Climate 'temperature rating' system launched for investors

A new temperature rating system has been launched to allow investors to track the carbon emissions of thousands of global companies.

The new set of climate ratings, launched by environmental non-profit CDP, will provide a temperature pathway for over 4,000 global companies, based on emission-reducing targets covering all relevant GHG emissions in a company's value chain.

CDP said the data will be 'key' for investors to better manage climate transition risk and to future-proof their portfolios and funds from 'costly' climate change.

European asset management firm, Amundi, will be among the first to test-drive the new temperature ratings, with the ratings being piloted on four of its global multi-sector equity funds.

CDP’s temperature ratings follow an impending protocol developed by the firm with wildlife charity, WWF, to translate companies’ emissions targets into temperatures.

The ratings reflect the global warming likely to occur if global GHG emissions are reduced at the same speed as the selected company’s emissions, based on its stated target ambition.

Commenting on the launch, CDP global director of capital markets, Emily Kreps said: “Climate science tells us that we must rapidly decarbonize and achieve net zero GHG emissions by 2050 to avoid the most dangerous effects from climate change.

"Needing to play their part and drive an economy-wide transition, investors increasingly want to align their portfolios with international climate goals and the economy of the future.

"By providing a clear, science-based and uniform standard for companies’ ambition, CDP temperature ratings now allow investors to do that by benchmarking, communicating and reducing the temperature of their portfolios and products."

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