Methodology
4.Scoring data
Arc has selected and compiled transition analysis data from world-class, high-integrity research organisations. This data is collated on the platform to provide users with trusted assessments of company performance across the seven selected metrics. The platform currently contains transition analysis data from the following organisations:
- World Benchmarking Alliance (WBA) which provides corporate assessments analyzed according to the ACT Methodologies (ACT Sectoral and ACT Core).
- Transition Pathways Initiative (TPI) which produces data on corporate transition in line with its own Management Quality (MQ) and Carbon Performance (CP) frameworks. The MQ assessment compiles a number of questions on corporate climate responsibility, while the CP assessment compares the emissions intensity of the company in the most material source or sources of emissions to that of a number of scenarios (e.g. the IEA NZE2050 scenario).
- Influence Map’s Lobbymap data (IM) which analyses a company’s voting records and industry associations to determine a score reflecting the supportiveness (or not) of a corporate towards the climate policies.
- Corporate Knights’ sustainable investment and revenue dataset which provides sustainable capital expenditure, R&D, acquisitions and revenue absolute dollar amounts as well as overall investment and revenue ratios. This data is benchmarked by Arc against values derived from the IEA NZE2050 scenario.
- Global Canopy’s Forest500 dataset which assesses companies on the strength and implementation of their deforestation- and conversion-free supply chain commitments.
- Carbon Tracker Initiative’s Oil & Gas capital expenditure assessment data, which assesses companies’ current and predicted actions towards decommissioning or expanding existing fossil fuel assets.
- Climate Finance Hub Brasil provides transparent assessments of the climate performance of companies and economic sectors, using methodologies developed by partners such as the World Benchmarking Alliance (WBA) and the Agence de la transition écologique (ADEME). The analysis is available under a Beta flag to account for and allow for methodological innovation which considers local and regional context where necessary.
TransitionArc grades five of the seven key metrics using transition analysis derived from one of the designated datasets (the Solutions metric and Supply chain metric are currently in beta mode meaning that, while an assessment is provided, the metric is weighted at 0% and does not contribute to the overall score). TransitionArc has at least two options of datasets for every metric, with potential to extend this in future. The default source on first access and the alternative source are listed in Table 3. Company assessment dates are displayed on the front-end of the platform. This update allows users to easily track when each company’s transition data was last disclosed, ensuring analysis remains up to date. More data from a selection of other providers is expected to be added on an ongoing basis.
| 1. Emissions | 2. Targets | 3. Capital Allocation | 4. Governance | 5. Policy Engagement | 6. Solutions | 7. Supply chain (Food and Agriculture only) | |
|---|---|---|---|---|---|---|---|
| Default Dataset | WBA ACT Sectoral (all sectors excl. Food and Other), WBA ACT Core | WBA ACT Sectoral (all sectors excl. Food and Other), WBA ACT Core | Corporate Knights | TPI | IM | Corporate Knights | Global Canopy
|
| Alternative Dataset | TPI | TPI Global Canopy (Food and Agriculture) | CTI (O&G) WBA (all other sectors) | WBA | WBA Global Canopy (Food and Agriculture) | Global Canopy (Food and Agriculture) | N/A |
The grading for each metric is built upon one or more specific sub metrics. The sub metrics currently used as primary and secondary sources of each metric within TransitionArc are shown in Table 4. We expect the sub metrics and datasets to change and evolve as more data becomes available.
