COMPANIES AND
CLIMATE CHANGE

An updated research application of the
AIIB-Amundi Climate Change Investment FrameworkReport summary
Contents
Report summary 2
Introduction 3Country level analysis 4
Low-carbon energy transition index 4
Industry rewards 6Country rewards 7
Industry risks 8Country risks 9Opportunities 10
Sector level analysis 12
Autos index 12
Technology-electronics index 16
Healthcare index 19
Basic industries index 22
Company level analysis 25
Overview 25
Selection of companies 25
Labelled bond issuers’ integration of Paris
Agreement objectives 31
Appendices 33
Endnotes 36

The Climate Change Investment Framework(CCIF) was designed by the Asian Infrastructure
Investment Bank (AIIB) and Amundi to tailor
investment portfolios that actively consider
alignment with the Paris Agreement.

Common international environmental disclosure
standards such as the Global Reporting Initiative(GRI) are being increasingly used, facilitating
the categorisation of companies by degree ofadvancement of their mitigation efforts.

The CCIF considers the three dimensions ofclimate change mitigation and adaptation, andcontribution to the transition to net zero. BMI, aFitch Solutions Company, and the Climate Bonds
Initiative (Climate Bonds) have applied the CCIF ata country and sector level (BMI), and an entity level(Climate Bonds). This is a follow up report, whichhighlights the energy transition performance of
the automotive (auto), technology-electronics(tech-electronics), healthcare, and basic
industries sectors. The results of the research arepresented in this report.

This report provides an update of theCompanies and Climate Change Reportpublished in January 2023.1

Key findings
There is evidence that the objectives of the Paris
Agreement are being integrated into the strategy
of companies across all sectors.
The degree of strategic integration varies atcountry level and within each sector, pointing to
the need for consistent policy support.
Among the three objectives of the Paris
agreement of climate change mitigation,
adaption, and contribution to the transition
to net zero, adaptation is the one receiving
the least attention from entities in the form ofphysical risk assessment, and consequently
the management of those risks. This was barely
mentioned by any of the entities examined in
the company level research.

BMI helps its clients better understandthe opportunities and risks they face,particularly in emerging and frontiermarkets. BMI’s team of country risk
and industry research analysts provide
authoritative, in-depth coverage of over
200 markets and more than 20 industries.
They integrate political, macroeconomic,
and industry expertise into all theiranalyses so that the client benefits fromunderstanding how each aspect impacts
the other in their chosen markets.

Climate Bonds Initiative is aninternational organisation working tomobilise global capital for climate action.
Climate Bonds Standard and Certification
Scheme is a labelling scheme for bonds,
assets, and whole entities. The scheme isused globally by bond issuers, governments,
investors, and the financial markets toprioritise investments which genuinely
contribute to addressing climate change.

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

Introduction
The Paris Agreement calls for ‘making financeflows consistent with a pathway towards low
greenhouse gas (GHG) emissions and climateresilient development.’2 To achieve the Paris
Agreement goals, all sectors of the global
economy, and in particular hard-to-abate
industries, must rapidly decarbonise. The AsianInfrastructure Investment Bank (AIIB)-Amundi
Climate Change Investment framework (CCIF)
was designed to help tailor investment portfoliosthat actively consider alignment with the Paris
Agreement. The CCIF translates this into threeobjectives based on fundamental metrics thatinvestors can use to assess alignment with theParis Agreement:
1. Climate change mitigation: holding theincrease in the global average temperature towell below 2°C above preindustrial levels andpursuing efforts to limit the temperature increase
to 1.5°C above pre-industrial levels.
2. Climate change adaptation: adapt toadverse impacts of climate change and foster
climate resilience.
3. Contribution to the transition: making
finance flows consistent with a pathway towards
low greenhouse gas emissions and climate
resilient development.
This initial assessment enables the identificationof investment opportunities, a pool of companies
to engage with, that are not necessarily climate
leaders in their sectors but have initiated theintegration of climate transition into theirstrategy. Supporting these entities encourages
the integration of climate change risks andopportunities into business practices and could
give investors an opportunity to benefit from any
future repricing of these risks.

The framework makes use of the growing
universe of environmental, social and governance(ESG) and climate transition metrics. Mandatory
or voluntary corporate ESG disclosures have beenin effect for several years in various countries(e.g., Thailand in 2017, Viet Nam in 2013, India in2022) and indicate the current environmental andsocial impact of a company. In parallel, the Task
Force on Climate-Related Financial Disclosures(TCFD) recommendations have been widely
accepted by companies worldwide who wantto provide information on their climate-related
financial risks and opportunities, including those
associated with physical impacts. The need to
go a step further has emerged more recently andthe latest mandatory and voluntary disclosure
frameworks include net-zero transition plans.
These forward looking plans describe how
companies will align with the Paris Agreement
by selecting an appropriate decarbonisation
pathway and adapting their business model
to transition to a net-zero economy, thereby
mitigating transition and physical risks. A credible
transition plan should be an all-encompassing
strategy that captures the three dimensions
pinpointed by the CCIF.
Following its launch in 2020, the CCIF wastested by several climate finance researchorganisations.3 Initial research outcomesconfirmed that the integration of climatechange differed strongly among companies inthe same sector, highlighting the leaders andlaggards in climate strategy integration. The
research also identified that sectors closer to a
net zero-economy business model were aligning
faster to the goals of the Paris Agreement. No
companies performed well along the three CCIF
dimensions, with resilience to physical risk being
the dimension the least integrated in corporate
strategy. Transition plans were rarely disclosed,and data to assess the mitigation dimension wereinconsistent. Finally, the research highlighted
that a company’s financial capability to transition
was among the most challenging factors in
performing well across the three dimensions.  

This report discusses the process and results of
the application of the CCIF at three levels.

Country level
BMI examined the progress of
18 markets in the Asia-Pacific(APAC) region in terms of theirenergy transition momentum
and the investment
attractiveness of each throughits low carbon energy transition framework.

Sector level
In this update report, BMI
assessed the performanceof four sectors around thethree pillars of the CCIF andexamined the progress ofthese sectors. The chosen
sectors were auto, tech-electronics, healthcare,and basic industries.

Entity level
Climate Bonds used theprinciples and Standards
underpinning its Paris-aligned
Certification of entities totest the level of corporatetransparency and ambition
against the three CCIF objectives. Climate
Bonds also conducted in-depth analysis of
the transition plans of four companies toillustrate the level of additional information thattransition plans provide, and finally examinedthe extent to which issuers of labelled debt
were aligned with the Paris Agreement, using
examples of labeled debt instruments.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework3Country level analysis
Introduction
BMI’s Low-Carbon Energy Transition Framework
is a benchmarking tool measuring the progressof 18 markets in the APAC region towards a clean
energy future. This assessment is rooted in thethree main pillars of the CCIF: climate mitigation,
adaptation, and contribution to the transition.

CLIMATE CHANGE INVESTMENT FRAMEWORK INDEX

Industry Rewards

Country Rewards

Industry Risks

Country Risks

Low Carbon
CapacityHigh Emission
Power Share of Mix

Competitive
Landscape

Short-Term
Econonmic Risk

Low Carbon
Capacity Growth

PumpedHydropower
Storage Capacity

Logistics Risk

Long-Term
Econonmic Risk

Labour Market
Risk

Short-Term
Political Risk

Transmission& Distribution
LossesLong-Term
Political Risk

• Climate mitigation encompasses strategies toreduce emissions, such as phasing out fossil fuels;
promoting the adoption of electric vehicles; andincreasing low-carbon hydrogen production.
• Climate adaptation includes increasing
renewable power capacity, reducing relianceon electricity imports, and growing energy
storage capacity.

Low Carbon Power
Share of Mix
EV Annual
Addition Growth• Contribution to the transition is anassessment of the effectiveness of market
policies and regulations in promoting
emission-reduction technologies.
The framework uses a range of indicators to offer
a detailed analysis of each market’s progress.
These include characteristics such as therenewable share of a country’s power mix, public
expenditure, GDP growth rate and energy policies.
It also considers industry rewards like low-carbon
capacity and growth, and potential risks such asa market’s competitive landscape, logistics risks,and labour market challenges (see Appendix1).

Key Index Findings• Developed markets across the region tend tohave stronger country fundamentals, benefit fromhigher government spending, and as a result
suffer from lower grid losses, meaning renewable
development in these markets is less risky.
• Developing markets tend to be risky but some,such as Thailand, Indonesia and India score

Trade &
Investment Risk

Energy Policy
Hydrogen Index

Crime &
Security Risk

Battery Storage
Pipeline Capacity

Figure 1.1: Australia and China lead the market in low-carbon energy transition
Asia-Pacific Low-carbon energy transition index, by risks and rewards
100

Note: Scores out of 100; higher score = more attractive market.

90

Singapore

80

60

ThailandPhilippines

40

China

Viet Nam

Regional average

50

Australia

Japan
Korea

New ZealandHong Kong, China
Malaysia70• High-emission power types still remain
dominant in the regional power mix,
accounting for almost 60% of power
generation between now and 2032. This
presents significant opportunity for low-carbon
power as energy transition accelerates in APAC.

• The energy trilemma of cost, sustainability,
and security presents a challenge for APAC
markets in terms of energy policy. Thereneeds to be a balanced approach to energy
policy across the region.

Electricity
Consumption
GrowthLow Carbon
Hydrogen
Pipeline Capacity• Australia and China perform very well in theframework due to their supportive businessenvironments for low-carbon energy transition
and robust renewable sectors.

India
Indonesia

30
20
Risks

• Newer technologies such as EVs andhydrogen are still limited in the region.
Electrification efforts are supporting these
new technologies, which should drive a
growth in electricity consumption.

Electricity Import
Dependence

100

Lao PDR
Cambodia

Bangladesh
Pakistan

Myanmar
0
10
Rewards

20

30

40

well on the Rewards part of the framework.
Moreover, India, Indonesia, Viet Nam and thePhilippines account for 90% of global coal
growth, offering financial institutions ample
opportunities to support a transition.

Low-Carbon Energy Transition
Framework Analysis
Across the framework there is a wide spreadof risks and rewards (see Fig 1.1) because of
the APAC region’s complex and diverse
composition of markets. This suggests

50

60

70

80

90

100
Source: BMI

opportunity for private sector investors seeking
investments with varying degrees of risk.
Australia is a market leader owing to a supportive
environment for businesses looking to enter themarket or expand operations as is politically stable,
has a strong financial market, a diverse low-carbon
energy market and a well-developed renewables
sector. China is also an outperformer, given theopportunities presented by having the largest
renewables sector. China’s strong energy policy andlow grid losses also feed into its high score.

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

4

100%
Hydropower80%

Non-Hydropower Renewables

Nuclear
Oil

60%

Gas

40%

Coal

20%

f

f
32

20

f

30

20

f

28

20

f

26

20

e

24

22

20

20

20

18

20

16

20

14

20

12

20

10

20

08

20

06

20

06

20

04

20

02

20

00

0

20

e/f = BMI estimate/forecast. Source: EIA, IRENA, Local sources, BMI

Figure 1.3: Fossil fuel consumption in Asia will continue to rise,
only coal shrinking post-2030
Select Asian markets total coal consumption (mn tonnes), natural gas consumption (bcm),
and oil consumption (mn b/d).
8000

40
Coal (mn tonnes) (LHS)

7000

35
30
Oil (mn b/d) (RHS)

5000

25

4000

20

3000

15

2000

10
Natural Gas (bcm) (LHS)

1000

5
0

20

04
06
20

20

20

20

06
20
08
20
10
20
12
20
14
20
16
20
18
20
2
20 0
22
20 e
24
20 f
26
20 f
28
20 f
30
20 f
32
f

0

Million barrels/day

6000

00
02

Efficiency gains reduce electricity
consumption per GDP
The development of the APAC region over the
past two decades has increased electricity
consumption, fuelled by the expansion ofelectrification and increased urbanisation.
However, as developments in energy efficiency
gain traction, notably in the region’s moredeveloped markets, electricity consumption
per real GDP is expected to decline over the
next decade (see Figure 1.4). Total energy
consumption is expected to grow in the region
by 4% year-on-year (YOY), on average, which will
increase the need for clean energy investment.

Asia-Pacific total power generation by type, % of power mix

20

There will also be more opportunities for energy
storage projects, such as pumped hydropowerand battery energy storage systems, which
will complement the growth of intermittent
renewables and sharpen the segment’s capacity
to replace thermal power from fossil fuels.

Figure 1.2: High-emission power types remain dominant in regional
power mix, opportunities for Low-carbon power

Coal: mn tonnes, Natural Gas: bcm

Regional reliance on coal demonstrates
slow regional transition, but opportunities
for investment
Thermal power will account for almost 60% of
power generation between 2023 and 2032 (seeFigure 1.2). Figure 1.3 also shows that increasing
thermal consumption will continue over thisdecade. However, BMI expects that the need for
low-carbon energy solutions will provide plentyof opportunities to develop renewable projects
across APAC’s markets.

e/f = BMI estimate/forecast. Source: EIA, Local sources, BMI

Figure 1.4: Asian economies grow more energy efficient
.18

5000

.15

4000

.12

3000

.09
Consumption per Real GDP

2000
1000

Consumption per Capita

.06
.03

0

0

Per real GDP, kWh/USD

6000

19
9
19 4
9
19 6
9
20 8
0
20 0
0
20 2
0
20 4
0
20 6
0
20 8
1
20 0
1
20 2
1
20 4
1
20 6
1
20 8
20 20
22
20 e
2
20 4f
2
20 6f
2
20 8f
3
20 0f
32
f

Per capita kWh

Asia Pacific regional average electricity consumption per capita, kWh, and per real GDP, kWh/USD

e/f = BMI estimate/forecast. Source: EIA, IRENA, Local sources, BMI

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework5China leads the global renewables sector andis forecast to have a 40% share of the global
renewables market by 2032. Meanwhile, ten outof the 18 markets score below 50 in the industry
rewards index (see Figure 1.6), indicating low
levels of installed clean energy, and therefore
strong potential for renewables development.
Low-carbon power to grow in APAC over the
next five years
Figure 1.7 shows net low-carbon capacity
additions between 2022 and 2027 for markets
covered by the low-carbon energy transition
framework, excluding China and India. The othermarkets are expected to add a total of about
110GW over the coming five years. This contrasts
with India’s 94GW and China’s overwhelming
1,093GW, which is more than 11 times the capacityof the markets listed below combined. Overall,
average annual growth in the region will be about
9% from the end of 2022 to 2027, which is higher
than the global average growth rate of 5.5%.
Although the strong growth indicates that there
is momentum behind the energy transition, thechart also highlights several markets with slower

Regional average

60

Global average

40
20
0

Ho

ng

Au

st
ra
li
Ko Ja a
p
ng a
,C n
hi
n
Ko a
Si
r
ng ea
ap
M o
Ne ala re
w ys
Ze ia
al
Th anda
Ph ilaili nd
pp
in
e
Ch s
in
a
In Indido an
Vi esi
et a
N
Pa am
ki
Ca sta
m n
Ba bo
ng di
la a
M des
ya h
nm
La ar
o
PD
R

Score out of 100

2023

Note: Scores out of 100; higher score = more attractive market. Source: BMI Operational Risk Index
Financial barriers consider taxation levels, openness and access to funding and the sophistication of local financial systems

Figure 1.6: Industry rewards highest in China
Asia-Pacific industry rewards score and weighted component scores
100
80

Low Carbon Capacity Growth
Low Carbon Capacity

60

Hydrogen Pipeline(Post Planning)

Low Carbon Share Power Mix
Average Annual EV Additions
Battery Storage Pipeline(Post Planning)

40
20
0

Note: Scores out of 100; higher score = more attractive market. Source: BMI

Figure 1.7: Strong low carbon power capacity growthincreases overall performance
Asia-Pacific net low-carbon capacity additions, by market (2022e–2027f), MW
1200000

25

80000020

Nuclear

60000015

Non-Hydropower Renewables

400000102000005

00HydropowerJ
Au apast n
Vi ral
et ia
Na
Ko m
Pa re
In kist a
do an
M nes
Ph ala ia
i y
Ba lipp sia
ng in
la es
Th desai hl
Ne La andw oP
Ze D
Ca ala R
m n
Si bo dng di
Hong M apo a
Ko ya reng nm
, C arhinaThis part of the framework assesses the growthof low-carbon power in each market, which
includes hydropower, nuclear, non-hydropower
renewables, the electric vehicle (EV) fleet, and themarket’s pipeline of low-carbon hydrogen andbattery energy storage projects.

