Moody’s Investor Services has launched Net Zero Assessments (NZAs) which are designed to help investors in evaluating and comparing companies’ decarbonisation plans and actions.
The aim is to address the challenges faced by investors and market participants in gauging and comparing emissions reduction plans across different companies.
This is due to the well documented inconsistencies in disclosure requirements, varying magnitudes, coverage, and timing of targets, as well as differences in firms’ capacities to implement business transformation plans and meet the stated targets.
The NZAs offer a scoring system, ranging from NZ-1 (highest score) to NZ-5 (lowest score), allowing for a clear assessment of an entity’s decarbonisation profile.
This is assessed against a Paris Agreement-consistent pathway towards achieving global net zero by 2050.
The scores consider factors such as the strength of an entity’s ambitions, the implementation of its plans, and its governance concerning emissions reductions.
The new framework applies not only to financial corporates but also non-financial organisations including public sector and non-profit entities that exhibit revenue-raising capacity akin to business models.
“NZAs provide an independent and comparable assessment of an entity’s emissions reduction profile, enabling market participants to better understand the relative positioning of non-financial corporates as they transition to a low-carbon future,” said Brian Cahill, global head of ESG at Moody’s Investors Service.
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