, 2015) of the ISO 14080 Standard Guidance with framework and principles for methodologies on climate actions.

While recognizing that there are many principles that can be formulated and that they all make sense, effort
should be focused on deciding what principles would be most likely to influence key decisions.

10E.g. CDP scoring development process and CDP questionnaire development process; ISO standard

development; GHG Protocol standard development.
11

For more info check http://ratesustainability.org/ and http://ratesustainability.org/wp-

content/uploads/2015/07/GISR_CORE_Framework12Principles.pdf.
12

ISEAL is the global membership association for sustainability standards, created by leading organizationsin the field of sustainability standardization such as the Forest Stewardship Council (FSC), the International
Federation of Organic Agriculture Movements (IFOAM), Fairtrade and Marine Stewardship Council (MSC).
For more info check http://www.isealalliance.org/about-us/ and http://www.isealalliance.org/infographic/isealscredibility-principles.
13

Check http://www.iso.org/iso/home/standards_development.htm.

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Considering time constraints and practicality, we focus on 3 reputable organizations that have previously
codified the process for: sustainability ratings specifically (GISR); sustainability standards (ISEAL); andstandards in general (ISO). In this way, going from the specific to the generic, we have sufficient coverage ofusual practice in the adoption of principles to guide standard development. The principles used in the processof standard development by each of these organizations and their application to ACT are discussed below.

9.1.1. GISRTABLE 9: GISR PRINCIPLESACT Framework | ACT Initiative | Version 1.1 | page 49

TABLE 10: CONCLUSIONS OF THE GISR PRINCIPLES EVALUATION FOR USE IN THE ACT DEVELOPMENT PROCESSGISR PROCESS PRINCIPLESRATIONALE

TRANSPARENCY

Included - Transparency is a key value of both CDP and ADEME.
Transparency is also a must for credible uptake of a standard by themarket.

IMPARTIALITY

Included - The impartial consideration of inputs based on theirrationality is an important principle. The methodology shall beprotected from undue influences.

CONTINUOUS

Not Included - TBD

IMPROVEMENTINCLUSIVENESS

Included – In sustainability, including all voices, expert or not, and thevoices that are directly involved in the work carried out is goodpractice.

ASSURABILITY /Included (see “Methodology principles”) – As a guarantee of its

VERIFIABILITY

robustness and quality, assurability/verifiability of the data in which theassessment will rely on should be sought.

GISR CONTENT PRINCIPLESRATIONALE

MATERIALITY

Not included - This and other documents of the project should satisfy
the principle of materiality on what concerns assessing the low-carbon
transition models of companies, but “materiality” is not considered amethodology principle. Instead, the principle of relevance, in a similar
formulation as in ISEAL, will be considered. This states that “the most
relevant aspects for the transition, directly or indirectly influenced by
the company should be considered”.

COMPREHENSIVENESS

Not included - Comprehensiveness, as defined by GISR andencompassing several sustainability dimensions such as human,
intellectual, natural and social capital, will not be taken into
consideration. The remit of the project has been set with a muchnarrower scope.

SUSTAINABILITY

Not included – Considered by design and addressed in other parts of

CONTEXT

this framework but not a principle.

LONG-TERM HORIZON

Included – the Long-term horizon is a key characteristic of the ACT
approach to assessing transition

VALUE CHAIN

Not included - Will be addressed, as can be seen in other sections of
the framework, but not articulated as a principle. Value chain impacts
need to be considered in light of the “relevance” principle and not besingled out as a principle itself. The consistent application of the
ACT Framework | ACT Initiative | Version 1.1 | page 50

framework will guarantee that value chain aspects are consistently
considered.
BALANCENot included - TBD

COMPARABILITY

Not Included - TBD

9.1.2. ISEALFIGURE 5: ISEAL CREDIBILITY PRINCIPLES SYNTHESISACT Framework | ACT Initiative | Version 1.1 | page 51

TABLE 11: CONCLUSIONS OF THE ISEAL PRINCIPLES EVALUATION FOR USE IN THE ACT DEVELOPMENT PROCESSISEALRATIONALESUSTAINABILITY - Standards scheme

Not included - ACT is a sustainability standard andowners clearly define and communicate theircommunicates its sustainability objectives andsustainability objectives and approach toapproach to achieving them in other sections ofachieving them. They make decisions that best

this framework. As such, this principle isadvance these objectives.

considered in the development of this framework,
but does not need to be considered for the
methodology development process.