2022

80

Ch
in
a
In
di
a

Industry rewards

100

Ch
Au ina
st
ra
lia
In
di
Ja a
pa
Ne K n
w or
Ze ea
al
Vi and
et
N
Pa am
ki
s
Th tanai
In lando dneLa siao
M PDR
al
Ca aysm ia
Ph bo
ili dia
Ho Ba pping ng neKo lad s
ng es
,C h
M hin
ya a
Si nm
ng ar
ap
or
e

However, JET-P will not be sufficient to support
the transition in its entirety but will likely attract
crowding in from the private sector. For example,
Indonesia is expected to reach 11% renewables
share in 2030, despite its JET-P target of 34%. The
market’s plan to continue building captive coalplants undermines the funding potential of JET-P.
Moreover, JET-P funding will comprise a small
share of grants, increasing debt for governments,
while also being obscure in its application to
key energy transition sectors. Private sector
investment will be needed to increase funding
availability to reduce emissions.

Asia Pacific financial barriers score by market

Score out of 100

JET-P is a financing mechanism being implemented
by wealthier developed countries to increase thefunding of clean projects in coal-reliant markets
such as Indonesia and Viet Nam and presents anopportunity for renewables developers in thesemarkets to gain access to financing.

Figure 1.5: Majority of Asian markets have above global averagedeveloped financial markets

MW

APAC project financing and international
investment opportunities
The APAC financial sector is developing well,
as shown by the financial barriers componentof the framework (see Figure 1.5). This reflects
a greater ability for markets to direct project
financing and direct international investment
to developers. The Just Energy Transition
Partnerships (JET-P) are good examples ofinternational investment schemes that will
benefit from openness in the financial sectors.

e/f = BMI estimate/forecast. Source: EIA, IRENA, Local sources, BMI

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

6

800

Total vehicle fleet

400

EV share of fleet (%)

6%

f

f
32

20

f

31

20

f

30

20

f

29

20

f

28

20

f

27

20

f

26

20

f

25

20

f

24

20

e

23

20

e

20

20

20

20

22

0

21

0

20

3%

19

200

% EV Share of fleet

9%*Note: This includes only passenger and commercial vehicles. This also includes datafrom Afghanistan; Brunei; Macau, China; and Taiwan, China. Source: Local Sources, BMI

Figure 1.9: Strong country rewards in APAC as high emissions share
increase potential for investment
Asia-Pacific country rewards index and component weighted sharesHigh Emission Power Generation Share
Electricity Import Dependence

Capacity, Hydro-Electric Pumped Storage, MWElectricity Consumption Growth

Hydrogen Index

70
60
50
40
30
20
10

In

do

n
Th esia
ai
la
nd
Ch
in
a
In
d
Vi
et ia
N
Au am
s
Ph traili lia
pp
in
es
Ba Ja
ng pan
la
Ho
de
ng
sh
Ko Ko
ng re
,C a
h
M ina
al
Si ays
ng ia
a
Ca po
m re
bo
Pa diaNe kw ista
Ze n
al
a
La nd
o
M PD
ya R
nm
ar

0

Note: Scores out of 100; higher score = more attractive market. Source: BMI

Figure 1.10: AIIB members represent over 90% of global coal output growth
Selected markets, coal net change, TWh (2022e-2032f)
600
400
200
0
-200
-400

a

ite

d

St
at
es

in
Ch
Un

y
an

Ge
rm

pa
n
Ja

ia
st
ra
l

Au

ne
ra
i

Uk

pp
ili

Ph

et
N
Vi

do
In

in

am

a
si

di
In

es

-600

a

TWh

The APAC region will account for the largest
global additions of coal-fired power generation,
which increases the high-emissions power
generation share score, highlighting thedependence on thermal sources whilst
demonstrating a need for investment in

EV Fleet

600

Country rewards
Indonesia and Thailand score very well in the
country rewards part of the framework (seeFigure 1.9) owing to their strong growth potential
in the renewables sector. Indonesia’s potential
is driven by high consumption forecasts andits coal-fired power dominance while Thailand
is a large electricity importer, leaving space fordomestic growth. Both Indonesia and Thailand’s
power sectors present investment opportunities.
This also indicates risks to energy supply as
consumption growth, high emissions share andelectricity import dependence will mean markets
need to invest in domestic clean energy to meetdemand. Energy security will be a salient aspectof the energy transition and provide impetus forclean energy investment in these markets.

12%

ne

The adoption of EVs will drive electrification
efforts and power demand over the next five
years. Twelve out of the 18 markets coveredin this framework are expected to experience
growth in their EV fleet from the end of 2022 to
2027. However, EV penetration is still limited
currently (see Figure 1.8), at less than 3% of theautomotive fleet. This is expected to reach to
10% in 2027 and 13% in 2032 which will increase
the need for clean electricity to supply the grid,and grid management solutions such as battery
storage, adding potential to these sectors.

Asia-Pacific total vehicle fleet (LHS), EV fleet (LHS) & EV share of fleet, % (RHS)

Million vehicles

Hydrogen storage pipelines and battery
storage pipelines limited in APAC
The growth of new technologies is also includedin the Industry Rewards pillar of the framework,
which assesses the size of each market’shydrogen and battery pipelines, as well as the
expected annual average EV fleet additions forthe next five years. Korea and India are expected
to have the largest average annual EV additions.
However, hydrogen projects in the region arelargely limited to Australia, India, and China
due to the challenges of transporting hydrogen
between countries with no land barriers. Japanand Korea are expected to be large demand
centres, but these are geographically separated
from major potential producers, such as Australia
and India, presenting downside risks to projects.

Figure 1.8: EV penetration in Asia remains low

Score out of 100

growth, which shows there are many less mature
markets in the region with further potential fordevelopment. For example, Thailand will add
under 5GW of capacity between 2022 and 2027,
which is significantly lower than markets such as
Australia, Viet Nam or China. However, the market
is looking to diversify its energy mix and offers
subsidies for renewable energy that make it an
attractive investment opportunity.

*Note: Markets presented are top five contributors and bottom five. e/f = BMI estimate/forecast. Source: EIA, IRENA, Local sources, BMIforecast.

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

7

Markets with stronger country risk scores tend
to maintain and expand their grid infrastructure
more effectively, leading to more power sector
efficiencies. This can be attributed to stable
political landscapes, better-developed trade,
and investment flows into the market to support
power sector growth. These markets also
usually have a stronger rule of law, ensuring thatelectricity thefts are curbed.
Labour market and logistics risks are also
important indicators for a market’s attractivenessfor energy transition investment. Strong labour
markets suggest high skills, availability of labour,and lower costs of labour. Meanwhile, less risk
around logistics means broader transport andutilities networks, as well as ease of trade for amarket. These are important for reducing risks
and costs for projects in the sector.
The weaker utilities network scores denote thatelectricity utilities are costly and unreliable andpresent a barrier to clean technology growth in
the market. This also suggests there are higher
risks to energy supply and there is a need forinvestment in improving this network.

Logistics Risk

Transmission & Distribution Losses

Labour Market Risk

Energy Policy

100
80
60
40
20

or
Ja e
A pa
Ne ust n
w ral
Ze ia
al
Ho
an
ng
d
Ko Ko
ng re
,C a
h
M ina
al
ay
si
a
Ch
Vi in
et a
N
Th am
ai
la
nd
Ph In
d
ili
pp ia
In inedo sneLa siaoBang PDRlad
Pa eshki
Ca sta
m n
b
M odi
ya a
nm
ar

0

ga
p

Industry risks are assessed in the framework oneach power market’s stage of development andeach country’s ability to sustain growth in its
power sector. The lower the level of development
and supportive policies in place, the higher therisks to businesses from an operational andconstruction perspective.

Competitive LandscapeSinIndustry risks

Asia-Pacific industry risks index and component weighted shares

Score out of 100

This highlights a need to focus on the markets
that will experience the largest contraction ofcoal-fired power generation, as three of the
top five are also in the region (see Figure 1.11).
This demonstrates that the region also has themomentum to transition away from coal.

Figure 1.11: Developed markets are safer due to well-developed
power markets

Note: Scores out of 100; higher score = more attractive market. Source: BMI

Figure 1.12: Grid connection supported by strong country fundamentals
Asia-Pacific transmission and distribution losses, and country risks
Singapore

100
80
T&D Losses (Score)renewables across the region. The world’s top
four coal growth markets are in Asia (see Figure1.10). There are opportunities for financial
institutions with mandates to spur a low-carbon
energy transition across the region to reduce coal
growth in these markets.

Thailand60
Trendline

40

Malaysia

200Myanmar
0
10
20Country Risks (Score)

30

40

50

60

70

80

90

100

Note: Scores out of 100; higher score = more attractive market. Source: BMI

Figure 1.13: Utilities network weighs on regional logistics scores
Asia-Pacific transport network (score), trade procedures and governance (score) and utilities network (score)
Logistics Risk, Transport Network

Logistics Risk, Trade Procedures and Governance

100
80

Logistics Risk,
Utilities Network

40
20
0

Ho

ng SinKo gap
ng or
,C e
hi
n
Ja a
Au pan
Ne st
w ral
Ze ia
al
an
d
Ko
M rea
al
ay
si
a
Ch
Th inaail
Vi and
et
In Na
do m
ne
si
a
Ph In
d
ili
i
a
p
Ca pinm esbo
Pa diaBa kisng ta
la nd
La esh
o
M PD
ya R
nm
ar

Score out of 100

60*Note: Utilities Network Score is also derived from water, fuel & internet utilities. Scores out of 100; higher score = more attractive market. Source: BMI

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework8

Country risks

Figure 1.14: Developed markets lead

The country risks pillar of the framework
weighs each market’s economic, political, andoperational risks, looking at both their short- andlong-term outlooks. Developed markets scorebetter than emerging markets (see Fig 1.17),
mainly attributed to their generally more stable
political outlooks, and trade and investment
openness. Private investors with higher risk
appetites and experience in emerging markets
would be suited to managing the political andeconomic challenges of some of the moredeveloping markets.

Asia-Pacific country risks score and component weighted scores
Crime and Security Risk

40
20
0

Si
n

ga
p
Au orestrali
Ne K a
w ore
Ze a
al
Ho
an
ng
d
Ko Ja
ng pa
,C n
hi
na
Ch
M ina
al
a
Vi ysiaet
In Nam
do
ne
si
a
In
d
Th ia
Ph ailaili ndpp
Ca inem s
Ba bo
ng dia
la
de
La sh
o
P
Pa DR
ki
M st
ya an
nm
ar

Score out of 100

60

Note: Scores out of 100; higher score = more attractive market. Source: BMI

Figure 1.15: Risky Economic outlook weighs on power sector growthprospects
Southeast Asia country risks score by market and economic risk indicators
Short-Term Political Risk Index

Long-Term Political Risk Index

Country Risks

80
60
40
20

m

ar

R

ya
n
M

PD
o

m
Ca

La

bo

di

a

es
in
pp
ili

ila

nd
Ph

si

a

Th
a

ne
do

am
et
N

Vi

In

a
si
ay

M
al

or
e

0

ng
ap

Markets with the lowest economic, political, andoperational outlooks also tend to have the lowest
government spending per capita (see Fig 1.16).
This indicates that riskier markets have lower
public spending on goods and services suchas clean energy, which makes private financial
institutions important stakeholders in stimulating
clean energy growth.

Trade and Investment Risk

80

Si

Lao PDR and Myanmar have more difficult
macroeconomic outlooks (see Fig 1.15).
Lao PDR’s large and persistent fiscal andexternal deficits weigh on its market score,and undermines public sector expenditure onlarge clean infrastructure projects. Similarly,
Myanmar’s low economic growth andunderdeveloped financial market increase theeconomic risks of investment into the energy
sector. These markets require private sector
investment to fund clean projects.

Political Risks

100

Score out of 100

Within Southeast Asia, markets with welldeveloped financial systems (e.g., Singapore,
Malaysia) tend to have lower risks to theireconomic outlook. This is supportive of theregion’s drive to decarbonise the power sector as
more investment opportunities become available
for renewable growth, which should result ina greater appetite for foreign investment todevelop low carbon power projects.

Economic Risks

Note: Scores out of 100; higher score = more attractive market. Source: BMI

Figure 1.16: Higher government spending in developed markets
Asia-Pacific government consumption per capital (av. 2022-2032) and country risk scores (RHS)
20
Government consumption
per capita (av. 2022-2032) (LHS)Country Risks (RHS)

60

5

40

0

0

Score out of 100

10

80

Au
s
Si trang liaapo
Ne K re
w or
Ze ea
al
a
Ne J nd
w ap
Ze an
al
an
Ja d
M pa
al n
a
Vi ysi
et a
In Na
do m
ne
si
a
In
Th di
a
Ph ailili andp
Ca pin
m es
Ba bo
ng di
la a
d
La esho
Pa PDRk
M istaya n
nmar

USD Thousands

15

100

*Government consumption per capita refers to all government spending, including on government community services.
Note: Scores out of 100; higher score = more attractive market. Source: Local Sources, BMI

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

9Opportunities
Although there is a wide spread of risks andrewards across the diverse mix of markets in
APAC, this offers financial institutions a range
of opportunities for investing in the energy
transition. Unsurprisingly, the framework reveals
the more developed markets offer investors
a low-risk environment, with these countries
presenting lower operational risks and amore stable political environment. This is also
indicated by a better quality of infrastructure,such as in the grid, thereby reducing potential
investment losses. However, markets such as
Thailand, Indonesia, China and India scorestrongly on rewards, because of the growth
opportunities. Therefore, financial institutions
can play an important role by providing targeted
private capital.
The APAC region offers a strong investment
opportunity as many markets still rely heavily oncoal. The markets in this report, excluding Japan,
account for 90% of global coal output growth. To
replace this increasing coal share, investment in
low-carbon technology will be required, adding
opportunity for renewables growth. Moreover,consumption growth scores are high in theregion, indicating an elevated demand for new
power projects, and demand for renewable
technology. Opportunities in the region are
greater for established power technologies, suchas hydropower and non-hydropower renewables,
whereas new technology pipelines are still
limited to a few countries. This is largely due tobarriers, such as transport infrastructure andmarket regulation, which pose higher risks toinvestors in the new technology space.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework10Low-Carbon Energy Transition Framework Indicators
Indicator

SourceRationale

Low-carbon capacity

BMI Power Forecast

Installed power capacity indicates market size and scale of operations. The larger the sector,
the greater the opportunities available. MW, five-year average forecast.

Low-carbon
capacity growth

BMI Power Forecast

Changes in installed power capacity indicate potential for business opportunities as a reflectionof the market rate of expansion. % change y-o-y, five-year average forecast.

Low-carbon share of
power mix

BMI Power Forecast

Higher share indicates the market’s scale and expertise in operations. The larger the share, thegreater the ability. %, five-year average forecast.

EV annual additions

BMI Autos Forecast

Changes in the adoption of EVs indicate the potential for increased low-carbon power demand
to expand electrification and reduce transport emissions, reflecting business opportunities. Fiveyear average forecast.

Low-carbon hydrogenpipeline capacity(post-planning)

BMI Key Projects
Database

Indicates the market’s progress in developing low-carbon hydrogen production. The higher thecapacity, the further advanced the market.

Battery storage pipeline
capacity (post-planning)

BMI Key Projects
Database

Indicates the market’s progress in developing alternative energy storage. The higher the capacity,
the greater the market’s ability to integrate more renewables.

High-emission powershare of mix

BMI Power Forecast

Higher share indicates market opportunities for low-carbon power to phase out fossil fuels. %,five-year average forecast.

Pumped hydropower
storage capacity

BMI Power Forecast

Installed storage capacity indicates the market’s ability to integrate more intermittent renewables.
MW, five-year average forecast.

Electricity importdependence

BMI Power Forecast

Higher exposure to power imports implies a lower level of energy security and provides more
incentive to build domestic power capacity.

Electricity
consumption growth

BMI Power Forecast

The more substantial the growth rate, the greater the demand for additional power generation. %change y-o-y, five-year average forecast.

Hydrogen index

BMI Hydrogen Index

Reflects the market’s suitability for the development of a low-carbon hydrogen industry. The
higher the score, the greater the market’s suitability.

BMI Subjective
Indicator

Assesses the openness of the power and renewables competitive landscape.

Logistics risk

BMI Operational
Risk Index

Evaluation of the quality and coverage of the utilities, transport and trade infrastructure, including
the costs and potential obstacles to business activities.

Labour market risk

BMI Operational
Risk Index

Evaluation of the risks surrounding employing workers, including the education levelof the labour force, availability of suitable workers, and employment costs.

Transmission anddistribution losses

BMI Power Forecast

Provides an indication of the quality and efficiency of power infrastructure. The higher the losses,
the lower the quality of the power supply. % of total power output, five-year average forecast.

Energy policy

BMI Subjective
Indicator

Assesses the market’s position in relation to the competing goals of energy security, power sector
decarbonisation, and economic sustainability, as well as energy policy continuity.

Short-term economicrisk index (STERI)BMI Country
Risk Index

The STERI defines current vulnerabilities and assesses real GDP growth, inflation, unemployment,
exchange rate fluctuations, balance of payments dynamics, as well as fiscal and external debt
credentials over the next two years.

