Bloomberg has released Implied Temperature Rise Metrics to help determine how companies and portfolios align with climate risk goals.
Bloomberg says the release come after calls for investors to reallocate capital in line with science-based net-zero targets are increasing. A recent report by CDP (formerly the Carbon Disclosure Project) revealed that under 1% of funds were Paris-aligned as of October 2021, based on an analysis of a third of the total global fund industry worth over $27 trillion.
Bloomberg’s Implied Temperature Rise Metrics are based on the Temperature Rating methodology developed by the SBTi, which provides a science-based framework to assess how the projected emissions of a company, or carbon targets, translates into an implied temperature rise. Investors can use the metrics to measure the temperature rise alignment to specific climate objectives, and to engage with companies on setting actionable emissions reduction targets.
Bloomberg’s metrics currently cover companies that disclose their greenhouse gas reduction targets to CDP and the SBTi. For current emissions, the default is “as reported data” for scope 1, 2 and 3. If this data is not reported, estimates based on a proprietary machine learning model developed by Bloomberg are being used. Nine metrics expressed in degrees Celsius are provided for each company, reflecting scope 1+2, 3 and 1+2+3 carbon emissions for short-term, medium-term and long-term scenarios, as defined by the model used by the SBTi. The metrics are provided for over 3,000 listed and private companies.
Nate Aden, SBTi Finance Lead, said: “Implied temperature rise is a succinct and rapidly-developing metric for communicating climate alignment. In 2020, the SBTi published the first and only open-source method for calculating the temperature score of a given financial portfolio. Bloomberg’s inclusion of these metrics in its client offerings will help to accelerate the re-allocation of capital towards climate stabilization, not to mention helping to refine and standardize these new metrics.”