RELEVANCE - Standards are fit for purpose.

Included - Relevance is considered a methodology

They address the most significant sustainability

principle, but not for the development process. See

impacts of a product, process, business or“Methodology implementation principles”.

service; only include requirements that contributeto their objectives; reflect best scientificunderstanding and relevant international norms;
and are adapted where necessary to local
conditions.
ACCESSIBILITY - To reduce barriers to

Not included - In our view, Accessibility has two

implementation, standards systems minimise

components. One that we would call “pragmatism”,

costs and overly burdensome requirements. They

which is related to the need to reduce barriers tofacilitate access to information about meeting theimplementation, minimise costs and facilitatestandard, training, and financial resources tomarket adoption. This will lead to overly

build capacity throughout supply chains and forburdensome requirements to be simplified to more

actors within the standards system.

pragmatic, although less perfect, formulations. In
our view this is a component of any standard
setting process and does not need to be
formulated as a guiding principle. Anothercomponent is related to the access and availabilityof the standard, training materials, etc. While weconsider this an important aspect, particularly inthe future scale up of current projects, it is notconsidered a key driver of the process for it to berecognized as a principle. As it currently stands, it
is not considered likely (or desirable) thataccessibility requirements will strongly influence
methodology process and design.

EFFICIENCY - Standards systems refer to or

Not included - Efficiency, as formulated by ISEAL,

collaborate with other credible schemes tois an important aspect of ACT. The adoption of

improve consistency and efficiency in standardssome of the main GISR principles reflect some ofcontent and operating practices. They improvethe concerns of the “efficiency” principle. It istheir viability through the application of soundconsidered that in the current process, there is no
particular need to raise it to a principle level.

ACT Framework | ACT Initiative | Version 1.1 | page 52

revenue models and organisational management
strategies.

ENGAGEMENT - Standard-setters engage a

Included in “Inclusiveness”, see above.

balanced and representative group of
stakeholders in standards development.
Standards systems provide meaningful andaccessible opportunities to participate ingovernance, assurance and monitoring andevaluation. They empower stakeholders with fairmechanisms to resolve complaints.
IMPARTIALITY – Standards systems identify

Included, see “Impartiality” above.

and mitigate conflicts of interest throughout theiroperations, particularly in the assurance process
and in governance. Transparency, accessibility
and balanced representation contribute toimpartiality.
IMPROVEMENT - Standards scheme owners

Not included - TBD

seek to understand their impacts and measureand demonstrate progress towards their intended
outcomes. They regularly integrate learning andencourage innovation to increase benefits topeople and the environment.
RIGOUR - All components of a standards

Not included - Rigour, as formulated by ISEAL,

system are structured to deliver quality

reflects the need for quality outcomes. There is no

outcomes. In particular, standards are set at adisagreement with this principle, but it lacks

performance level that results in measurable“substance” on what quality means and how toprogress towards the scheme’s sustainability

assess it. The way quality issues will be consideredobjectives, while assessments of compliancewithin the process will be through the rigorous

provide an accurate picture of whether an entity

observation of the principles of transparency,

meets the standard’s requirements.

impartiality, inclusiveness and continuous
improvement principles, as well as by the quality
assurance process. As such, there is no particularneed to reflect it as a methodology development
principle.

TRUTHFULNESS - Claims and

Not included - TBD

communications made by actors within standards
systems and by certified entities about thebenefits or impacts that derive from the system orfrom the purchase or use of a certified product or

ACT Framework | ACT Initiative | Version 1.1 | page 53

service are verifiable, not misleading, and enable
an informed choice.
TRANSPARENCY - Standards systems makeIncluded, see above “Transparency”.

relevant information freely available about thedevelopment and content of the standard, how
the system is governed, who is evaluated andunder what process, impact information and thevarious ways that stakeholders can engage.