Long-term economicrisk index (LTERI)BMI Country
Risk Index

The LTERI explores the structural characteristics of economic growth, the labour market, pricestability, exchange rate stability, and the sustainability of the balance of payments, as well as
fiscal and external debt outlooks for the coming decade.

Short-term politicalrisk index (STPRI)BMI Country
Risk Index

The STPRI assesses pertinent political risks to the stability of the investment climate over a
two-year time frame.

Long-term politicalrisk index (LTPRI)BMI Country
Risk Index

The LTPRI assesses a country’s structural political characteristics over a multi-year timeframe.

Trade andinvestment risk

BMI Operational
Risk Index

Evaluation of the openness of an economy, the level of banking and taxation sophistication, andthe effective functioning of the legal and bureaucratic systems.

Crime and security risk

BMI Operational
Risk Index

Evaluation of potential security risks stemming from terrorism, political violence, war andcriminal activities, weighed against the government's capacity to protect against these threats.

Industry Rewards

Country Rewards

Industry Risks
Competitive landscapeConsiders saturation of the existing market, its ability to compete in fair tenders, and barriers tointernational companies entering the market.

Country Risks

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

11Sector level analysis
Fitch Solution applied the CCIF to four sectorsof economic activity, each with a different roleto play in the transition.
• The auto sector provides an example
of a sector that needs to shift its wholebusiness to new product ranges, and thisprocess is already well underway for mostentities operating in the sector.
• The tech-electronics and the healthcare
sectors are not material GHG emittersand technologies are established to cut

Autos index
Using the CCIF, the autos
index aims to capture
the extent to which theoperations, investments
and strategies of companies operating in this
sector align with the Paris Agreement goalsof mitigation, adaptation and contribution to
the transition. A fourth dimension, financial
capability, was added to the CCIF to assess acompany’s financial strength and ability to deliveron its climate objectives.

Mitigation
Assessing an auto company’s mitigation
effort with respect to GHG emissions should
encompass two different angles: the emissions
impact of the company’s products and its
operations. While public attention tends
to focus on the vehicles produced and theelectrification strategies of a company, vehicle
manufacturing and delivery of the productare energy-intensive processes which also
require attention. Where companies are actively
reporting emissions data for both productranges (in the case of carmakers) and business
operations, this is relatively transparent.
However, evaluating the potential efficacy
of corporate net-zero carbon goals (whereapplicable) and assessing the sustainability
approach of companies can be subjective.

Adaptation
In a mature industry such as the auto industry,
the adaptation pillar represents one of thegreatest challenges as it encompasses changes
being made by companies to limit futureenvironmental damage, particularly in relation
to the supply chain. The shift to EVs requires
new metals for batteries and the associatedmining process to retrieve them. Therefore, thispillar considers sustainability initiatives related
to sourcing components and raw materials, aswell as investing in measures such as recycling
to reduce the demand for new mining. This istheir direct emissions. Both sectors still havea role to play in a net-zero economy but theirbusiness models are not directly impacted
by the transition. The tech-electronics sector
is seen as an enabler as it can deliver new
technology solutions to help the rest of theeconomy become energy efficient.
• Basic industries provide a typical example
of a hard-to-abate sector, for which
technological and economic feasibilities are
known challenges to the transition.

• Across these four sectors, there is a
shortfall in data being reported on
ESG. There should be a move towards an
integrated policy-driven approach to theimposition of data reporting standards
across all these sectors. A regional – or evensub-regional – framework is required so thatgovernments take a more uniform approachto data reporting.

Auto sector tracker
AUTOS INDEX

Mitigation

Contribution

Adaptation

Capability

Emissions

Capex

Supply Chain
Management

CapitalAvailability

EnergyConsumption

Renewable
Energy Sources

Raw Materials

CapitalSustainability

CarbonNeutrality

Product Line

Recycling

CapitalEfficiency

Sustainability
Approach

Manufacturing
Waste

also an area where digitalisation could play abigger role as technology such as Blockchain
can be used to track the journey of components,
enabling Original Equipment Manufacturers(OEMs) to be more pro-active in ensuring their
suppliers align with their values. One such
example is Volkswagen, which announced
in 2019 it would use Blockchain to increasetransparency in its raw materials supply chain,
ensuring metals are mined with minimal
environmental impact.

Leverageto the transition from the manufacturing process,such as the use of renewable energy to power
facilities and efforts to reduce manufacturing
waste, which are not always as widely reported.

Contribution to the transition
The product lines of autos companies play a
key part in the green energy transition and canbe relatively easy to track by measuring the
proportion of a company’s product range which
is low or zero emission vehicles, whether that beelectric or another technology such as hydrogenfuel cell, and related components for thosecompanies in the supply chain. However, thispillar of the tracker also considers contributions

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

12

Context: Auto firms centre stage in decarbonisation efforts
The auto industry is aleader in the move todecarbonise as it is oneof the most recognisable
sources of emissions forthe public and one in which
they can influence as consumers. According
to data from the World Resources Institute(WRI) road transport accounts for around 12%of annual global GHG emissions and 60% ofthat total comes from passenger vehicles.4
The Covid-19 pandemic underlined the extent
of the transport sector’s impact as heatmaps
were produced showing the intensity ofemissions before and during lockdown when
there was little to no traffic on the streets. For
many, these images better contextualised theneed to decarbonise than pure data and so
it is not surprising that many governments
and local authorities subsequently steppedup regulatory efforts relating to emissions ormaintained those measures that had been

introduced during lockdown. Paris, for example,
expanded its network of bike lanes during
lockdown and kept them in place as the city reopened to encourage more cycling and walking.

spurred record levels of investment into EVs
and other low emission vehicles and given
consumers the opportunity to play their partin the transition.5,6

The European Union’s (EU) Next Generation
EU package is an example of an institution
using regulation and funding to do double
duty in both revitalising the economy after the
lockdown period and accelerating the green
transition towards the bloc’s goal of reducing
emissions by 55% by 2030. The Fit for 55
package included legislation to strengthen
emissions reduction targets for vehicles,
ultimately leading to a goal of all new carsand vans sold being zero-emission by 2035.
This, in turn, prompted several national level
incentive packages to encourage sales of low
and zero-emission vehicles, such as France’s‘bonus ecologique’ and Spain’s ‘MOVES III’plans, as well as goals for phasing out internal
combustion engine (ICE) vehicles, which has

However, while the transport sector is thesecond largest contributor to global GHG
emissions, according to the WRI data, theleading contributor is ‘energy used in industry’and as a highly energy-intensive industry, theauto sector is increasingly turning its attention
to manufacturing operations as well as
products. This element of emissions reductionis less likely to be driven by consumers andbrand preference, instead linked to incentives
for using renewable energy or lowering energy
usage. This presents an opportunity for policy
makers to intervene, although companies’ net
zero strategies are becoming broader in scope
to cover these various elements voluntarily.

Auto companies face triple threat in energy transition
The increasingly broad
strategies deployed by autocompanies speak to thevariety of challenges they
face in reducing emissions
across all businessareas. For the purposes of evaluating thesechallenges and means of addressing them,three headline categories are examined –product, process and supply chain. These
encompass the main levers available to autos
companies to address the green transition.

Figure 2.1: Global – Electric vehicle sales by region, 2023-2032
Asia

North America

The EU has set a goal of phasing out sales of
new ICE vehicles by 2035, China is aiming for
20% of new sales to be ‘new energy vehicles’
by 2025, while the US is aiming for half of
new light vehicle sales to be electric by 2030.
These markets are understandably among the
projected leaders in EV adoption, although thiskind of regulation must be complemented byadequate charging infrastructure and financial
incentives for consumers to address the dual
concerns of range anxiety and cost.

Latin America

Middle East and North Africa

Sub-Saharan Africa

30
25
20
15

Product

10
USD Millions

A combination of regulation and consumer
demand have accelerated the drive toward
electrification, which has resulted in billions ofdollars in investment into the manufacturing of
EVs and related components, as companies havecommitted more fully to the transition. Impending
internal combustion engine (ICE) bans or goals toreach 100% emissions reductions have become
increasingly commonplace as governments
and authorities attempt to meet the goals of
the Paris Agreement.

Europe

5
0
2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

Source: Fitch Solutions forecasts

According to Fitch Solutions forecasts, EVs willaccount for 23% of global passenger vehicle
sales by 2030.7 Europe will be the clear leader
on a regional basis with a 42% penetration rate,
largely due to EU policy, although other key
markets outside of the EU such as Norway andSweden have equally if not more supportive
policies and will have penetration rates far
above this projected regional average (79.6%
and 82.8% respectively). In volume terms
Fitch Solutions’ forecasts show Asia leadingwith a market of 13.2 million units out of the
24.8 million units being sold globally by 2030.

However, China will account for the lion’sshare of that Asian market with 11.5 million
units, having been an early mover in termsof offering the kind of comprehensive
supportive policy that is required, as wellas an industry offering models at all pricepoints to improve accessibility. Therefore,
based on penetration and market volume,
companies with exposure to Europe andChina will play a bigger role in the industry’s
low carbon transition.
Road freight accounts for 40% of the totalroad transport emissions, which means that

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

13

manufacturers of trucks and vans must alsoact. While the number of electric models in allcommercial vehicle segments is increasing,it is not always the best fit for the purpose.
The long distances travelled and the need torecharge quickly are challenges for current
battery EVs. Therefore, hydrogen fuel cellelectric vehicles (FCEV), while available for all
segments, including cars, will likely have thebest use case in the road freight sector. They
will enable longer distances travelled on asingle tank and quicker refueling.
However, FCEVs have drawbacks, including
the cost and complexity of building out
the refueling network. There has been
government support in this area, particularlyin those markets that produce hydrogen andsee the opportunity to create a source ofdemand through growing the FCEV market.
Fitch Solutions believes that Asia will be a
global leader in hydrogen FCEV adoption
in the short to medium term due to the
incentive programmes of key markets in
the region, and the market-leading positionof the region’s automakers in developinghydrogen FCEVs. Specifically, Korea will be
the largest hydrogen FCEV market in theregion, primarily because it has been the firstto roll out strong purchase and development
incentives. Fitch Solutions forecasts the
FCEV fleet in Korea to surpass 100,000 units
by 2026, accounting for just over half of thetotal Asian fleet. North America will be thesecond-largest regional market, supported
largely by provisions for clean hydrogenprojects in the Inflation Reduction Act (IRA).
While Europe has an equally supportive
policy backdrop through the EU Green Deal
and Next Generation EU packages, the region
will not become a larger force in the market
until after 2030. Fitch Solutions believes that
Europe will initially focus on developing
domestic green hydrogen production
capacity before shifting its attention towards
the domestic refuelling network, which willthen provide a solid foundation for stronger
FCEV sales growth post-2030.

Process
While the growing adoption of EVs has been
the centrepiece of the auto sector transition,
sustainability efforts in other areas of thevehicle’s life cycle, such as manufacturing andmaintenance, are less obvious but gaining
momentum. As these activities are less public,
they are driven more by the companies
themselves, and in some cases government
regulation, rather than direct pressure fromconsumers; although it is fair to say that
consumers are now much more informed
about the companies they choose to buy
from, which is likely to be a consideration forcarmakers. Either way, renewable energy andother measures to make the manufacturing
process cleaner are being deployed.
This is not just a developed market trend; insome emerging markets regulation has been
prompting carmakers to use renewable energy
for their factories. As far back as 2012, Daimler
opened a commercial vehicle plant in Chennai,
India, which included a solar complex to generate
at least part of its electricity. Daimler was obliged
to undertake some investment in solar energy
due to producing in the state of Tamil Nadu,
which had set a solar power generation target.
Power consumers within special economic zones
and IT parks, industrial consumers, and a rangeof other large-scale power users had to use acertain proportion of solar power.
There are other drivers of renewable use as well
as regulation, however. The business strategies
of utilities are also changing to encourage
more of these industrial projects through thecontracts they are offering, with Power Purchase
Agreements (PPAs) becoming particularly
popular in the USA. As an example, Ford reacheda deal with DTE Energy in 2019 to acquire
500,000 megawatt hours (MWh) from the utility
to be used at its Dearborn Truck Plant and its
Michigan Assembly Plant, where solar power
generating capacity is already installed.8 PPAs
enable companies to access energy at a
predictable price and costs which are increasinglycompetitive with conventional power sources,
which is driving more industrial users toward
renewable energy.
There are several positive implications of thisshift towards renewable energy for vehicle
manufacturing, aside from just a reductionin emissions. Firstly, having lower and morepredictable energy costs through the PPA model
helps companies reduce and better manage theircosts at a time when other costs are increasing.
Secondly, having one carmaker in the area
implementing this strategy creates opportunities
for the utility to replicate the model with othercompanies, which could in turn lower costs for
all involved through economies of scale. The
overall impact is lower emissions in the local
manufacturing industry.

Supply Chain

added benefit of reducing both distances
travelled and resulting emissions.
New technology also offers companies
the best chance yet of being able to moreclosely monitor their supply chains to ensurethat their partners and the methods they
employ align with their own strategies andstandards. Blockchain is one example of atechnology being increasingly used by autos
companies to better track the journey of
key components and materials. This meansthat even suppliers, who are not as directly
impacted by consumer pressure, will needto have more sustainable practices in place
if they are to retain business with vehicle
manufacturers that have their own stringent
transition strategies in place. Ultimately thisshould have a positive compound effect on
the industry’s green transition.
Similarly, if companies are considering thewhole journey of their supply chain theymust also include their own deliveries, whichmeans the industry can simultaneously createa demand channel for EVs and other low- or
zero-emission vehicles, as well as supplying
them. In April 2023, Swedish commercial
vehicle manufacturer Scania launched thefirst electric car transporter, while electric vans
and trucks are being increasingly deployed byOEMs for deliveries of smaller goods between
factories or to retailers.9 Suppliers are also
partnering with logistics firms that havecommitted to using EVs in their fleets.
Indeed, these ‘last mile’ journeys will become
increasingly important in terms of reducing theemissions in a company’s supply chain as thegrowing trends of near-shoring and re-shoringcut down the overall distance to be covered
and put emphasis on the last stage. While it
was the pandemic’s disruption that first madecompanies aware of the need to reduce theirdependence on other regions, most notably
Asia, it is now government policy supporting
ongoing efforts to make industries more selfsufficient in key autos markets such as Europe
and North America, particularly the EV sector
and related supply chain. Although geopolitics
has been a big driver of these policies, they willundoubtedly have a positive added effect of
reducing the sector’s carbon footprint.

As with the auto industry transition in general,sustainability related to the supply chain can bedivided into different elements, (i) more active
monitoring of suppliers to align standards;(ii) use of low-emission vehicles in the supply
chain; and (iii) shortening the supply chain to
reduce carbon footprint. Despite the disruption
caused by the Covid-19 pandemic to deliveries,
it has catalysed many entities to rethink theirsourcing and reset, particularly as strategies
such as re-shoring and near-shoring have theCompanies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework

14

Opportunities
There are so many areas in the auto sector
where decarbonisation efforts are required,that successful companies can play a central
role in the industry’s low carbon transition.
However, the need to measure the progress ofthat transition increases the importance of robust
and transparent data reporting, particularly
when companies are becoming reliant on otherpartners to meet their sustainability goals, suchas decarbonising their supply chain.
The Autos tracker highlights a need for morethorough and transparent reporting. Companies
that have a focus on the green energy transition
by virtue of their product line (i.e., EV or battery
manufacturers) were penalised for not reportingon several of the indicators , and as a result, ranked
below companies with low to medium scoresfor many categories but that had reported acrossall indicators. Another discrepancy is between
reporting goals and the data required to measurethem. For example, some companies score wellunder the ‘Carbon Neutrality’ indicator, whichassesses their commitment to setting carbon
neutrality goals and measures to enforce them, butthey scored 0 for their emissions because they did
not report them, making it hard to evaluate theirsuccess in meeting these carbon neutrality goals.

From an investor perspective, the ‘Capability’pillar of the index is particularly important as
this evaluates a company’s ability to fund its
transition efforts. The levels of investment going
into areas such as EV and battery production,mining, and recycling show that it will be
an expensive process and the payoff is not
immediate. On the positive side, this pillar
comprises more consistently reported financial
indicators, making it much easier to track and tocompare companies. One of the differentiating
factors on the financial side, which is nottracked, is the variation in financial support
across different markets, both in terms of
incentives for setting up manufacturing, and for
consumers to purchase the finished products.
This is when the geographical exposure ofcompanies and their future expansion plans will
come into play. China has been the clear leader
in this respect, both regionally and globally,
having had incentives for NEVs in place for wellover a decade. According to an MIT report,
China spent over CNY200bn (USD29bn) on
NEV-related subsidies and tax breaks for bothconsumers and manufacturers between 2009
and 2022.10 In June 2023, the government wenta step further with a package worth CNY520bn(USD72.3bn) to cover purchase tax breaks for
NEVs for the next four years.11

However, not all markets in the region will
have the fiscal firepower to provide this levelof support. Thailand, which has a goal oftransitioning 30% of its local vehicle production
to EVs by 2030, is focusing on encouraging
domestic production and the use of local
content. The government is offering tax holidays
to manufacturers of EVs, components, andcharging stations, as well as subsidies of between
USD2200 and USD4800 for purchases of EVs
depending on the model. As far reaching andcomprehensive as the policy is, however, thegovernment approved a funding package of justTHB2.9bn (USD83m) in 2022, which is a fractionof the support on offer in China, even accounting
for different market size.

