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Climate group launches temperature rating of companies for investors

Published July 15, 2020

Climate group launches temperature rating of companies for investors

International pressure group CDP has launched a set of climate ratings to measure the global warming path of companies and investments.

The dataset will help investors gauge the temperature pathway for 4,000 companies, based on their progress against GHG emissions reductions targets. The data includes all relevant GHG emissions in a company’s value chain.

Europe’s largest asset manager, Amundi, is already using the rating to monitor four global multisector equity funds.

The rating looks at the GHG emissions from companies a fund invests in and predicts the global temperature rises associated with this data. This enables asset managers to identify the degree to which a fund should push for companies to set more ambitious emissions reduction targets.

The ratings are part of work by CDP and WWF to develop a protocol to translate companies’ emissions targets into temperatures. The ratings reflect the global warming likely to occur if GHG emissions are reduced at the same speed as the selected company’s emissions, based on its stated target ambition.

Climate scientists have determined that global temperatures must rise by no more than 1.5°C if the worst effects of climate change are to be avoided. At present, warming is predicted to increase by 3.2°C by the end of the century