Functional Overview

Temperature Score

Portfolio temperature scores are calculated through an aggregation of all companies’ temperature scores within your portfolio. For each company, the score is calculated based on the publicly announced targets, which are mapped to regression models based on IPCC climate scenarios. The company is then awarded a score for each period and scope based on the ambition and coverage of the relevant targets. For more information, refer to the methodology here.

Time Frames

By default, the SBTi temperature scoring tool reports temperature scores on the mid-term time frames (i.e. based on emissions reduction targets aimed at 5-15 years into the future). However, it is also possible to inspect short (less than 5 years) and long-term time frames (15 to 30 years).

Scopes

SBTi temperature scoring tool reports on the scores for Scope 1+2 and Scope 1+2+3, however it is also possible to inspect the Scope 3 score individually.

Aggregation methods

The portfolio temperature score can be calculated using different aggregation methods based on emission and financial data of the individual companies. The available options are:

  • Weighted average temperature score (WATS)

  • Total emissions weighted temperature score (TETS)

  • Market Owned emissions weighted temperature score (MOTS)

  • Enterprise Owned emissions weighted temperature score (EOTS).

  • EV + Cash emissions weighted temperature score (ECOTS)

  • Total Assets emissions weighted temperature score (AOTS)

  • Revenue emissions weighted temperature score (ROTS)

It is also possible to calculate scores of the individual companies without aggregating to a portfolio score.

Grouping data

This functionality enables the user to analyze (for examples see Jupyter notebook analysis_example) the temperature score of the portfolio in depth by slicing and dicing through the portfolio. By choosing to “group by” a certain field (for example region or sector), the user receives output of temperature scores per category in the chosen field (so per region or sector). It is possible to group over region, country, sector, and industry level 1-4. Furthermore, it is also possible to add your own fields to group the score over (e.g. investments strategies, market cap buckets) via the portfolio data.

Choose fields to show

By default, the SBTi temperature scoring tool reports Company name, Company ID, Scope, Time frame and Temperature score for each individual combination. However, using this option allows the user to add additional columns to the output. It is possible to add all fields imported via either the portfolio data or the company data (fundamental and target).

What-If Analyses

To analyze the effect of engagement on your portfolio temperature score it is possible to run “what-if” analyses. In these scenarios, the temperature score is recalculated with the presumption that based on various engagements some or all companies decided to set different (more ambitious) targets.

The possible scenarios are:

  • Scenario 1: In this scenario, all companies in the portfolio that did not yet set a valid target have been persuaded to set 2.0o Celsius (C) targets. This is simulated by changing all scores that used the default score to a score of 2.0o C.

  • Scenario 2: In this scenario, all companies that already set targets are persuaded to set “Well Below 2.0:sup:o C (WB2C) targets. This is simulated by setting all scores of the companies that have valid targets to at most 1.75o C.

  • Scenario 3: In these scenarios, the top 10 contributors to the portfolio temperature score are persuaded to set 2.0o C targets.

    • Scenario 3a: All top 10 contributors set 2.0o C targets.

    • Scenario 3b: All top 10 contributors set WB2C, i.e. 1.75o C targets.

  • Scenario 4: In this scenario, the user can specify which companies it wants to engage with to influence to set 2.0o C or WB2C targets. The user selects companies to engage with in the portfolio input file by settings the engagement_target field to TRUE for these companies.

    • Scenario 4a: All companies that are marked as engagement targets set 2.0o C targets

    • Scenario 4b: All companies that are marked as engagement targets set WB2C targets.

Portfolio coverage

The portfolio coverage calculates the percentage of the portfolio that is covered by companies with an approved SBTi target. This coverage is calculated using one of the aggregation methods above.

Output options

The temperature score can be requested for all time frames and scope combinations on the following levels.

  • Portfolio temperature score: the aggregated score over all companies in the portfolio

  • Company temperature score: the temperature score of an individual company

  • Grouped temperature score: using the “group by” option, the user can get the aggregated temperature score per category in a chosen field (for example per region or per sector).

For the portfolio temperature score and the temperature score grouped by some category, the following additional information is reported for the composition of the score

  • Contributions: the level to which each company contributes to the total score based on the chosen aggregation method. This value is split into company temperature score and relative contribution.

  • The percentage of the score that is based on reported targets vs. the percentage based on the default score

  • For the grouped temperature scores: the percentage each group contributes to the portfolio temperature score. For example: how much each region or sector contributes to the total score.

For the company temperature scores it is possible to request all underlying data.

  • Portfolio data

  • Financial data

  • GHG emissions

  • Used target and all its parameters

  • Values used during calculation such as the Linear annual reduction (LAR), mapped regression scenario, and parameters for the formula to calculate the temperature score.

Finally, it is possible to anonymize all names and identifiers, e.g. for submission to the SBTi Target Validation Team for approval.