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

15

Technology-electronics
sector tracker

Technology Electronics Index composition

Technologyelectronics index
Using the CCIF, the techelectronics index aims tocapture the extent to which
operations, investments,and strategies of companies operating in this
sector align with the Paris Agreement goalsof mitigation, adaptation, contribution to thetransition, plus financial capability.

Mitigation
The tech-electronics companies assessed under
the CCIF are, in the main, either original design
manufacturers (ODMs) or OEMs that produce
software or hardware (components or finishedgoods) for themselves or other parties positioned up
or down the value chain. Manufacturing is both raw
material- and energy-intensive and efforts aimed at
mitigating climate change tend to pivot around themore directly controllable aspects of production,
namely carbon emission reduction and the
management of product end-of-life waste materials(e-waste). The sustainability of operational activities,
such as product packaging and distribution, is also
being tackled with alternatives to plastic packaging.
Notably, over the last five years, OEMs and ODMs
have been making considerable efforts to collectdata regarding raw material and power consumption
and sourcing (scope 1 and scope 2), as well as scope
2 and scope 3 contributions from sub-contractors
and customers. This has enabled companies to

TECHNOLOGY ELECTRONICS INDEX

Mitigation

Contribution

Adaptation

Capability

CarbonFootprint

Capex

Raw Materials

CapitalAvailability

E-WasteManagement

Asset
Modernisation

Business
Resilience

CapitalSustainability

Sustainability
Approach

Location
Based Risks

CapitalEfficiency

NaturalResource Usage

DigitalMaturity

Leverageconstruct and implement wide-ranging mitigationplans, with both short- and long-term objectives.

Adaptation
The tech-electronics sector’s high dependence on
raw materials and the need to keep production costs
low means that the adaptation pillar poses one of
the biggest challenges in the transition process.
The most potent challenge is that of raw material
consumption: electronics remain highly dependent
on rare earth elements (REEs), metals, minerals,
and chemicals. These may be used directly, as

conductors or agents, or indirectly as part of the
manufacturing process. While REEs are abundant
and key metals and minerals remain in reasonably
good supply, companies must look to improve
supply chains with regards to ethical sourcing (thismay range from considering treatment of mining
companies’ employees (a particular example
being heavy manual workers exposed to heatstresses in hotter climatic conditions), the impactof resource extraction on local communities andthe environment and dealings with disreputable
governments and agencies).

Context: Location and mobility key to adaptation
The tech-electronics tracker
assesses key companies’
location-based risks within
the adaptation parameters of
the Paris Agreement, which
include their ability to enhance
adaptive capacities, strengthen their resilienceand reduce their vulnerability to climate change.
None of the surveyed companies scored lessthan 50 points, but this may be because all of
the companies in question are large and welldispersed, with key manufacturing, management,
and distribution centres spread across a wide
area of Asia and the world. This gives themconsiderable operational resilience, enablingthem to switch production from one market toanother should the local political, economic or
environmental conditions change. A major test ofthat resilience came with the COVID-19 pandemic,
with the software-focused players most able toadapt to a remote working environment and able
to rapidly scale staffing and computing resources
to meet increased demand from clients.
The manufacturing base’s critical weakness –its dependence on China as the pre-eminent

manufacturing hub – was exposed during the
pandemic. The sector was able to leverage wellsupplied inventories to weather the worst of thecrisis. However, supply chain bottlenecks quickly
emerged and, as of late 2023, demand continued
to outstrip supply, particularly in the high-end
semiconductors field where car manufacturers
are particularly exposed.
The tech-electronics companies surveyed by
the CCIF tracker are also generally locatedclose to important logistics hubs, which adds
further resilience as rail, air, road and maritime
transportation are all key to the sector’s ability
to secure resources and export finished goods.
For the most part, the surveyed companies werebased in areas less likely to be affected by rising
sea levels or extreme weather conditions such as
drought and flooding.
Notably, however, it is the legion of small,privately-owned or large state-owned
manufacturers that are more exposed to locationbased risks. These entities tend to be in older cities
where only older weather defences exist or which
are likely to come under threat from rising sea

levels over the coming decades. These entities
typically lack the financial resources to restore
facilities following weather-related damage
or to relocate to more secure locations even if
given ample time to do so. These companies
are not covered by the tracker, owing to a lackof data and, thus, present a hidden risk.
The CCIF tracker also assesses the digitalmaturity of the key markets in which thesurveyed companies are based or where they
are most active. This considers access to highspeed wireless and fixed Internet connectivity,
proximity to high-capacity submarine cable orsatellite systems and access to high performancecomputing ecosystems to support current or
future cloud-based business processes. Mirroring
the findings of the location-based risks, thetracker focused on the larger, internationallyfocused players which have become dependent
on digital connectivity, so the scores in this field
are perhaps overly optimistic. Smaller privatelyowned players and state-owned enterprises tend
to be less engaged with digital solutions, owing
to limited cashflows or the reliance on physicalor analogue business processes.

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

16

Context: Mitigation efforts centre on e-waste

A study carried out by the University ofCalifornia, Irvine (UCI), which was publishedin 2022, found that GHG emissions associatedwith the production, usage and disposal ofelectronic devices increased by 53% between
2014 and 2020.12 Approximately 580 million
metric tons of (MMT) CO2 were discharged into
the atmosphere in 2020 alone. The researchersconcluded that, without adequate regulation
or a legal framework to extend the useful
lives of electronic devices, more than 850
million tons of CO2 compounds will be emitted
annually from e-waste sources by 2030. Suchdevices would account for approximately
0.99% of global CO2 emissions by 2030 (upfrom 0.44% in 2014).
Based on analysis of 1,003 life cycle reports
from different manufacturers, it was foundthat flat-screen TV sets (FD-TVs) were

FD Monitors
Printers

FD TVsPC Accessories

Mobile Phones

Games Consoles

400
300
200
100

30

29

20

28

20

27

20

26

20

25

20

24

20

23

20

22

20

21

20

20

20

19

20

18

20

17

20

16

20

15

20

20

14

0

Source: University of California, Irvine

associated with the highest emissions (41%of total cumulative emissions), followed bylaptops/tablets, flat-screen computer monitors,
desktop computers, mobile phones, computer
accessories, printers, and games consoles.13
Using these same reports, the UCI researchersconcluded that, if the useful lifetime of electronic
devices were extended, there could be a
substantial reduction in CO2 emissions. Multiple
scenarios were modelled, but the scenario of a
50-100% increase in the useful lifetime cycle would
see the prevention of 19-28 MMT of e-waste related
CO2 emissions over the 2015-2030 timeframe.
This would pivot around the well-recognised, andincreasingly implemented, approach known as
reduce, reuse and recycle (3re).
There is a laudable effort to tackle thebiggest challenge for the tech-electronics
sector. According to the International
Telecommunication Union’s 2020 Global E-Waste
Monitor, a total of 53.6MMT of e-waste was
generated worldwide in 2019, an increase of
9.2MMT from the volume recorded five years
earlier.14 The report predicted that global e-waste
volumes will reach 74.7MMT by 2030, almost
double the 2014 figure, fuelled by higher electricand electronic consumption rates, shorter
lifecycles and limited repair options.
The 2020 report noted that the number ofcountries that had adopted a national e-waste
policy, legislation or regulation had increased from61 to 78 between 2014 and 2019. In many regions
however, regulatory advances were seen as being
slow, enforcement was low, and collection andproper e-waste management was poor.
An update to the Global E-Waste Tracker is
expected in December 2023; while the ITU had not
set out its findings at the time of writing, it seems
likely that momentum will have been lost owing to

the global Covid-19 pandemic and heightened
geopolitical tensions that have disrupted supply
chains and seen key manufacturing centres set
aside climate mitigation concerns in pursuit ofboth restored economic growth and political/
technical superiority.
Whereas the CCIF tracker found that many
Asian technology companies were making
reasonable progress in dealing with e-waste,
it also found that relatively few scored wellin terms of mitigating the sector’s impact onnatural resource usage. Metals such as gold,
nickel and copper are intensively used inelectronics, and while there is no immediateshortage of resources, key deposits are finite
and the largest are in increasingly politicallyand ethically challenging locations for global
players. A redrawing of the global politicalstress-lines, as the global order gives way to a
multi-dimensional multipolar world presents
considerable operational difficulties for Asiabased companies and those they do businesswith across the value chain.

Figure 2.3: Global e-waste
regulation adoption, 2020
80
70
60
50
Countries covered

Most of the scrutiny surrounds carbon
footprints and waste management. The
companies covered in the CCIF tracker havetypically been monitoring their activities andimpacts in these areas for five years or more
and are beginning to make performancedata available to regulators and the investor
community. Invariably, every company takes adifferent approach to defining and quantifying
the various elements making up their impact
footprints, but the sharing of information in
public and regulatory fora is beginning to yielda degree of standardisation. It has resulted in
the greater availability of book-of-materials
and device life cycle records for analysis.

Laptop/Tablets
Desktops

20

In the middle, and accounting for most of thesector, are companies that are listed, whichenjoy a large (regional or global) presence andaccess to somewhat reliable revenue streams.
However, they more often bear the brunt ofgovernment, regulator and consumer scrutiny.
Increasingly, these mid-tier companies arefacing shareholder scrutiny and criticism
where recent or ongoing climate change
responses might be viewed less favourably
vis-à-vis other, nimbler sectors.

Figure 2.2: Sources of CO2 emissions 2014-2030(millions of metric tons, MMT)

CO2 Emissions (MMT)The tech-electronics sector
depends on a set of highly
diverse and global supply
chains populated by a verybroad mix of contributors,
which can be challenging forindividual companies implementing climatechange mitigation practices. The ecosystem
ranges from small privately-owned entities
with low margins and limited cashflows
to large state-owned enterprises that may
be dependent on unreliable government
financing or constraints on their ability toadapt and innovate.

40
30
20
10
0

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

2014

2017

2019
Source: ITU

17

Context: Renewable energy, automation and AI benefit contribution efforts
Fortunately, the techelectronics sector has
capitalised on its own
resources to invest in
solutions that actively
contribute to climate change
mitigation. The automation of manufacturinglines has been ongoing for decades, and newtechnologies - such as computer-aided design,
demand and supply tracking software, robot
assembly lines, virtual and augmented realityand digital twin solutions – have enabledcompanies to improve efficiency and moreaccurately target investments to achieve theleast impact from operations. The CCIF tracker
found that many of the companies surveyed
were already actively investing in asset
modernisation with the accompanying benefit
of improving their ESG profiles.
A key area of focus for the sector is improving
the sourcing and consumption of energy,
with advances in technologies generatingenergy from renewable sources often citedin companies’ climate change contribution
strategies. The move is not surprising, giventhat the energy-dependent manufacturingsector has been seeking ways to become more
self-sufficient since the energy crises of theearly 1970s. The light manufacturing tier of thesector – which includes electronics production– has always had a more modest energy
usage footprint than heavy manufacturing;
nevertheless, as a more consumer-facing
segment, it has had to move faster to adapt.
The CCIF tracker shows that better-capitalised

and internationally-facing companies have had
more of an incentive to improve than smaller
companies active on a localised scale.
While better usage and interpretation of energy
usage data has enabled companies to find more
efficient operating models, the key driver is now thetransition to sustainable energy sources. Over thelast five years, many private and listed companies
have been seeking renewable power suppliers or
engaging in offsetting measures to improve theircontribution profiles. However, the main impedimentto progress has been the under-developed natureof the renewable power supply market.
In the summer of 2023, Taiwan Semiconductor
Manufacturing Corp (TSMC) – the world’s
leading semiconductor manufacturer interms of volume – opined that Taiwan,
China’s slowness in developing renewableenergy supplies was weighing on its efforts
to improve its impact.15 TSMC noted thatelectricity usage accounted for 62% of
its carbon emissions in 2022. Around thesame time, Samsung Electronics noted that
Korea’s under-developed renewable energy
ecosystem was proving to be a challenge in
its efforts to contribute to climate change
mitigation. Samsung’s semiconductors unit,
SK Hynix, reported that only 4% of its power
supplies came from renewable sources in2022.16 These admissions could see majorclients of these companies turn elsewhere fornon-critical needs to address their own Scope
2/3 reduction goals.

Key semiconductor-makers’ renewable energy roadmaps
Company
TSMC (Taiwan, China)

Current use of renewables

Target For 100%
renewable usage

10.4% of total, 100% for overseas
operations in 2022

2050

Samsung (Korea)

20.5% of total, 100% for US, Europe,
China operations in 2022

2050

Intel (Global)

93% of total in 2022

2030

SK Hynix (Korea)

4% of total in 2022

2050

Kioxia (Japan)

0.02% of total in YE March 2022

2040

Infineon (Germany)

100% in Europe and US in 2022; smaller but
undisclosed level for Asian operations

2030

Source: Company filings, Financial Times

Resources such as water are often used in the
production process, most notably for coolingor cleansing purposes,and among other things,
companies must consider the burden they
are placing on local water supplies and theircontamination. Companies must also consider
how they can mitigate risks relating to water supply
shortages under changing climatic conditions –notably, drought and shorter but more intense
rainy seasons are becoming more problematic
across APAC, meaning that the timely capturing
and cleaning of deposited water supplies must beplanned for with as much intensity as developing
solutions to scale water usage in order to reflectchanging local supply conditions.

Contribution to the transition
Asset modernisation is a key element of techelectronics companies’ efforts to decarbonise.
Companies must replace ageing, powerinefficient plants with low-energy systems.
Automation – which can range from simple
digital quality control systems to sophisticatedrobotic assembly systems – is helping toaccelerate production with fewer faults or
wastage of raw materials. Offices and plants
are also being decarbonised, with clear efforts
being made to switch to renewable energy andenergy-efficient lighting and heating systems.
Changes to distribution systems are also being
pursued, with lighter and more ergonomic
recyclable packaging as well as the introductionof electric-powered vehicles. In this regard,companies that have significantly increased
their capital expenditures and researchand development budgets to address theircontribution efforts score well in this category.

Opportunities
The tech-electronics sector is dominated bymany well-capitalised and technologicallyproficient companies that are playing a keyrole in the industry’s low carbon transition.
A significant proportion of those that do notalready do so will likely begin to contribute overthe next 10-15 years, but many small private andstate-owned enterprises will struggle to make ameaningful contribution.

The critical area of weakness lies in the lack ofcomprehensive and standardised data collection,
reporting, analysis and responses. This will becomea particularly pressing issue as their international
partners across the value chain look to improvetheir own sustainability goals and pivot towards
entities that can demonstrate decarbonisation.
Where some companies are yet to report certain
data, their overall scores are lower than theyshould be; it may be the case that in areas
where no data points are available, they may
be performing better than their peers. On theflip side, it may be the case that the reportingof some companies is over-stated reflected in
artificially higher scores. The key takeaway isthat the lack of standardised data makes it hardto evaluate each company on its respective
achievements with respect to decarbonisation.

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

18

Healthcare index
Using the CCIF, the healthcare
index aims to capture theextent to which operations,investments, and strategies
of companies operating inthis sector align with the Paris
Agreement goals of mitigation,
adaptation, contribution to the transition,plus financial capability.

Mitigation
Over the past five years, the healthcare sector
has intensified efforts to mitigate climatechange. This has primarily been achieved by
reducing GHG emissions in the production of
medical products (including pharmaceuticals
and medical devices) and in delivering
medical services, particularly within hospitals.
The healthcare sector is also increasingly
tracking and reducing energy consumption
in manufacturing and general operations,specifically in its usage of electricity andnatural gas. In terms of the industry’s approachto sustainability, healthcare prioritises the
reduction of medical waste (some of which ishazardous), energy efficiency policies and water
management, which is particularly important in
the manufacture of pharmaceuticals.

Adaptation
Despite water being an important raw material in
the manufacture of pharmaceuticals, healthcarecompanies are seeking to measure and reduce
total water usage in production processes andgeneral operations. This is particularly importantin water-stressed regions, such as the Middle
East and North Africa. Many newly built hospitals
in middle and high-income markets collectrainwater, treat wastewater onsite and employ
water-saving technologies. The healthcare sector
does not rely on many physical raw materials, so
is not overly concerned about reducing relianceon inputs that are sourced from vulnerable
ecosystems. Healthcare is one of the mostglobalised sectors, so it is paying closer attention
to climate hazard risks, such as droughts, floods,
and other natural disasters. While the provisionof medical services is generally decentralised,enabling patients to access some form ofhealthcare in challenging circumstances induced
by climate change may not always be the case in
more rural areas.