9.1.3. ISOTABLE 12: CONCLUSIONS OF THE ISO PRINCIPLES EVALUATION FOR USE IN THE ACT DEVELOPMENT PROCESSISORATIONALE

MARKET LED - ISO standards respond to a

Not included - This principle is not considered,need in the market, ISO does not decide when tosince ACT is market driven, but not market led.

develop a new standard, but responds to a

ACT explicitly defines itself as a pilot project testing

request from industry or other stakeholders suchthe market readiness for what it proposes toas consumer groups. Typically, an industry sector

achieve. Market considerations related to adoption,

or group communicates the need for a standard

costs (etc.) will be important in the decision making

to its national member who then contacts ISO.

process, but as commented above in the“accessibility” principle section, we consider thisthe norm for any standard development.

EXPERT LED - ISO standards are based on

Not included - this principle is partially in conflictglobal expert opinion and developed by groups ofwith the inclusiveness principle. In ACT, and inexperts from all over the world, that are part ofsustainability in general, the importance of expert-

larger groups called technical committees. These

voices as well as non-expert voices is recognized.

experts negotiate all aspects of the standard,

For this reason, this principle is not considered,including its scope, key definitions and content.

although expert advice and input will be required

Details can be found in the list of technicalduring the entire methodology development

committees.

process.

MULTI-STAKEHOLDER - ISO standards are

Included, see “Inclusiveness” above.

developed through a multi-stakeholder process,the technical committees are made up of experts
from the relevant industry, as well as fromconsumer associations, academia, NGOs andgovernment.
CONSENSUS DRIVEN - ISO standards are

Not included - by design, during this pilot phase,based on a consensus and developing ISO

consensus will be sought and a nice-to-have, but isstandards is a consensus-based approach andnot a requirement to be observed rigorously.
Where consensus is not possible, pragmatic

ACT Framework | ACT Initiative | Version 1.1 | page 54

comments from all stakeholders are taken into

decisions will be taken by project teams, justified

account.

and documented, as will the reasons for alternativedecisions.

9.1.4. ISO 14080
TABLE 13 : CONCLUSIONS OF THE EVALUATION OF ISO14080 PRINCIPLES FOR USE IN THE ACT METHODOLOGIESISO 14080

RATIONALE

ACCURACY - Reduce bias and uncertainties as

Not Included – TBD

far as is practical.
COMPARABILITY - Ensure that the

Not included – TBD

methodologies generated, selected and provided
for calculating emissions reduction and removal
apply this framework in a consistent way, thereby
allowing for comparisons.
COMPATIBILITY - Increase harmonizing,

Not Included – This links with the Efficiency

aggregate climate change mitigation andprinciple of ISEAL. Can be considered at theadaptation activities by methodology and its

sectoral level, but not considered necessary totechnologies

raise it to a principle level.

COMPLETENESS - Include all relevant GHG

Not included – Partially covered already by theemissions and removals. Include all relevant

relevance principle, which specifies that all relevant

information to support criteria and procedures.

factors should be considered. In many cases
important information gaps within companies’
information is expected to be found. In other cases,
it is expected that information will be organizedaccording to the standards adhering to theseprinciples.

CONSERVATIVENESS - Use conservative

Included – Where data is not available or of limited

assumptions, values and procedures to ensure

availability, insuring that conservativeness isthat GHG emissions reductions or removal

applied is key to maintaining environmental

enhancements are not over-estimated.

integrity. See “Methodology principles”.

CONSISTENCY - Enable meaningful

Included – Particularly important to ensure timecomparisons in GHG-related information.

series data reported by companies.

EFFECTIVENESS - Extent to which planned

Not included – Not a sufficient concern in a pilot

activities are realized and planned results areproject to be raised to a principle. See

achieved (ISO9000:2015).

“Methodology implementation principles”.