| Sub metrics details (by sector) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Metric | Dataset | Transition Arc sub metric | Airlines, Shipping | Auto | Cement, Steel | Electricity | Oil & Gas | Food and Agriculture | Other (sector agnostic assessments) |
| Emissions | WBA ACT Core | Alignment of absolute emissions |
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| WBA ACT Sectoral | Trend in emissions intensity |
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| Scope 1 and 2 |
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| Climate Finance Hub Brazil |
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| TPI | Trend in emissions intensity | Scope 1 | Fleet emissions | Scope 1 | Scope 1, owned electricity generation | Scope 1, 2, and 3 | Scope 1, 2 and 3 | ||
| Alignment of most recently assessed emissions intensity | |||||||||
| Targets | WBA ACT Core | Alignment of absolute emissions targets |
| ||||||
| WBA | Alignment of emissions targets | Scope 1, 2, and 3 |
| Scope 1 and 2 |
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| Climate Finance Hub Brazil |
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| TPI | Alignment of 2027 emissions targets | Scope 1 | Fleet emissions | Scope 1 | Scope 1, owned electricity generation | Scope 1, 2, and 3 | Scope 1, 2 and 3 | ||
| Alignment of 2035 emissions targets | |||||||||
| Alignment of 2050 emissions targets | |||||||||
| Global Canopy | Deforestation- and conversion-free (DCF) commitment strength | N/A |
| ||||||
| Capital Allocation | Corporate Knights | Alignment of recent sustainable investment expenditure | Sector-specific methodological decisions and benchmarks | ||||||
| CTI | Recent capital expenditure- expansion versus maintenance CapEx | N/A | Company score from asset level analysis | ||||||
| Recent approvals/sanctions of new O&G projects | |||||||||
| Future capital expenditure- potential approvals/sanctions of new investments | |||||||||
| WBA | Capital expenditure | N/A | Low carbon technologies | Low carbon and mitigation technologies | |||||
| Carbon removal, capture and storage technologies | |||||||||
| R&D expenditure | Low carbon transition | Low carbon transition | Low carbon transition | Climate change mitigation technologies | N/A | ||||
| Climate Finance Hub Brasil | Capital expenditure | Low carbon technologies | Low carbon and mitigation technologies | ||||||
| Carbon removal, capture and storage technologies | |||||||||
| R&D expenditure | Climate change mitigation technologies | N/A | |||||||
| Governance | TPI | Climate change management incentives | Sector-specific methodological decisions and benchmarks | ||||||
| Climate change oversight | |||||||||
| WBA | Climate change management incentives | Sector-specific methodological decisions and benchmarks | |||||||
| Climate change oversight | |||||||||
| Global Canopy | Deforestation/conversion oversight | N/A | Company score | ||||||
| Policy Engagement | Influence Map | Position on climate policies | Sector-specific methodological decisions and benchmarks | ||||||
| WBA | Position on climate policies | Sector-specific methodological decisions and benchmarks | |||||||
| Global Canopy | Involvement in advocacy for DCF legislation | N/A | Company score | ||||||
| Solutions | Corporate Knights | Alignment of recent sustainable revenue ratio | Sector-specific methodological decisions and benchmarks | ||||||
| Global Canopy | Disclosed performance on deforestation-and conversion-free supply chains | N/A |
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| Supply chain (Food and Agriculture only) | Global Canopy | Deforestation- and conversion-free requirement for suppliers | N/A |
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4.Additional data
In addition to analysis used to generate a transition alignment score, several datasets have been added to the platform because they can provide greater transparency and depth to our company assessments. These datasets are not used to generate the ‘score’ ultimately associated with the company but do provide the viewer with helpful additional information about the company’s transition plans or commitments. In future, some of this data may be incorporated into the grading system. Datasets used for context at present include:
- Emissions data from the Science Based Targets Initiative’s (SBTi) database of committed and approved targets;
- Data on companies’ deforestation- and conversion-free commitments and exposure to deforestation from Global Canopy’s Forest 500 data and from the Forest IQ dataset respectively; and
- Data on companies’ disclosure, targets, and action relating to selected climate- and nature-related issues (soil health and agrobiodiversity, food loss and waste, water withdrawals, protein diversification, and sustainable fisheries and aquaculture) from The World Benchmarking Alliance’s Food and Agriculture Benchmark.
Full datasets for SBTi, Forest 500 and ForestIQ also available via the back end of the TransitionArc system for those organisations who wish to access information via our API or Snowflake marketplace.