Contribution to the transition
In terms of contribution to the transition,
healthcare is gradually increasing investments inrenewable energy sources, such as solar powerand biomass generators, for manufacturing
plants, hospitals and clinics. This trend is
especially noticeable in newly constructedfacilities and is highlighted in corporate reports.
Healthcare produces large quantities of waste,especially plastic and packaging. As such, theHealthcare index composition
HEALTHCARE INDEX

Mitigation

Contribution

Adaptation

Capability

Emissions

Capex

Water Usageand Risk

CapitalAvailability

EnergyConsumption

Renewables

Supply Chain

CapitalSustainability

Sustainability
Approach

Manufacturing
Waste

ClimateHazard Risk

CapitalEfficiency

Waste
Management

Adaption
Capacity

Leverageindustry is becoming more involved in activities
that encourage the appropriate disposal andrecycling of used products. A particular concern
for the healthcare sector is the safe disposalof clinical waste, which is either incinerated
or sent to landfill for decontamination. Waste
management capabilities within healthcare are
well-developed, mainly due to public safetyconcerns and stringent regulations covering
disposed medical items.

Opportunities
The healthcare sector, has in recent years
recognised its unique position in bothcontributing to and addressing environmental
sustainability. While the industry was initiallyslow in aligning with the Paris Agreement’s goals,
it has made substantial strides in mitigating
its impact through reducing emissions, waste
management, and incorporating renewableenergy. The sector’s shift from CSR to a core focus
on ESG criteria exemplifies a greater commitment
to responsible practices.
Despite setbacks such as increased plastic
usage and higher emissions during the Covid-19
pandemic, the industry’s embrace of telemedicine
and efforts towards pandemic preparedness
demonstrate adaptability and resilience. With therealisation of its substantial climate footprint, theindustry is accelerating towards net-zero targets,and should progress with addressing scope 2 and3 emissions. The commitment to LEED standards
and alignment with UN’s SDGs shows a refined
approach to sustainability.

reporting and alignment with climate goals. By
investing in robust data collection, analytics
and comprehensive reporting mechanisms, theindustry can address these gaps and provide amore accurate representation of its sustainability
efforts. Enhanced transparency and adherence
to internationally recognised standards will
not only improve the sector’s tracker score but
foster trust among investors, regulators, andthe public. This focus on data integrity andtransparent reporting is a critical step in thehealthcare sector’s journey towards achieving
its sustainability objectives and reinforcing its
commitment to environmental issues.
The healthcare sector has evolved from being aminor concern in the climate debate to becoming
a leading participant in the global climate effort.
The sector’s complex interplay in both health andclimate, along with its economic importance,
underscores the vital role it will play in shaping
a future that aligns human wellbeing withecological balance. The journey to net zero by2050 represents not just a goal, but an imperative
for a sector that has the expertise and resources
to be a leader in the global transition to a moresustainable future.

Moreover, the healthcare’s sector current
tracker score and the identified data gaps
in its index present both a challenge and an
opportunity. The relatively low score andhigher-than-average data gaps signal room
for substantial improvement in transparency,

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

19

Context: Formerly a Minor Concern
Compared with otherFigure 2.4: Global health expenditure (USDbn) and
sectors, healthcare has
percentage of global GDP

From CSR To sustainability
In the late 1990s and early 2000s,
multinational pharmaceutical and medical
device companies started to express theircommitment to external stakeholders in theimmediate and wider community as corporatesocial responsibility (CSR). Activities under
the term CSR included ethical commercial
practices, employee support programmes,
environmental initiatives, charitable
contributions, social activities and operationalsafety plans. Within environmental initiatives,
the focus was the prevention of pollution
and protection of ecosystems. Multinational
pharmaceutical and medical devicecompanies began to openly express concerns
about global warming and climate changearound 2010, with such concerns becoming
widespread by 2015.
The 2015 Paris Agreement’s worldwide
importance and dedication to environmental
sustainability have brought the concept of ESG
criteria to the forefront. As a result, multinational
pharmaceutical and medical device companies
now commonly use the term ESG instead of CSR.
Most of the larger firms produce an annual ESG
report, which outlines their efforts to improve
emissions, energy usage, waste management,
employee diversity, medicine access, productsafety, board composition and ethical businesspractices. These documents are intended forinvestors, employees, stakeholders and otherinterested parties.
The concept of ESG, which is often usedinterchangeably with the term sustainability, is
now a core component of the corporate

20

20%
Health expenditure
Global GDP

15%

10

10%

5

5%

0

0
2000

2010

2020

Percentage of global GDP

15

Health expenditure (USDbn)

been less concerned withenvironmental mattersin general, and climatechange in particular. Thisis because medical services and products
like pharmaceuticals are generally nondiscretionary, high-value and beneficial tohuman health. Any environmental costs
incurred in giving care to patients or the
manufacture and distribution of medicines are
significantly offset by the healthcare sector’s
wider benefit to society, specifically reducing
the burden of disease. These attributes andcircumstances are reflected in healthcare having
the lowest average sector tracker score (43.5)
out of the eight industries that were evaluatedin
the previous iteration of this report.17 Thissituation is reinforced by healthcare having
the third highest amount of data gaps in its
index (an average of 3.6 gaps), which is above
the average (1.6 gaps) and just behind basic
industries (3.0 gaps) and autos (3.3 gaps).

2030f

f = BMI forecast. Source: World Health Organization (WHO), BMI

strategies employed by companies in healthcare.
As a result of global health expenditureaccounting for a higher percentage of global
GDP between 2000 and 2030, healthcare
is increasingly seen as an attractive investment
opportunity. Expansion of the sector alsomeans that healthcare systems are progressively
influenced by major external forces,
such as industry and macroeconomic
megatrends, geopolitical and trade tensions,digital transformation, and the low carbon
energy transition.

Covid-19 setbacks
The outbreak of the Covid-19 pandemic led
to global travel restrictions and economic
slowdowns. As a result, air pollution and GHG
emissions dropped within a matter of weeks.
However, within the healthcare sector, energy
usage and emissions both increased in 2020-21.
To provide care for the influx of severe Covid-19
patients, healthcare systems created dedicatedwards in hospitals, doctors and nurses worked
longer hours, demand for medical devices suchas ventilators rose sharply, and the mass testingof suspected infections was rolled out. Thisphenomenon was mainly seen in developed
markets, which were already the primary sourcesof healthcare emissions globally.
Usage of plastic in healthcare also rose
dramatically during the pandemic when theextensive use of plastic-based personal protection
equipment (PPE) became standard practice.
In the wider community, surgical face masks
were mandated. These masks predominately
comprised polypropylene-fabrics, along withmetal nose wires and occasionally rubber bands

to keep the mask in place. As the pandemic
progressed, health systems purchased anddistributed billions of diagnostic kits, whichwere also mainly plastic-based. In the last stageof the pandemic, the rollout of vaccines added
to the immense volume of plastic consumed,
specifically in the form of vaccine syringe
barrels, plungers and needle hubs.
During the pandemic, the use of telemedicine
surged as restrictions on personal movement
forced healthcare systems to adopt
technologies like video calls. This allowed
patients to consult with doctors remotely,
reducing the need for physical visits to clinics
and hospitals. Consequently, there was adecrease in GHG emissions associated withtravel to healthcare facilities. Although theuse of telemedicine has declined since thepandemic ended, it remains substantiallyhigher than pre-2020 levels. As the healthcare
sector moves towards achieving net zero
emissions over the coming decades,
telemedicine will play a significant role.
A key feature of the post-Covid-19 healthcare
landscape is increased public spending on
pandemic preparedness. Governments realisethat the provision of medical services wasseverely strained during the pandemic, andpolicy changes need to be made before thenext major global infectious disease outbreak.
Investments are being made in disease
surveillance, response planning, stockpilingof essential medical supplies and the creationof emergency funds. If these measures are
successfully developed and implemented, theimpact of the next pandemic on emissions willbe less than what was seen during Covid-19.

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

20

E

R I SIN
TEM GPE

Extreme
Heat

R
TU
RA

Environmental
degradationG
I N LSE

Forcedmigration,
civil conflict,mental healthimpacts

Severe Weather

INC
R
CO2 EAS
LE
V

Injuries,
fatalities,
mental healthimpacts

Asthma,cardiovascular disease

Water and foodsupply impacts

Malnutrition,
diarrheal disease

Air Pollution

MOR
W E A E EX
TH

E

Healthcare has the unique capability tocontribute to climate resilience by developing
treatments for climate-related diseases.
The coming decades will see increasing
carbon dioxide levels, rising atmospherictemperatures, more extreme weather andrising sea levels. This will result in a higher

Injuries, fatalities,
mental health impacts

Changes
In vector
ecology

RISI
N
LEV G S
ELS

A few developed markets have introduced
regulatory instruments that are encouraging
the healthcare sector to transition. The BidenHarris Administration in the US has initiatedthe Health Sector Climate Pledge, which aims
to reduce GHG emissions in the Healthcare
industry by 50% by 2030.19 This pledge has
been signed by 61 of the largest US hospitaland health sector companies, representing
over 650 hospitals. The initiative also includes
plans for climate resilience and public healthprotection. Meanwhile, NHS England aims
to be net-zero by 2045, and this has been
embedded in UK legislation since 2022.20

Figure 2.5: Impact of climate change on human health

EM
TR
ER

The healthcare sector will accelerate efforts
to achieve net zero targets. Most of the large
publicly listed companies in the sector are
now tracking and disclosing GHG emissions,energy consumption, manufacturing waste
and water usage. Many of these firms havethe principal goal of achieving net zero by
2050. Due to the intensifying climate change
discourse seen in recent years, the healthcare
sector is likely to bring forward transition
objectives, representing opportunities andchallenges for the sector and its stakeholders,
including governments, investors and the
public. Another fundamental shift for thesector is broadening emission reduction
efforts to include Scope 2 and 3. Healthcare’s
climate footprint is equivalent to nearly 5% of
global net emissions (equivalent to 2 gigatonsof carbon dioxide). Emissions emanating
directly from hospitals/clinics and Healthcare
vehicles (Scope 1) make up 17% of the sector’s
global footprint. According to the non-profit
organisation Health Care Without Harm, if
healthcare were a country it would be the fifthlargest emitter on the planet.18

EA

Acceleration towards net zero

Water
quality impacts

Malaria,
dengue,encephalitis,
hantavirus,
Rift Valley
fever, chikun
gunya,
West Nile
Virus

Increasing
allergens
Respiratory
allergies,
asthmaCholera, cryptosporidiosis,
campylobacter, leptospirosis,
harmful algal blooms
Source: Centers for Disease Control and Prevention (CDC)

prevalence of a range of medical conditions,such as malaria, dengue fever, asthma, cholera,cardiovascular failure and mental health impacts.
Consequently, there will be an increased
demand for pharmaceutical and medical devicecompanies to develop and commercialise
vaccines, diagnostics and therapies specificallytargeting climate change-related health issues.
This represents new business opportunities forcompanies arising from the need to help people
adapt to climate change impacts.
A refinement in healthcare’s approach tosustainability will be an important feature of
the transition to net zero. All new healthcare
facilities in developed states will soon adhere to

the Leadership in Energy and Environmental
Design (LEED) standard or similaraccreditation. Healthcare companies
will increasingly align with the UN’s
Sustainable Development Goals (SDGs) and
the GRI. Plastic usage in healthcare will beminimised through systematic applicationof the waste management framework of the
3Rs (reduce, reuse and recycle). Additional
resources will be directed to addressing
sustainability issues associated withradioactive healthcare waste, anaestheticgenerated emissions and hospital wastewaterfacilitated antimicrobial resistance.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework21Basic industries sector tracker
In the context of this report,
basic industries meansbuilding and construction,and environmental
services Using the CCIF,
the basic industries index
aims to capture the extent to which operations,investments, and strategies of companies operatingin this sector align with the Paris Agreement goalsof mitigation, adaptation, contribution to thetransition, plus financial capability.

Mitigation
The mitigation pillar comprises six segments,
the first of which is based on a company’s GHG
emissions intensity and growth. Here, the index
assesses each company’s percentage change
in emissions between 2016 and 2020 and givesa ranked score relative to the other companies
in the index. This score is combined with acarbon intensity score, which measures the total
emissions per unit of total sales for the company.
The energy consumption segment assesses
each company’s total energy consumption inthousand kilowatt hours (KWh) and then rankseach company’s total energy consumption perunit of total sales to calculate a score. Meanwhile,the fuel mix segment considers what types offuels are used by the company, including use ofcoal, oil/diesel, natural gas, and renewables.
Waste management is a weighted average of
two scores relating to waste and waste recycling.
More weight is given to the score for recycling,a qualitative assessment of the extent to which
each company recycles waste. Where available
the score considers data on waste recycled by
a company, as a share of total waste. The score
related to waste in turn assesses the total waste
of a company and then generates a score basedon the total waste per unit of sales compared toother companies.
The High Emissions Projects measure is driven
by an assessment of the relative share of eachcompany’s project pipeline value in USD terms
accounted for by high-emission projects, in orderto gauge the impact of the projects on GHG
emissions.. This is calculated using Fitch Solutions’proprietary Infrastructure Key Projects Data.
The final segment, sustainability approach, isqualitative. By researching and analysing eachcompany’s annual reports, sustainability reports,
websites and other official documentation, theIndex assesses a company’s commitment tosupporting mitigation efforts. Scoring considered
aspects such as the presence of dedicatedcommittees, budgetary allocations, internal
policy formation, disclosure practices, mitigationcommitments and plans in place to achievethese targets, as well as the existence of policies
around aspects such as energy efficiency, waste
reduction, water use and climate change.

Basic industries index
BASIC INDUSTRIES INDEX

Mitigation

Contribution

Adaptation

Capability

Emissions

Capex

Water Use &Recycling

CapitalAvailability

EnergyConsumption

Low Emissions
Projects

Climate Change
Vulnerability

CapitalSustainability

Energy Source

Infrastructure
Efficiency

Adaptation
Capacity

CapitalEfficiency

Waste
Management

R&D

LeverageHigh Emissions
Projects
Sustainability
Approach

Adaptation

Contribution to the transition

Adaptation is divided into three segments,
the first of which assesses a company’s water
management practices. This is made up of ascore assessing a company’s total water use
per unit of total company sales compared toother companies, which is then combinedwith a qualitative score assessing the extent ofcompany efforts to recycle water. This qualitativescore is informed where available by company
data on water recycling as a share of total wateruse. Climate change vulnerability is a functionof the company’s exposure to climate changerisks based on its operating location. The lastof these three segments, adaptation capacity,refers specifically to the response capacityand preparedness of each company to adapt
to climate change. This considers both thecompany’s geographic location and strategy.

Contribution is divided into four segments,
beginning with capex which measures the overall
investment undertaken by the company over themost recent reporting year. The low emissions
projects score combines a qualitative score of acompany’s efforts to pursue low emissions andresilient projects with a quantitative measure of
the number and value of low emission projects
within a company’s project pipeline. This is also
calculated using Fitch Solutions’ Infrastructure
Key Projects Data.21
The infrastructure efficiency segment is aqualitative measure of the extent to which
companies are pursuing energy efficiency instructures and whether t a company has adopted
a green building policy.
Finally, the R&D segment considers a company’scontribution towards innovation andimprovement in the industry. This is done bycombining a quantitative measure of R&D as ashare of company revenue with a score derived
from qualitative analysis using company annual
reports and other official documentation toconsider each company’s efforts in adopting
green technologies.

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

22

Context: Modest shifts but momentum is growing
Due to the high emissions
Figure 2.6: Global Construction Industry Value, 2018-32

Inconsistent levels of regulatory focus on the
sector across geographies has been one factor
leading to relatively slow progress. At thecompany level as well, this limited progressis mirrored by relatively low attention toclimate change mitigation and adaptationby companies in the sector. For example,
companies within the sector generally trail
those of most other sectors in terms of thereporting of climate-related data such as
figures related to energy consumption, waste
management, and GHG emissions.
The use of the Global Real Estate
Sustainability Benchmark (GRESB) andequivalent frameworks to benchmark thesustainability of real assets, at present, tends
to be conducted predominantly by financial
institutions to measure the ESG complianceand performance of brownfield assets.
Whereas GRESB is more widely applied to realestate investments, efforts by institutional
investors to promote sustainability reporting
among infrastructure assets are gathering
momentum. Among such efforts are theParis Aligned Asset Owners, Net Zero AssetManagers Initiative, and the Institutional
Investors Group on Climate Change (IIGCC).
In particular, the IIGCC provides guidance for
infrastructure assets; this is a complement to
its Net Zero Investment Framework that details
best practices for sustainability reporting byinfrastructure assets.
Though the integration of ESG factors,
particularly ‘E’ issues, during the design

Global Construction industry, real growth

2

6000

1

5000

0

4000

-1

3000

-2

2000

-3

1000

-4

0

-5

20

20

20

20

20

20

22
23
f
20
24
f
20
25
f
20
26
f
20
27
f
20
28
f
20
29
f
20
30
f
20
31
f
20
32
f

7000

21

3

20

8000

19

4

18

9000

% Growth

Global Construction Industry Value

USDbnfrom the basic industries
sector, its decarbonisation
is integral to global climatechange mitigation, including
efforts to meet GHG
reduction commitments set out under the2015 Paris Climate Change Agreement. For
example, construction and buildings overall,including the production of cement and othermaterials as well as the operational emissionsof buildings constructed with those materials,
accounted for 37% of global GHG emissions
in 2021, according to the UN Environmental
Programme.22 Despite this, the basic industries
sector has seen relatively modest progress
toward emissions reduction. While 2020 saw
a reduction in emissions across industries,
amid the Covid-19 pandemic, emissions rose
again in 2021 as economic activity rebounded.
Global construction industry value, grew
globally by 3.8% y-o-y in 2021 in real terms,
bringing global construction activity above its
pre-pandemic peak of 2019. Further growth of
0.9% y-o-y was recorded in 2022, as demandfor construction services and materials
continued to expand.