ACT Framework | ACT Initiative | Version 1.1 | page 55

ETHICAL Conduct - Demonstrate ethicalNot Included – Partially covered at least throughconduct through trust, integrity, confidentialitytransparency and impartiality principles.

and discretion throughout the process.
FLEXIBILITY - Increase the selection to

Not included - TBD

balance between reducing costs and generating
emissions.
GOVERNANCE - System of directing and

Not included as a principle, however noted in thecontrolling (ISO/IEC 38500:2015).

ACT documentation.

RELEVANCE - Select the GHG sources, GHG

Included, but not linked to GHG specifically. See

sinks, GHG reservoirs, data and methodologies“Methodology principles”.

appropriate to the needs of the intended user.
TRANSPARENCY - Disclose sufficient andIncluded as “Transparency”, see above.

appropriate GHG-related information to allow
intended users to make decisions withreasonable confidence.

Other principles developed and adopted by other standard makers have not been researched and have notbeen considered for practical reasons. Additionally, too many principles can create barriers for a fast standard
development process, as there are also trade-offs between them that would have to be redeemed.
The table below summarizes the different principles and their use in the ACT process development and in the
ACT methodologies (see following section).

ACT Framework | ACT Initiative | Version 1.1 | page 56

TABLE 14: PRINCIPLES CHECKLIST AND USE IN THE ACT DEVELOPMENT PROCESS AND IN THE ACT METHODOLOGIES

GISR

ISEAL

✓

✓

✓

IMPARTIALITY

✓

✓

✓

CONTINUOUS
IMPROVEMENT

✓

✓

✓

✓

TRANSPARENCYINCLUSIVENESS /ENGAGEMENT /MULTI-STAKEHOLDER
ASSURABILITY /VERIFIABILITY✓

MATERIALITY✓COMPREHENSIVENESS

ISO

✓

ACT
(PROCESS)ACT(METHOD OLO
GIES)

✓

✓

✓

SUSTAINABILITY CONTEXT✓LONG-TER M HORIZON✓VALUE CHAIN✓

BALANCE✓

COMPARABILITY✓✓SUSTAINABILITY✓RELEVANCE✓ACCESSIBILITY✓

EFFICIENCY✓RIGOUR✓

TRUTHFULNESS✓✓MARKET LED✓

EXPERT LED✓

CONSENSUS DRIVEN✓

ACCURACY

14080

✓

✓

ACT Framework | ACT Initiative | Version 1.1 | page 57

COMPATIBILITY✓COMPLETENESS✓CONSERVATIVENESS✓✓CONSISTENCY✓✓EFFECTIVENESS✓ETHICAL CONDUCT✓FLEXIBILITY✓

GOVERNANCE✓

METHODOLOGY IMPLEMENTATION PRINCIPLES
To round out the principles related to the development process of the methodologies, it is also important toarticulate principles to consider in the sector methodologies. There are many more principles that could bemapped and discussed, namely:

GRI G4 principles for the application of its framework (Stakeholder Inclusiveness, Sustainability
Context, Materiality, Completeness, Balance, Accuracy, Comparability, Timeliness, Clarity,
Reliability);Integrated reporting principles, as defined by IIRC (Strategic focus, Connectivity of information,
Future orientation, Responsiveness and Stakeholder Inclusiveness, Conciseness, Reliability, andMateriality);

SASB principles for suitability of sustainability indicators (Relevant, Useful, Applicable, Costeffective, Comparable, Complete, Directional, Auditable);

Arista 3.0 commitments (Independent sources, global activities, Beyond legal compliance, Socialand environmental, Balance, Relevance/ Materiality, Consistency and comparability, Stakeholder
involvement, Up-to-date, transparency, Continuous improvement) and principles on conducting
sustainability research (Independence, Professionalism, Accountability, Objectivity, Impartiality,
Equal treatment, Responsible relationships, Selective disclosure, Avoidance of personal interest)



GHG Protocol principles (relevance, completeness, consistency, transparency, accuracy).

