NET ZERO COMPANY BENCHMARK: STRUCTURE AND METHODOLOGIES

The Net Zero Company Benchmark draws on distinct analytical methodologies and datasets, designed to evaluate focus company performance against the initiative’s goals and provide greater insight for investors on companies’ transition to net zero emissions business models.

The types of assessments can broadly be categorised into two types of indicators, which form a dual approach to evaluate corporate progress. Disclosure Framework Indicators evaluate the adequacy of corporate disclosure. Alignment Assessments evaluate the alignment of company actions with the Paris Agreement goals.

Disclosure Framework Indicators

The Disclosure Framework Indicators, assessed by Transition Pathway Initiative, draw on public and self-disclosed data from companies. These are collected from sources such as company annual reports, sustainability reports, press releases, and Carbon Disclosure Project (CDP) disclosures. The Benchmark is not a disclosure mechanism or database itself, but rather an assessment tool. Companies are assessed against ten indicators:

1. Net-zero GHG Emissions by 2050 (or sooner) ambition
2. Long-term (2036-2050) GHG reduction target(s)
3. Medium-term (2026-2035) GHG reduction target(s)
4. Short-term (up to 2025) GHG reduction target(s)
5. Decarbonisation strategy
6. Capital allocation alignment
7. Climate policy engagement
8. Climate governance
9. Just Transition [Beta]
10. TCFD disclosure

The elements of the Disclosure Framework are structured by:

  • Indicator: Specific area the company is being assessed on (e.g. Indicator 8 evaluates companies on climate governance).
  • Sub-indicator: Component of an indicator that divides it into specific areas of interest (e.g. Sub-indicator 8.2 evaluates executive remuneration).
  • Metric: Highest resolution assessment that separates sub-indicators into components, creating the opportunity for evaluation across the subject of attention (e.g. Metric 8.2.b focuses on the company’s progress against their climate change targets as a KPI to remuneration).

Each indicator comprises 1-4 sub-indicators; sub-indicators are comprised of 1-2 metrics. Each metric is assessed on a Yes/No basis from information and evidence published by the company. Sub-indicators and indicators are also assessed on a Yes/No/Partial basis (or Not Applicable/Not Assessed), and are then labelled Green/Red/Amber (or Grey) respectively. The assessments do not present an overall (or aggregate) score or ranking for the company.

Disclosure Framework Indicator Summary

Summary of the disclosure Indicators that focus companies are assessed against by TPI. Select your language to download the March 2022 summary:
English  Japanese  Korean  Simplified Chinese  Traditional Chinese

Disclosure Framework Methodology 

Guidance used to collect company data and assess disclosures, as well as how assessments are presented (i,e., the ‘traffic light system’). Select your language to download the March 2022 assessment methodology:
English  Japanese  Korean  Simplified Chinese  Traditional Chinese


Alignment Assessments

Alignment Assessments(formerly called Capital Allocation Indicators) complement the Disclosure Framework. They provide independent evaluations of the alignment and adequacy of company actions with the goals of Climate Action 100+ and the Paris Agreement.

These assessments come from different data providers of the Climate Action 100+ Technical Advisory Group including Carbon Tracker Initiative (CTI), the Climate Accounting and Audit Project (CAAP), 2 Degrees Investing Initiative (2DII) and InfluenceMap. For the March 2022 Net Zero Company Benchmark assessments, they cover the following topics and sectors:

Capital Allocation Alignment (CTI)

For oil and gas focus companies, CTI’s alignment assessments analyse companies’ potential capital expenditures (CapEX) for unsanctioned upstream oil and gas carbon-emitting assets relative to a range of climate change scenarios. In addition, for electric utility focus companies, CTI’s alignment assessments analyse companies’ announced retirement schedules for their legacy coal and gas-fired power generation capacity and new planned additional carbon-emitting assets relative to a range of climate change scenarios.
English  Japanese  Korean  Simplified Chinese  Traditional Chinese

Climate Policy Engagement Alignment (InfluenceMap)

InfluenceMap’s alignment assessments provide detailed analyses of corporate climate policy engagement and the alignment of company climate policy engagement actions (direct and indirect via their industry associations) with the Paris Agreement goals. Their assessments cover all focus companies.
English  Japanese  Korean  Simplified Chinese  Traditional Chinese

Capital Allocation Alignment (2DII)

For electric utility and autos focus companies, 2DII’s alignment assessments analyse focus companies’ planned CapEX and production capacity relative to a range of climate change scenario pathways for the sectors. In addition, for steel, cement, and aviation focus companies, 2DII’s alignment assessments analyse companies’ planned economic outputs and associated emissions intensities relative to selected climate change scenarios.
English  Japanese  Korean  Simplified Chinese  Traditional Chinese

Climate Accounting & Audit [Provisional] (CTI and CAAP)

CTI and CAAP’s alignment assessment evaluates whether a focus company’s accounting practices and related disclosures, and the auditor’s report thereon, reflect the effects of climate risk and the global move towards a 2050 (or sooner) net zero emissions pathway and the Paris Agreement goal of limiting global warming to no more than 1.5°C. This assessment covers all focus companies and is considered Provisional, meaning the information will be collected and publicly assessed for the March 2022 iteration of the Benchmark, but the framework will be subject to change in future iterations.
English  Japanese  Korean  Simplified Chinese  Traditional Chinese

 


Additional Resources

Summary of Methodology Updates 

This outlines the key enhancements to the Benchmark framework and methodologies since March 2021. It includes an overview of the assessments to be provided by the Benchmark data providers: Transition Pathway Initiative (TPI), Carbon Tracker Initiative (CTI), 2 Degrees Investing Initiative (2DII) and InfluenceMap. Select your language to download the summary:
English  Japanese  Korean  Simplified Chinese  Traditional Chinese

Investor Guide to support engagement in Asia 

The investor guide to support Asian engagements published in March 2021 continues to be a useful tool for investors looking for comparative analysis of progress made from within Asian companies. As new analysis and commitments become available, this guide will be updated with additional case studies. Minor updates in line with changes within the indicators between the March 2021 version and the March 2022 version are also expected where references are made to the Net Zero Company Benchmark. Although the guide has a focus on supporting engagement in Asia, it is generally applicable across regions. Select your language to download the guide:
English  Simplified Chinese  Traditional Chinese

Methodologies Archive

Download supporting documents for past iterations of the Net Zero Company Benchmark

2021 Disclosure Framework Indicator Summary

 

Summary of the disclosure Indicators that focus companies were assessed against by TPI. Select your language to download the framework:

 

English  Japanese  Korean  Chinese 


2021 Disclosure Framework Methodology

 

Guidance used to collect company data and assess disclosures, as well as how assessments were presented (i,e., the ‘traffic light system’). Select your language to download the methodology:

 

English  Japanese  Korean  Simplified Chinese  Traditional Chinese

 


TPI Carbon Performance methodology

 

Methodology guide explaining how TPI assesses companies’ emissions targets/intensities’ alignment against reference climate scenarios (Disclosure Framework Indicators 2.3, 3.3 and 4.3) and relevant sector-specific methodological notes are available here.

 

No supplementary alignment assessment resources were available at this time.