Source: BMI; f = BMI forecasts

and construction phase is growing, currently
these are not systematically adopted acrossall segments of real assets. Green building
certification programs in developed markets,
such as Leadership in Energy and Environmental
Design (LEED) in the US and Building Research
Establishment Environmental Assessment
Method (BREEAM) in the UK, are longstanding
examples of sustainability considerations. Again,
however, this highlights the relatively moredeveloped nature of sustainability reporting
among real estate versus infrastructure assets.
While overall progress remains modest, there arenotable shifts underway within the sector which,though still at a nascent stage, point to a growing
focus on the part of both governments and firms
on emissions reduction. Among these shifts,
explored in more detail below, is a rising focus
on emissions from the production of materials,
with notable cases of governments beginning toramp up regulation in this area and companies
boosting relevant actions and investments. Also
among these shifts is a growing focus on theemissions of the assets that materials are used tobuild, such as buildings and infrastructure.

Growing focus on materials emissions
While still limited at a global level, recent years
have seen an uptick in regulations and policies
aimed at reducing emissions from the materials
industry which are increasingly shifting thelandscape for companies in this area. The EU
has been a leader in this regard, with carbon
pricing through the European Emissions Trading
System (EU ETS), and permit prices have risen
considerably since 2020. Carbon pricing throughthe ETS has incentivised companies in the EU toadopt emissions-reduction strategies, including
for example the adoption of more energyefficient kilns and the development of new lower

emission forms of concrete. Looking ahead,
the tightening of rules under the ETS over the
coming years because of reforms adopted in
April 2023 stands to boost the cost of emitting
carbon further for materials providers, further
incentivising emissions reduction.23
Additionally, the adoption of the first carbon
border adjustment mechanism (CBAM)
globally by the EU from 2024 stands to placepressure on exporters of key materials suchas cement, steel, iron and aluminium locatedoutside the EU as the implementation of the
CBAM ramps up in the coming years. Withother markets such as the UK and Australia
also contemplating the adoption of CBAMs,
there is further potential for pressure on
suppliers particularly in developing markets.
Alongside increased regulation, a greater focus
on the emissions of assets in operation suchas buildings and infrastructure by clients of theconstruction industry is increasing pressure foremissions reduction during the developmentof assets. This, along with construction
companies’ own emissions reduction targets,is increasingly serving as a hard incentive forconstruction companies to adopt loweremission construction materials and methods,
most notably in developed markets.
Amid these shifts in both the regulatory
landscape and client preferences, construction
materials providers are increasingly
incentivised to find emissions reductions in thematerials production process. This can include
more energy efficient systems, such as more
efficient kilns in the case of cement producers,or the development of new products such as
more energy efficient concrete. Other likely
areas of investment and greater proliferation
include steel produced from low-emission

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

23electric arc furnaces, timber and potentiallythe adoption of carbon-capture technology,
which currently forms a central pillar of
many materials companies’ strategies toreduce emissions. Waste management is also
increasingly an area of attention, as is energy
procurement, with the use of a greater shareof renewable energy to power production
processes an appealing option for many
companies to reduce emissions.
Along with change and innovation around the
production of construction materials, a greater
focus on materials emissions is also spurringinnovation in the construction process as
construction companies look to adopt practices
and technologies to reduce use of materials
and project emissions. This includes a growing
focus on nascent construction methods, suchas offsite construction and 3D printing which
can lead to less waste generation relative to
onsite construction. Further, a more controlled
and efficient construction process will reduce
emissions involved in the production ofmaterials and buildings, as well as across thebuilding’s lifetime by ensuring a more energyefficient output.
Other adjustments to reduce emissions in
the construction process are being pursued,that avoid the wholesale shift that offsite
construction tends to require. This includes
Building Information Modelling (BIM), drone
technology for site monitoring, and the useof robotics for site automation which eachprovide greater visibility of onsite emissions,enhancing the understanding of the required
construction inputs and thus minimisingsite waste. 24 This greater visibility of onsite
emissions and on how to minimise sitewaste would directly enable a construction
site operator to reduce, in particular, its
scope 2 and 3 emissions. For example,
the elimination of unnecessary or excessive
onsite work, if such work is energy-intensive,
would reduce its scope 2 emissions byeliminating emissions entailed in its purchaseof energy. Waste generated in operations,
meanwhile, is explicitly accounted for underscope 3 emissions; minimising site waste
would directly translate into lower scope 3

Opportunities
The progress of the basic industries sector
in terms of the climate transition has beenmodest, with much still to be done to reduce
emissions in line with the goals of the Paris
Agreement. Companies which can accelerate
this process will be better placed amid a
growing policy focus in this area and will be lessexposed to changes in regulation and customer
preferences where they favour lower emissions
projects, products, and materials.

emissions. Naturally, understanding thenature of a construction site’s direct emissions,scope 1 emissions, would help identify theemissions over which the site operator has directcontrol to reduce.
The use of BIM can improve cost efficiency inthe design and construction process, as well
as streamline its activities, reducing a project’s
environmental impact. In addition, artificial
intelligence (AI) has been integrated into BIM
technology and transformed the way buildings
are designed. The technology will also help
with the mitigation of risk and the planning of
projects, whilst also offering significant efficiency
gains via the real-time analysis of data.

Shifting investment trends
There has been an increasing shift in the type of
projects that are being adopted and demanded,amid a greater consideration of the emissions
and resilience of buildings and infrastructure
assets. In the building sector, this trend iscentred around a growing emphasis on energy
efficiency. According to the IEA, the operationsof buildings account for 30% of global final
energy consumption and 26% of global final
energy-related emissions.25 Though still limited
at a global scale, governments are establishingregulations aimed at reducing building energy
use. This includes regulations affecting both
new and existing buildings and implemented
across various government levels including
at subnational, national, and supranational
levels, with the EU’s REPowerEU a prominent
example of a recent policy initiative which placesemphasis on building energy efficiency.26 This
regulatory push, together with shifting consumer
preferences, is driving demand for more efficientbuilding systems, spurring the installationof existing systems and incentivising thedevelopment of new technologies, benefitting
companies which are first movers in this area.
The infrastructure sector is seeing a shift towards
those projects which support climate change
mitigation and adaptation. This includes thepower sector where there has been a proliferationof renewable energy generation projects asgovernments, utilities and corporates look to
renewables development as a decarbonisation

Anticipating regulatory changes will be critical forcompanies in the industry, including changes interms of carbon pricing schemes as well as rules
and regulations related to the implementationof CBAMs. Understanding shifts in technology
will also be central, as technological innovation
will be key to opening new opportunities foremissions reduction in areas such as material
production and offsite and onsite construction.
Companies which anticipate a rising demandfor certain types of construction services andlever. This shift, which has seen global
renewables capacity overall grow by over 350%
between 2012 and 2022, is increasing demandfor companies specialised in the production
and installation of renewables systems, suchas solar panels and wind turbines. It is also
boosting investment in transmission andbattery storage systems, in turn increasing
opportunities in these areas, given the needto integrate new renewables projects intotransmission grids and the benefits of battery
storage systems amid growth in intermittent
renewable energy capacity.
Though climate mitigation investment
continues to account for the preponderanceof sustainability-related funding, climate
adaptation investment remains an impactful
segment of funding. This is particularly so
in markets already experiencing climatechange-related events and incidents of extreme
weather. Flood prevention, water desalination
and water resource management works are
becoming increasingly essential in order toprotect major cities and other large urban areasfrom the growing threat of climate change.
Building regulation is already requiring theincreased use of efficient management ofenergy, water, waste and other resources. This
is often supported by the integration of smart
technology into building design, including
the use of smart sensors to facilitate resource
consumption patterns and optimise theperformance of existing infrastructure.
In the transport sector, a push away from ICE
vehicles is the development of EV enabling
infrastructure such as charging stations. Masstransit including both electrified intercity
and metro rail systems are also experiencing
increased investment. While these shifts are
driving new opportunities, they also generaterisks for companies whose business model
remains dependent on higher-emissions
projects. For example, a growing global
effort to move away from coal in electricity
generation is impacting demand for services
and inputs related to projects such as new coalplants. Moving ahead, such risks appear likely
to expand, as these trends accelerate further.

the materials and inputs needed to buildout
the projects will stand to benefit considerably,
as investment in those project types expands.
Technological change and the emissions ofprojects over the lifecycle will be particularly
critical for companies to understand andconsider in this process. On the other hand,companies which fail to anticipate shifts in project
development trends risk seeing a reduction inmarket share, as opportunities are reduced.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework24Company level analysis
Climate Bonds examined how the latest set ofcommon widely accepted disclosures could
be used to rank companies according to CCIF
dimensions and identify areas of engagement
for investors. The analysis concludes with adeep dive into one company per sector and how
issuers of labelled bonds align along the CCIF.

Overview
Climate Bonds derived a list of disclosures that acompany should submit to present a transparent
climate transition plan.27 For each of these
disclosures, Climate Bonds assigned a scoreof one if the information was provided. These
disclosures were then weighted to capture thedegree of ambition or progress in the company’stransition journey (see Appendix 1), as guided
by Climate Bonds five principles for financing
a credible transition.28 The resulting score canbe seen as a first step to categorise the maturityof corporate plans in integrating the Paris
Agreement objectives.

Figure 3.1: Basic industries
companies, China’ headquarters
Korea 1

Singapore
2

Korea
3

Total number
27

India
4
Philippines 1

Hong Kong,
China
2
Indonesia 2

China
14

India
4

Israel 1

Hong Kong, China 1

Figure 3.4: Technology-electronics
companies’ headquarters

Thailand 1
Túrkiye1
UAE 1
United Kingdom 1
Japan Australia
2
3
Brazil2

Total number
26

Malaysia2

Total number
26

China
6

Figure 3.3: Healthcarecompanies’ headquarters

Korea 2

Viet Nam 1
Japan
2

2

Indonesia
2Companies headquartered in AIIB member
countries were randomly selected for eachsector by BMI. Most were in Asia and include
representation from developed and emerging
countries whose 2022 annual revenues range
from USD0.5bn to more than USD80bn.

Companies analysed operating in the auto sector
were mostly auto manufacturers and several
electrical battery producers. Those operatingin basic industries are either real estate or
infrastructure companies. Healthcare companies
are a mix of pharmaceuticals production,
healthcare providers and healthcare equipment
manufacturers. Finally, tech-electronics
companies are design manufacturers or original
equipment manufacturers.

Russia 1

Australia
2
BrazilTurkey3

Selection of companies

Climate Bonds added a further 19 issuers oflabelled bonds for its own study to investigate theextent to which labelled bond issuance indicatesa strong climate strategy integration.

Taiwan 1

Figure 3.2: Autos companies’
headquarters

China
13

Israel 2
New Zealand 1

Australia 2
Viet Nam 1
Taiwan,China 1
Turkey4
Thailand
4

China
6

Total number
40

India
4

Korea 7Singapore
3
Philippines 1
New Zealand 1

Malaysia
4

Indonesia 1
Hong Kong, China 1
Source: Climate Bonds

Climate Bonds Five Transition Principles29
1. In line with 1.5 degree
trajectory
All goals and pathways needto align with zero carbon
by 2050 and nearly halving
emissions by 2030.
2. Established by scienceAll goals and pathways
must be led by scientificexperts and be harmonised
across countries.

3. Offsets don’t countCredible transition goals andpathways don’t count offsets,
but should count upstream
scope 3 emissions.

5. Action not pledges
A credible transition isbacked by operating metrics
rather than a commitment/
pledge to follow a transition
pathway at some point in
4. Technological viability trumps economic
the future. In other words,
competitiveness Pathways must include an
this is NOT a transition toassessment of current and expected technologies.
a transition.
Where a viable technology exists, even if relatively
expensive, it should be used to determine thedecarbonisation pathway for that economic activity.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework25

Auto companies

Figure 3.5: Climate Bonds ranking of autos companies

Autos is activelytransitioning:

Contribution to the transition

0.6
0.4
0.2
0
1.0

0.2

Ad

0.4
0.6

1.0

0.2
0
1.0

1.0

n

0.4

ap
tat
io

0.8

Ad

0.2

• A quarter of the companies have scope 2
short-term targets, with the other quarter
only committing tor a medium-term target.

0.4

n

o
ati
tig
Mi

0

• Only half of the companies have long-term
decarbonisation targets but another four
have mid-term commitment only.

0.6

0.6

Scope 2 and 3 are the most material for this
sector and:

0.8

0.8

Strong variation in the maturity of the
mitigation plans:

1.0

0.6

• Half of the companies have announced agreen procurement policy but there is no
indication yet that their effort is having amaterial impact on the supply chain.

Figure 3.6: Climate Bonds ranking of technology andelectronics companies

0.4• Half of the sample has identified theopportunities generated by climate change
and made changes to the product offering.

• Half of the issuers have announced
decarbonisation levers tackling their operational
GHG emissions, such as engagement with
suppliers, vehicle carbon intensity reduction,
greener factories, logistics, and materials.

0.2

Climate change doesn’t
influence the strategicorientation of the 40 techelectronics companies but
sustainability matters:

Source: Climate Bonds

Contribution to the transition

Tech-electronics companies

M0• Only six are sufficiently advanced in theirtransition journey to announce scope 3
targets for the short, medium, and long term.

n

o
ati
itig

0

• Most had long-term 2050 carbon neutrality
goals for these emissions scopes.
• A third of the 26 firms had short- and midterm scope 1 and 2 targets, an indication thatplanning for the transition has been initiated.

0.2

0.8

n

0.6

ap
tat
io

0.4

Strong variation in the maturity of
mitigation plans:

0.8

0.8

• The auto sector has a major role to playto accelerate the decarbonisation of the
supply chain and three quarters do have agreen procurement policy, yet no concrete
engagement to procure green steel had beenannounced among the sample studied.

1.00• All 26 companies except one
are including EV/batteries intheir product offering and board oversightof the transition is standard for most.
Despite venturing into EV production, mostmanufacturers’ product offerings remain
ICE-dominant, particularly in Asian anddeveloping markets.

Source: Climate Bonds• Only two companies have scope 3 short-,
medium- and long-term targets. Six morecompanies aimed to reduce scope 3
emissions in the long term.

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

26

Healthcare companies

Figure 3.7: Climate Bonds ranking of healthcare companies

Climate change isn’t apriority of the
30 companies analysed but
sustainability matters

0.6
0.4
0.2
0
1.0

Ad

0.4

0.8

0.6

n

Basic industries companies

1.0

0.8

n

o
ati
itig

0

• The primary sources of scope 3 emissions in thehealthcare sector are ‘Purchased Goods and

0.2• 12 companies have scope 1 and 2 targets forthe short and medium -term.
• Only two companies have scope 3 short-,
medium- and long-term targets. Twomore companies aimed to reduce Scope 3
emissions in the medium-term.

0.6

ap
tat
io

0.4

• Only half of the companies have long-term
decarbonisation targets but five companies haveannounced plans for the medium-term only.

0.8

0.2

Scope 3 is the most material for this sector:

Contribution to the transition

Strong variation in the maturity of
mitigation plans:

1.0

0

The main potential contribution that thehealthcare sector can make to the transitionis through its supply chain engagement,
particularly with the chemical sector. Climate
Bonds analysis demonstrated that a majority(19) of the companies have already green
procurement in place.

M

Source: Climate Bonds

Services’ that dominates at 48% and this shouldbe the focus of the sector.30 This is acknowledged
by 19 companies, but these are largely at the
beginning of their engagement process.