No attempt has been made to map the entire principle space within the many sustainability standards there
are and can be used. Many of the principles reported above either match or overlap with other principles
already considered. As explained in the previous section and noted in the tables, five methodology principles
are considered, which are:

RELEVAN CE: the most relevant aspects for the transition, directly or indirectly influenced by thecompany should be considered.


VERIFIABI LITY: the data required for the assessment shall be verified or verifiable.



CO N SERVATIVEN ESS: whenever it is necessary to make assumptions, ensure that error isconservative on the side of achieving 2°C or beyond.
ACT Framework | ACT Initiative | Version 1.1 | page 58



CO N SISTEN CY: whenever time series data is used, these should have been produced in orderto generate comparable data over time.


LO N G - TERM O RIEN TED: enables the evaluation of the long-term performance of a company

while simultaneously providing insights into short- and medium-term outcomes in alignment withthe long-term.

ACT Framework | ACT Initiative | Version 1.1 | page 59

Appendix 3: Maturity matrix on
narrative scoring criteria
TABLE 15: MATURITY MATRIX ON NARRATIVE SCORING CRITERIABASIC

BUSINESSSTANDARD

The company does notseem to be able to be

The company has begun

ADVANCED

LOW-CARBON TRANSITIONALIGNED

NEXT PRACTICE

The company has

The company is in

identified profitabletransition toward profitable

The company’s activities seem

activities in a low-carbon

activities in a low-carbon

to be profitable and its short-

MODEL AND

profitable in a low-carbon

0 to seek profitable activities

1 economy, and climate

STRATEGY

economy and there is noin a low-carbon economy.

issues have been

evidence that mechanisms

compatible with the low-carbon

integrated into its businessare being put in place fortransition.

model and strategy.

this purpose.

sign of internal efforts.

The past and present

CONSISTENCYAND
CREDIBILITY

actions, and transition

The past and present

The past and present

plan if there is one, do not

actions are not in line withactions demonstrate that

demonstrate overall

the company's potential

the company has a climate

coherence and theclimate objectives.

ambition, but additional

company does not seemto be able to achieve its
climate objectives.

efforts may still be needed

0 However, there is some
1 to achieve climate targets.
evidence that the company
already begun to consider

The company has started

Important efforts aremechanisms to implement

to establish an action planneeded for thea low-carbon transition

to improve its climate

implementation of a low-plan.

performance.

carbon transition plan.

2 economy and there is

3 term strategy and targets are4

The past and present
actions are coherent withthe company’s transition
plan.
The past and present actions

Additional efforts are
2 needed but the company
has always demonstrated
the will to implement theneeded mechanisms tostay aligned with its
climate goals.

3

are coherent and already in lineor beyond with a low-carbon
transition.

4

Existence of serious or

REPUTATION

Existence of negligible

several environmental

Existence of minor

Existence of minor

environmental

controversies harming theenvironmental

environmental

controversies that do notcompany’s climate

controversies.

controversies.

hamper the company's

commitments.

1 The company has madeThere is no evidence thatthe company is working toreliable commitments to

The company has always

the company is addressing

avoid this kind ofaddress these types ofresolved environmental

or taking the controversies

controversy.

controversies.

controversies with due

seriously.

that could undermine the

There are minor risks thatcompany’s profitability andcould undermine theits ability to successfullycompany’s profitability andimplement a low-carbon

its ability to successfullytransition plan.
The company does not

0 implement a low-carbon
transition plan.

consider climate issues

The company has begun

related to its activities andto consider climate issues

remains passive in therelated to its activities.

face of climate risks.

3

No environmental
controversies.

4

importance.

There are serious risks

RISK

2 climate commitments.

0 There is no evidence that

There are minor potential
risks that could undermine
the company’s profitability
and its ability tosuccessfully implement a
1 low-carbon transition plan.
However, there is evidence
that the company isdirecting efforts to reducethese risks.

Risks that could undermine
the company’s profitability
and its ability to implement
a low-carbon transition
2 plan are very limited.

No potential risk to the future
profitability of the company or
3 its ability to implement its

In addition, the company

transition to a low-carbon

has always addressed andeconomic model.

4

considered climate risks in
its strategy.

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