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  3. Portfolio 2°C Alignment Assessment

What is the scope of analysis ?

Scope 1 & 2 emissions are covered.
Scope 1 emissions are based on the Kyoto Protocol greenhouse gases (GHG) from sources that are owned or controlled by companies. Scope 2 accounts for GHG emissions from the generation of purchased electricity, steam, heating and cooling consumed by companies (The Greenhouse Gas Protocol, “A Corporate Accounting and Reporting Standard).

What types of securities are covered by the dataset ?

Trucost is able to assess listed equities and corporate bonds for 2°C alignment.

What about companies that don’t disclose ?

Trucost provides 2°C alignment data coverage for companies which disclose GHG emissions data over the historical time horizon to the most recent year examined, a length of time considered sufficient to measure with confidence the company’s transition pathway over time. Companies that do not disclose GHG emissions and instead require modelling are not incorporated into the analysis.

This is due to the relatively narrow difference in transition pathways necessary to achieve different temperature outcomes.
For example, the difference in transition pathways consistent with 2°C and 3°C of warming assessed using GEVA entails a difference in emissions intensity trend of less than 2% p.a.

For non-disclosing companies that require modelling, the expected level of modelling error may exceed these levels. To avoid incorrect inferences, companies requiring modelling which could be subject to modelling error incompatible with the calibration of 2°C assessments are not included in the dataset.

What portfolio level metrics are produced in the analysis ?

Once a footprint has been carried out a number of metrics are produced including:

1. the apportioned tCO2e expected (under)/over 2°C carbon budget over a 12 year time horizon

2. % of tCO2e (under)/over 2°C carbon budget over a 12 year time horizon
3. tCO2e expected (under)/over 2°C carbon budget per EURm invested,
4. Value of holding assessed
5. the coverage rate by value

Portfolios can also be furthered explored against chosen benchmarks. Sectoral breakdowns and
company breakdowns of each portfolio are examined for their contribution to tCO2e (under)/over the 2°C budget.