Figure 3.7: Climate Bonds ranking of basic industry companies

Climate change is being
integrated into the strategyof the majority of the 27
companies analysed:

0.2
0
0.2
0.4
0.6

1.0

0.8

n

0.6

ap
tat
io

0.8

Ad

0.2

• Scope 3 emission targets areeven rarer:
two have short-term, three have mediumterm, and six have long term targets. One
promising observation is that just over halfof issuers in the sample had also set green
supply chain policies to tackle scope 3. Thissuggests that companies without scope 3

0.4

n

o
ati
tig
Mi

0

• 10 companies have medium-term scope 1
and 2 decarbonisation targets

0.6

0.4

• Half of the companies don’t have any scope
1 and 2 decarbonisation targets.

0.8

1.0

The most material sources of emissions arescopes 1 and 2:

Contribution to the transition

But climate mitigation efforts varied a lot

1.0

0

Most companies have identified theopportunities the climate transition presented
their business and incorporated it into theirproduct range (green building certificationsetc.) The contribution to the transition extends
to other sustainability needs like building
water conservation projects, seawalls, anddesalination plants.

Source: Climate Bonds

targets are nonetheless working on reducing
scope 3 and this could lead in the future todecarbonisation commitments.

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

When targets are set, a material proportionof companies do not yet align these with adecarbonisation pathway. For those companies
that are more advanced, the main pathway
followed is in line with NDC. SBTi verifications
remain a minority.
Offsets are used and not necessarily for the last
mile of carbon emissions. Offsets should not
be used as a reason for not decarbonising ordelaying the transition.
Adaptation plans remain the least advanced
objective of the CCIF in each sector and planning
is not observed more in high-risk countries.

Decarbonisation plans
PATHWAY

n.a.

NDC
aligned

None

Autos
(26 companies)

2

10

5

2

3

4

Basic Industries(27 companies)

12

4

4

1

2

4

Healthcare(30 companies)

4

7

8

7

4

Tech-electronics(40 companies)

11

5

13

5

5

Adaptation plans
Physical risk level

Other
verification

SBTI
committed

1

SBTI
Verified

Offset used
Proportion w/o
adaptation plans

Proportion withadaptation plans

Yes

High-risk (22 companies)

14

8

Medium-risk (63 companies)

48

15

Low-risk (38 companies)

16

22

Autos (26 companies)

9

Basic Industries (27 companies)

7

Healthcare (30 companies)8

Tech-electronics(40 companies)

19

Healthcare case study: Samsung Biologics
Samsung Biologics(Samsung) is the largest
Contract Development
and Manufacturing
Organisation (CDMO)in the world, a service
provider offering
seamless development
and manufacturing solutions from cell line
development to final aseptic fill/finish as wellas laboratory testing services at every stage forbiopharmaceutical products. 2022 revenues
were KRW3tn (USD2.4bn). It is majority owned
by two industrial affiliates of Samsung group:
Samsung Electronics and Samsung C&T. The
company is located in Songdo, Incheon, Korea.
The company’s 2022 GHG emissions totalleda bit less than 1 million tCO2e, of whichapproximately 80% were Scope 3.31
Samsung’s vision is to maintain its leadership
positioning by driving quantitative growth;
it completed its fourth biomanufacturing
facility in 2023 and announced plans tobuild a fifth one. The company regards theincorporation of ESG considerations as
central to maintain its competitiveness.

Mitigation
As the company is rapidly expanding its
production facilities, its decarbonisation targets
are expressed as a percent reduction withrespect to a projected baseline that includes

the expected level of emissions of the company
once its fifth production facility is operational. The
company has committed to reduce its scope 1 and2 emissions by 32%, and its scope 3 by 36% by2030 compared to this projected baseline, whichfalls short of a 1.5°C decarbonisation pathway andis therefore not in line with Climate Bonds firsthallmark of a credible transition. Climate Bonds
recommends disclosing targets in absolute GHG
emission instead to reinforce the credibility of thecommitment. A 2040 target is also announced. The
company hasn’t benchmarked its pathway and isconsidering SBTi certification.
Strong governance and disclosure and theexistence of scope 1 and 2 decarbonisation plansthat are supported by the company engagement
to RE100 initiative (a global corporate initiative
aiming at getting influential businesses to commit
to 100% renewable electricity and reaching thistarget by 2050) confirm that the company’s
climate strategy is fully embedded in the overall
company strategy.32 Climate Bonds estimates
however that integrating for instance an internalcarbon price into the strategic decision process
would send a strong signal that decisions about
future business expansion are factoring in thenecessity to reduce absolute GHG emission.
The main challenge facing Samsung lies indecarbonising its supply chain and Climate
Bonds applauds the approach followed so far: 1)
a strong commitment, via its participation withother global pharma companies to the sustainable

market initiative, setting joint scalable action toaccelerate the decarbonisation of the sector; 2)
a thorough assessment of the carbon footprintof each product via building an inventory of
its key suppliers and setting up a roadmap to
perform a Life Cycle assessment for each ofits product; 3) definition and implementationof its supply chain green purchasing policy
and sustainable supply chain policy. 4)communication on its climate goals andengagement with the suppliers to play theirpart in the decarbonisation effort. The next key
step will be to define and implement targets ofdecarbonisation for its suppliers that would be
inclusive and fair.

Adaptation
Samsung s ran the analysis following the TCFD
guidance and use various scenarios to estimate
its risks. The company has identified flood risk
and heat waves as physical risks, estimatedthe financial impact, and detailed its current
response measures. The coastal location of
the company makes the flood risk particularly
acute, and any investment decisions should
investigate further the adequacy of themeasures taken by the company.

Contribution to the transition
Samsung’s main contribution to the transition isby positioning itself as a leader to decarbonise
and influencing upstream supply chain, andparticularly the chemical industry, to decarbonise.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework28

Auto sector case study: Toyota Motor Corporation
Toyota Motor
Corporation(Toyota) is amultinational auto
manufacturer
headquarteredin Japan. Amongthe most prominent auto manufacturers
globally, it recorded sales revenue of JPY31.3tn(USD280bn) in 2022. In the same year, its total
vehicle sales volumes of 8,230,425 vehicles
remained majority (73%) ICE, and just over aquarter (27%) from EV. In 2022, Toyota’s CO2
emissions totalled 575 million tCO2, of whichapproximately 99% were scope 3.33
Toyota’s vision is to become a producer ofcarbon neutral vehicles that would be fuelled
by various technologies, depending on thespecificity of each region. Toyota’s climate
strategy is based on the assessment that to
avoid carbon emission and to reduce themas quickly as possible, it is important to factor
in the capacity of each country to switch
to renewables electricity sources and eachcountry’s strategy; Toyota has therefore opted
to maintain its hybrids range, arguing that its
low cost makes it an effective way of reducing
CO2, to develop hydrogen or biofuel-based
vehicles to adapt to local specificities (Japan,
South America) and to prepare a full lineup ofelectrified vehicles, offering 30 new vehicles by2030. Unlike several industry peers, Toyota has
not committed to stop producing ICE vehicles.

Mitigation
Toyota has set a strong decarbonisation
path with medium-term targets certified by
SBTi as aligned to a 1.5°C decarbonisation
pathway for scope 1 and 2 and a below 2°C
pathway for the scope 3 emission intensity(CO2e per km) of all vehicles. Climate Bonds
notes as well that the targets are not reliant
on offsetting emissions, in line with its
principles for a credible transition. Strong
governance, disclosure and thoroughdecarbonisation plans, that have alreadystarted and encompass all vehicle types andproduction facilities, confirm that the company’s
climate strategy is fully embedded in the overall
company strategy. Scope 1 and 2 emissions
decreased over the past few years. However,a transition financing plan is needed to fully
appreciate the ambition and credibility of these
proposals together with a quantification on howeach of the outlined decarbonisation levers will
enable the company to achieve its goals.
As scope 3 is the bulk of Toyota’s emission,
the overall medium term SBTi certified
decarbonisation target falls short of Climate
Bonds transition principle to be 1.5°C aligned
and the absence of commitment to stop
producing fossil-fuel based vehicles signals that
Toyota’s transition doesn’t align with Climate
Bonds transition principle that technologicalviability trumps economic competitiveness.
Scope 3 emissions increased over the past few
years. Toyota’s mitigation strategy could havean impact on its ability to mitigate the transition
risks that might arise from a tightening of
regulations for fuel efficiency and zero-emission
vehicles and the establishment of carbon
pricing mechanisms worldwide. Most of Toyota’s
products and much of their existing production
line could become stranded assets due to their
low fully electric vehicles (battery EV, BEV)
product share.

Adaptation
The company’s adaptation strategy to anincreased risk of natural disasters is well-noted:
business continuity plans are continuously
adapted, including disaster support agreementswith local governments and a multi-faceted
system to mitigate disaster risk on employees,
supply chains, buildings, and equipment. Thisis encouraging considering the relatively low
climate-risk exposure of Toyota’s main markets,
including Japan and North America.

Contribution to the transition
The company rightly identified heightened
EV demand as a significant opportunity
arising from climate change. Climate Bonds
applauds its response to this through its quickly
expanding range of hybrid EVs (HEVs), plugin
HEVs, BEVs, and Fuel Cell EVs (hydrogen based).
In addition, through its approach of tacklingdecarbonisation at each step of the vehicle
life cycle, Toyota is a main driver of thetransition of the whole supply chain. So far,this has not extended to an announcement ofa green procurement policy. While hydrogenfuel- based vehicles have the potential to becarbon neutral, their deployment in Japanrelies first on developing nationwide carbon
neutral production facilities that won’t be
ready for 2030, as per Climate Bonds recent
analysis of the latest Japan policies.34 Biofuel
vehicles present the additional risk of having
an indirect impact on deforestation andfood security, as highlighted by Climate
Bonds taxonomy criteria for biofuel.35 Toyota
recognises the challenge but its initiatives
to tackle them are still limited in scope anddegree of advancement. Finally, Inevitable
Policy Response (IPR) recently forecasted
that an efficient deployment of biofuel would
imply increasing production in arid and cold
biomes instead of tropical locations andbioenergy used for road transport would beoutcompeted by lower carbon alternatives
and be efficient only for shipping, aviation andpulp and paper. TheIPR assessment conflicts
with the company’s vision of developing
biofuel-based vehicles in Brazil.36

The company doesn’t mention the procurementof raw materials as a potential limitation to its
strategic orientation.

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

29Technology-electronics case study: HCL Technologies
HCL Technologies(HCL) is a multinational
information
technology service andconsulting company
headquartered in
Noida, India. The
company operates in 60 countries with a total
revenue of USD12.6bn in the 2022 financial
year. HCL’s GHG emissions were recorded at
approximatively 450 MCO2e, of which scope
2 emissions account for a third, and scope 3
emissions to a bit less than two thirds.37
HCL’s current product offering is technology anddata-dependent, and thus is inherently alignedwith a 1.5°C future. The company is committed tolong term value creation for all its stakeholders,incorporating the right ESG practices to ensurea sustainable present and future.

Mitigation
Strong governance and disclosure, and theexistence of decarbonisation plans for thethree scopes of emissions confirm that thecompany’s climate strategy is embedded in
the overall company strategy. The company
has already started its decarbonisation journeyand has reduced scope 1 and 2 emissions by
30% in the past two years.
Scope 1, 2, and 3 decarbonisation targets areambitious and have been validated as 1.5°Caligned by SBTi.
Procurement of renewable energy andmeasures to reduce energy use are the two
decarbonisation levers envisioned by thecompany to further reduce emissions. The
shift to renewable energy will be through a mixof onsite production and renewable energy
procurement, however there is no informationon the level of commitment to produce as muchas possible onsite. Best practice would be for
HCL to invest in its own renewable electricity
production to be more resilient.
Scope 3 emissions have been increasing over the
past few years. To reduce scope 3, the company
announced electrification of its vehicles, reducing
work-from-home emissions through education
and awareness, adopting a life cycle approachto reducing the carbon footprint of its purchased
goods, reducing business travel and incentivising
decarbonisation through the value chain but thelevel of disclosure remains limited on that last lever.
The company doesn’t disclose a transition
finance plan but took the excellent initiative to
use an internal carbon pricing tool to integrate
the carbon impact in its investment decision
making process.
The company has started projects which cangenerate nature-based carbon offsets and plans to
use them to cover its residual emissions. Climate
Bonds advises entities to follow the guidance of
the Voluntary Carbon Markets Integrity Initiative
to set up and use these offsets.38
Climate Bonds considers that the absence ofdetailed scope 2 and 3 emission reduction plan,
linking each source of emissions to a detailed
decarbonisation lever, and the absence of a financetransition plan prevent the current analysis toconclude on the strength of HCL’s transition plan.

Adaptation
HCL’s analysis of risks and opportunities isongoing. The company has completed theassessment for its operations in India and theUnited States and identified numerous physicalrisks, notably heatwaves, saltwater intrusion, andcoastal flooding. Adaptation levers are identified
and being implemented. .

Contribution to the transition
The company develops climate related
solutions for its clients and quote several
examples of those:• A comprehensive framework and a set ofsolutions addressing sustainability throughthe entire product lifecycle namely productdesign, product manufacturing and end of life;• A system for net zero operation, thatenables clients to monitor, assess, andreduce enterprise energy consumption andcarbon emissions through its unique ability
to analyse multiple types of equipment,
processes, and facilities at once;• An integrated ESG platform to help financial
institutions accelerate execution ofsustainable finance strategy.
Further engagement would be needed to try
to quantify the contribution of the transition ofthese climate solutions.
As was highlighted in BMI sectoral analysis,
E-waste is a material source of waste of
tech-electronics companies, including HCL,
however no specific measure has beenannounced to reduce it. The company is active
in reducing another environmental footprint,
its water consumption, through a series ofmeasures that are being detailed.39
Climate Bonds recommends that further
efforts should be made to engage both the
upstream and downstream supply chain totry to reduce the environmental footprint andsupport its transition.

Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework30Basic industry case study: Hyundai Engineering and Construction

0.6
0.4
0.2
0
1.0

n

0.4

ap
tat
io

0.8

Ad

0.2

n

o
ati
tig
i
M

0

The activity of issuing a labelled bond subjects
the company to stronger scrutiny from investors
on its environmental credentials; therefore
issuers of labelled bonds should logically be
in alignment with Paris Agreement objectives,

0.8

0.6

As issuing labeled debt is a way to improve
the sustainability profile of a company, one
legitimate question is to understand to what
extent issuers of labeled debt integrate thethree objectives of the Paris Agreement into
their strategy.

The company is also driving the transitionin the value chain by developing innovative
low carbon building materials and signinga memorandum of understanding for joint
development and technological cooperationof low-carbon construction materials with
Holcim, a global leader in environmentallyfriendly construction materials.

1.0

1.0

Just under a third of thecompanies reviewed were
issuers of green, sustainable
or sustainability-linked
debt. Labelled debt canbe used to finance thetransition of companies and therefore be an
instrument of choice to deploy climate related
investment strategies.

Hyundai E&C recognises the pivotal role it canplay in contributing to the transition using
its product range, and tracks and reports its
green revenues, against the EU Taxonomy(it also reports revenues against the Korean
K-Taxonomy). In 2022, it reported 52.1% of
its total revenues coming from such green
products, up 6% from the previous year, andplans to increase this to 60% by 2030.

Figure 3.8: Climate Bonds ranking of labelled issuers

0.8

Labelled bond issuers’
integration of Paris
Agreement objectives

Contribution to the transition

0.6

Hyundai E&C has short-, medium-, and longterm targets for its decarbonisation, spanning

Climate Bonds considers that the recent planannounced by the company is strong but
should be further strengthened with a transition
financing plan and short-term actions; thiswould ensure the transition plan were alignedwith Climate Bonds fifth principle of a credible
transition that highlights the importance ofactions and not pledges. Climate Bonds would
also enquire why the company cannot commit todeforestation free activities before 2050.

Hyundai E&C has identified its physical risks
based on various potential climate change
scenarios and has identified a five-year plan
to prepare, including but not limited toheatwave preparedness training, water andrainwater recycling facilities, flood response
infrastructure, and an internet-of-things flood
response system. It is currently still working
on establishing further emergency response
systems and modelling potential infrastructuredamage or loss in the event of natural disasters.

0.4

Hyundai E&C has identified the potential risks
and opportunities climate change presents
to its business and has included these in its
projected product offering. Its climate strategy
is strongly integrated within the company’s
strategy and governance and the company isbest in class in terms of disclosing its climatetransition and ESG metrics.

Adaptation

0.2

Mitigation

Hyundai E&C has action plans for all scopes ofemissions, and across its business segments:
for its buildings segment it plans to utilise
energy efficient designs and systems, renewableenergy use, and green building certifications;for its construction segment is plans to utilise
smart construction technologies, prefabrication,
green or low-carbon materials usage, amongst
others; for its power segment it plans to utilise
renewable energy infrastructure, hydrogenproduction and transportation infrastructure,
and CCUS development. Complementing this,it plans to focus its R&D expenditure on green
projects and technologies that cover its existing
business segments.

