The Trucost 2°C Alignment Assessment measures the adequacy of emissions reductions over time in meeting a 2°C carbon budget. Adopting the transition pathway approach, Trucost tracks company emissions and activity levels and incorporates forward-looking indicators over a medium term time horizon.
A key advantage of the approach taken by Trucost is its ability to be applied across a wide variety of portfolio holdings and aggregated to portfolio-level results, not limited to the assessment of a small number of sectors or business activities. The transition pathway approach is adapted from two methodologies that are highlighted by the Science Based Targets Initiative (SBTI), the Sectoral Decarbonization Approach (SDA) and the Greenhouse gas Emissions per unit of Value Added (GEVA) approach.
The SDA is applied to companies with high-emitting, homogeneous business activities while GEVA is applied to companies with lower emitting or heterogeneous business activities. Trucost adapts these two methodologies to be scalable from individual company target-setting to assessments of portfolios that may include hundreds or thousands of companies.