Contribution to the transition

Hyundai E&C has a detailed andcomprehensive transition narrative for
its future asset base and how it plans toachieve zero-emissions. These plans cover
their existing segments of buildings, civilengineering, and power generation. They
also aim to grow a hydrogen business, andto expand their offering of automation in
manufacturing and construction segments.

all three scopes of its emissions. Its 2030 targets
to reduce scope 1 & 2 emissions (46.2%), andscope 3 emissions (25%) against a 2020 baseline
have been validated by SBTi, as being alignedwith 1.5°C and well below 2°C respectively.
The company aims to achieve net zero status
by 2045, using offsets and carbon capture
technologies to account for the last 10% of its
residual emissions.

0Hyundai Engineeringand Construction
Company(HyundaiE&C) isthe eleventh largest
construction company
in the world by sales
and recorded KRW21.2tn (USD16.0bn) of
revenues in 2022. In 2021, it recorded GHG
Emissions of 9.58m tCO2e, of which 96.9% werefrom scope 3.40 The company was selected foranalysis as it was among the top performers inthe sector in terms of disclosure.

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

Source: Climate Bonds

31especially in sectors materially impacted by thetransition. In addition, the International CapitalMarkets Association (ICMA), whose guidelines onlabelled bonds are widely followed internationally,
recommends that issuers of labelled debt should
explain their climate strategy plan.41
However, labelled debt can be used to financesustainable or social projects that are not directly
connected to decarbonising activities and ifthey are, they do not imply that the company iscommitted to the climate transition. Therefore,
we could also encounter issuers performing
poorly along the CCIF.
Climate Bonds looked at the results of thesurvey on the subset of companies that had
issued labelled debt: 15 companies in the techelectronics sector, 12 in the auto sector, five in thehealthcare sector,and four in basic industries. The
difference in number is due to the lower numberof labelled bond issuers in the healthcare andbasic industry sectors. Tech-electronics andautos have traditionally been more active as
many of their business activities are considered
as eligible under green financing standards.
The result clearly highlights a group of companiesaligning strongly with the three objectives and all
sectors are represented. We do observe howevercompanies performing poorly along all objectives
and the associated bonds are not related to theclimate transition (the sustainability bonds with
Use of Proceeds (UoP) earmarked for COVID-19
related projects, one to develop electric busesissued by the only autos company that didn’t
plan to shift its product offering to renewablefuels and the last one from a tech-electronics
company with very low level of disclosure).42

When looking more specifically at the bonds
issued by the auto sector, they are all labelledgreen except one that bears the sustainability
label. UoP was earmarked mainly to developing
the EV offering or batteries, so would be a naturalinvestors’ choice to increase exposure to climatechange solutions. The sustainability bond was a
recent issuance by Nissan, a perfect example of a
UoP bond capturing the climate transition of thewhole company along several CCIF objectives;
Climate Bonds expects such deals to be more
frequent: the eligible projects cover a wide
range of objectives, from activities contributing
to the transition ( R&D in zero-emission
vehicles, batteries, charging infrastructure), tothe mitigation effort (scope 1 and 2 emission
reduction via producing or purchasing renewableenergy, energy efficiency measures), to reduceother environmental impact (sustainable
water management, waste management), andcontribute to society (autonomous driving which
can ensure a safer and cleaner mobility according
to Nissan, use of battery as energy storage system
to cover power shortages).
Among the tech-electronics sector, some bonds
were dedicated to the mitigation effort as the
UoP was earmarked for decarbonisation levers or
the sustainability-linked bond Key Performance
Indicators (KPI) were focused on reducing GHG
emissions. A few bonds had UoP earmarked fordeveloping new climate aligned activities or a
mix of mitigation activities and activities with asocial component like helping to get access to
information technologies.

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

Appendix 1
Appendix: BMI Low-Carbon
Energy Transition Framework
The low-carbon energy transition frameworkcompares the progress of 18 markets in the
APAC region in terms of their energy transition
momentum. The assessment revolves aroundthe three pillars of the CCIF: climate mitigation,
adaptation, and contribution to the transition.
Mitigation is highlighted by the level of clean
technology deployment lowering emissions,
adaptation is shown by technologies that reducethe vulnerability of markets and contribution isdemonstrated by the extent to which policy andregulation is supporting each market to bringabout energy transition.

Climate mitigation
Mitigation efforts focus on reducing emissions
through fossil fuel phase-out and technology
developments to address scope 1, 2, and 3
emissions. Key indicators under this pillar are:• High emission power generation share:
Highlights the need to reduce high-emission
power generation sources, such as coaland fossil fuel-based plants, to combat
climate change.
• Electric vehicle adoption rate: Encouraging
the adoption of electric vehicles (EV) is a vital
mitigation strategy aimed at reducing thecarbon footprint of the transportation sector.
• Low carbon hydrogen production outlook:
Low-carbon hydrogen can play a substantial
role in mitigating climate change by providing
a cleaner alternative for various industries
including some types of transportation.

Climate adaptation
This pillar includes forecasts for renewablegrowth in the context of reconfiguring eachmarket’s power mix to increase resiliency throughthe diversification and accelerated adoption ofclean technology.. Key observations include:• Low carbon power capacity: Developing anddeploying low-carbon power sources is crucial
for adaptation, helping to increase reliability
and resiliency through clean technology, as
well as providing clean energy for energyintensive adaptation needs.
• Electricity import dependence: Countries
may need to adapt their energy infrastructure
to reduce dependence on electricity imports,
ensuring a more resilient and self-sufficient
power system.

Contribution to energy transition
Encouraging the adoption of emission-reduction
technologies requires an active and growing
contribution from market policies and regulators.
Key topics are:• Renewable share of total power mix:
This indicator examines the growth, output
and share of renewable energy sources in eachmarket’s total power mix, showcasing progress
towards a more sustainable energy landscape.
• Economic performance, public
expenditure & GDP growth rate:
A strong economy and public spending can
support investments in clean energy andsustainable infrastructure, thus contributing
to the energy transition.
• Energy policies: Energy policies play animportant role in driving the energy transition
by providing the framework for promoting
renewable energy, energy efficiency, andsustainability in the power sector.
By structuring the assessment around thesepillars, the framework offers a comprehensive
evaluation of climate-related factors andtheir impact on all markets that are examinedwithin the BMI Low-Carbon Energy Transition
Framework.
The Rewards categories are overweighted at
60% with Risks weighted at 40%. The matrix
assigns a lower weight to the Risks frameworkto account for the higher risk appetite of
institutions meaning that Industry and Country
Risks are given lower priority. Within the Rewards
framework, Industry Rewards is assigned thehighest weighting (40%, compared to Country
Rewards on 20%). This reflects the fact that whenit comes to long-term investment potential,
industry size and growth potential carry the mostweight in indicating opportunities, with otherstructural factors (demographics, labour statistics
and infrastructure availability) contributing to alesser extent. The focus on emerging and frontiermarkets also dictates this bias towards industry
size and growth to ensure that opportunities
are identified in markets where regulatory
frameworks are less developed and industry sizes
are smaller (in US dollar terms) compared todeveloped markets, but where there is a strong
desire to invest.

• Energy storage capacity outlook: Energy
storage contributes to adaptation, enabling
the integration of variable renewable energy
sources, enhancing grid stability, and copingwith climate-induced disruptions.

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

33

Appendix 2
Climate Bonds
Scoring Methodology
Climate Bonds developed a simplistic scoring
system to assess each company against thepillars of the CCIF: mitigation, adaptation, andcontribution to the transition pillars:

1. Mitigation
An assessment of the company’s transition
plan, covering the metrics listed in the Scoring
Framework below.
2. Adaptation
An assessment of the company’s vulnerability tophysical and climate risks, based on the metrics
listed in Scoring Framework below.

3. Contribution to the transition
An assessment of the company’s recognitionof climate change related opportunities
and following this their inclusion of suchopportunities in their product range, as definedin Scoring Framework below.
Further definitions of the respective indicatorsand data points are available in the List of further
definitions below the Scoring Framework.

Scoring Framework
MITIGATION FRAMEWORK
Indicator

Indicator categories (where applicable)

GHG accounting methodology stated
Scope 1 short term (<2025)

Number of points: Y
1
1.2 / 0.8

Scope 1 med term (<2030)
Scope 1 long term (<2050)
Scope 2 short term (<2025)

Notes
The scoring for each of the targets was weighted differently
based on the materiality of each scope to the sector. For thetech-electronics sector, scope 1 and 2 targets received 1.2
points each, and scope 3 targets received 0.6. While for theauto, healthcare, and basic industry sectors, this was 0.8 points
and 1.4 points respectively.

Scope 2 med term (<2030)
Scope 2 long term (<2050)
Scope 3 short term (<2025)

0.6 / 1.4

Scope 3 med term (<2030)
Scope 3 long term (<2050)
Non-emission environmental factors
Measured, targeted

4

Measured, not targeted3

Not measured

2

n.a.

1

Relevant factors included metrics such as water usage,
recycling rates, general energy consumption, amongst others.

Target verification
SBTi verified

2

SBTi committed

1

NDC aligned

0.5

Other verification

0.5

None

0

Materiality matrix

3

Decarbonisation lever maturity
Sector-specific detailed, all material emissions

5

Sector-specific levers outlined

3

General levers detailed

2

Levers in development

1

None

0

Offset use

Full list of sector-specific definitions available in Listof further definitions(N=2, Y=0)

Green supply chain policies

3

Independent GHG verification

2

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

34

Scoring Framework
MITIGATION FRAMEWORK Continued
Indicator

Indicator categories (where applicable)

Number of points: Y

Notes

Disclosure framework
CDP

3

TCFD

1

Having TCFD or GRI or SASB gives maximum 1 point

Other

(1)

Point awarded for use of a national disclosure framework, only
if no other disclosure frameworks used.

None

0

GRI
SASB

ADAPTATION FRAMEWORKClimate adaptation/resilience plan in place
Notre Dame GAIN Index score

Rather than generate scores based on these data points, Climate Bonds evaluated the
distribution of companies with adaptation/resilience plans in place vs. their country ofheadquarters’ ND-GAIN Index score.

CONTRIBUTION TO THE TRANSITION FRAMEWORKClimate change opportunities identified

2

Opportunities included in the product offering

5

List of further definitions
Regarding decarbonisation lever maturities:
Categorisation

Definitions

Sector-specific detailed, all material emissions

General and sector-specific decarbonisation levers detailed, covers allmaterial scopes of emissions. Well detailed and cohesive to strategy.

Sector-specific levers outlined

General and sector-specific decarbonisation levers implemented,
covers Scope 1 & 2 scopes of emission. Not necessarily very
quantitatively detailed.

General levers detailed

Non-sector specific ways of decarbonisation (eg. Renewable
Energy, EV fleets, office energy efficency adjustments, energy
saving) detailed. Likely covers Scope 1 & 2, but not really Scope 3.

Levers in development

Description of decarbonisation levers focuses on exploration ofpotential changes or particular instances of decarbonisation (e.g.
at a particular plant or site), rather than entity-level changes. Likely
does not cover all material scopes of emissions.

Regarding Sector specific decarbonisation levers vs. general
Sector

General lever examples

Sector-specific lever examples

Autos

Energy efficiency, use of renewables in manufacturing.

Pivot towards EVs and/or battery manufacturing. Green Steel,steel/aluminium recycling, and low carbon material procurement.
Battery recycling, green logistics, etc

PharmaEnergy efficiency, use of renewables in ops.

Engagement with chemical suppliers.

Tech

Energy efficiency, use of renewables in ops.

Green product offering, energy efficiency in offices, renewables

Construction

Energy saving materials and equipment

Green materials, renewable powered building construction, pivot
towards green buildings

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

35Endnotes
1. Climate Bonds Initiative, Fitch Solutions, and The Carbon Trust,Companies and Climate Change, March 2023. Companies and Climate
Change | Climate Bonds Initiative
2. https://unfccc.int/files/meetings/paris_nov_2015/application/pdf/
paris_agreement_english_.pdf
3. Companies and climate change, a research application of the
AIIB-Amundi climate change investment framework, cbi_ccif_
extended_2022_05b12.pdf (climatebonds.net)
4. https://www.wri.org/data/world-greenhouse-gas-emissions-2019
5. https://www.economie.gouv.fr/particuliers/prime-conversion-vehicules
6. https://www.idae.es/en/aid-and-financing/moves-III
7. Fitch Solutions forecast data 2023
8. https://media.ford.com/content/fordmedia/fna/us/en/
news/2019/02/21/ford-locally-sourced-michigan-wind-energy-dte.html
9. https://www.scania.com/group/en/home/newsroom/news/2023/
worlds_first_all_electric_scania_standard_car_transporter_goes_
into_service.html
10. https://www.technologyreview.com/2023/02/21/1068880/howdid-china-dominate-electric-cars-policy/
11. https://www.reuters.com/business/autos-transportation/
china-announces-extension-purchase-tax-break-nevsuntil-2027-2023-06-21/
12. https://www.sciencedirect.com/science/article/pii/
S2773167722000115?via%3Dihub
13. https://www.sciencedirect.com/science/article/pii/
S2773167722000115?via%3Dihub
14. https://www.itu.int/en/ITU-D/Environment/Pages/Spotlight/
Global-Ewaste-Monitor-2020.aspx
15. https://www.ft.com/content/40b02b1b-222f-40cb-b786-eacb3f01e697
16. https://asia.nikkei.com/Spotlight/Supply-Chain/TSMC-says-up-to2-of-revenue-will-go-to-green-initiatives

17. https://www.climatebonds.net/resources/reports/companiesand-climate-change
18. Health Care’s Climate Footprint, Health Care Without Harm,
September 201919. HHS Launches Pledge Initiatives to Mobilize Health Care Sector to
reduce Emissions, Department of Health and Human Services (HHS),
April 2022
20. Health and Care Act 2022, Legislation.gov.uk
21. BMI Infrastructure Key Projects Data. https://app.fitchconnect.
com/projects
22. United Nations Environment Programme (2022). 2022
Global Status Report for Buildings and Construction: Towards a
Zero‑emission, Efficient and Resilient Buildings and Construction
Sector. Nairobi.
23. Directive (EU) 2023/959 of the European Parliament and of theCouncil of 10 May 2023 amending Directive 2003/87/EC establishinga system for greenhouse gas emission allowance trading within theUnion and Decision (EU) 2015/1814 concerning the establishment
and operation of a market stability reserve for the Union greenhousegas emission trading system. https://eur-lex.europa.eu/legal-content/
EN/TXT/?toc=OJ%3AL%3A2023%3A130%3ATOC&uri=uriserv%3AOJ.L_.2023.130.01.0134.01.ENG
24. Building Information Modelling (BIM) involves the digitalmodelling of the characteristics of places in order to assist in thedesign, construction, maintenance and operation of built structures.
25. IEA (2023), Tracking Clean Energy Progress 2023, IEA, Paris https://www.iea.org/reports/tracking-clean-energy-progress-2023, License:
CC BY 4.0
26. EU Commission, REPowerEU https://commission.europa.eu/
strategy-and-policy/priorities-2019-2024/european-green-deal/
repowereu-affordable-secure-and-sustainable-energy-europe_en

27. Climate Bonds Initiative, Guidance to assess transition plans,
guidance-to-assess-transition-plans-202309-final.pdf (climatebonds.net)
28. Climate Bonds Initiative, Financing credible transitions, How toensure the transition label has impact, cbi_fincredtransitions_final.
pdf (climatebonds.net)
29. Climate Bonds, (2020). Principles for Transition (climatebonds.net)
30. My Green Lab The Carbon Impact of Biotech & Pharma - A
ROADMAP TO 1.5°C
31. ESG 2023 report, Resources | ESG Management | Sustainability |SAMSUNG BIOLOGICS
32. RE100 is the global corporate renewable energy initiative bringing
together hundreds of large and ambitious businesses committed to100% renewable electricity. About us | RE100 (there100.org)
33. Sustainability Data Book (global.toyota)
34. Climate Bonds Initiative, Japan policies to grow credible transition
finance, 2023
35. Climate Bonds initiative, the bioenergy criteria, Bioenergy |Climate Bonds Initiative
36. IPR_Bioenergy_2023.pdf (transitionmonitor.com)
37. FY2023_HCLTech_Sustainability_Report.pdf
38. Voluntary Carbon Markets Integrity Initiative, 2023, Claims Codeof Practice.
39. FY2023_HCLTech_Sustainability_Report.pdf
40. en.hdec.kr/en/invest/carbon_neutral.aspx , 2022 HYUNDAI E&C
Net Zero report
41. Transition finance handbook, ICMA, 2023, Climate Transition
Finance Handbook » ICMA (icmagroup.org)
42. The green bond raised by the technology-electronics company
was excluded from Climate Bonds Initiative’s database because of alack of information.

Suggested citation: AIIB et al (2024), Companies and Climate Change,
A research application of the AIIB - Amundi Climate Change Investment Framework.
Design: Godfrey Design, Joel Milstead© Published by Climate Bonds Initiative, January 2024 www.climatebonds.net
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Companies and Climate Change A research application of the AIIB - Amundi Climate Change Investment Framework36