Acknowledgments

ADEME and CDP warmly thank the members of the Technical Working Group for their inputs and feedbacks on the methodology (see list of members in annex).

Technical coordination:

Marlène DRESCH (ADEME)

Dua ZEHRA (CDP)

Quality assurance and quality control on development phase provided by :

André PEDROSA-RODRIGUES (Eco2 Initiative)

Patrick HARDY (Climate Check)

The relevant data for this indicator are:

• Targets information for each relevant scope 1+2 GHG emissions sources (Target year, emission reduction between reporting year and target year, coverage)
• Targets information for each relevant scope 1+2+3 GHG emissions sources (Target year, emission reduction between reporting year and target year, coverage), and information on what is included in the Scope 3 (which steps of the value chain, which CO2e emissions posts)

The benchmark indicators involved are the following:

The analysis is based on a trend ratio between the company’s scope Scope 1+2 (or Scope 1+2+3) emissions target and the company benchmark (see 4.1 to know what ACT takes into account in scope 3). Trends are computed between reporting year and the longest time horizon of the target.

The company’s target pathway is the decarbonization over time, defined by the company’s Scope 1+2 (or Scope 1+2+3) emissions reduction target. To compute it, a straight line is drawn between the starting point of the analysis and the company’s target endpoint.

The company benchmark pathway is the company specific Scope 1+2 and Scope 1+2+3 emissions low-carbon benchmark pathway. See section 6.1 for details on the computation of this pathway.

The company achieves the maximum score if the company’s target pathway and the company benchmark pathway are aligned (commitment gap = 0) and also if the targets are covering most of the company’s scope 1+2 (or scope 1+2+3) emissions at reporting year.

Calculation of score:

1) Trend ratio

The score is calculated by dividing the company engagement of reduction by the specific benchmark emission intensity reduction between the reporting year and the target year through the trend ratio:

where EIc(Yt) is the company Scope 1+2 (or Scope 1+2+3) emissions intensity at target year, EIc (Yr) is the company direct emissions intensity at reporting year, EIb(Yt) is the company’s benchmark direct emission intensity at target year and EIb(Yr) is the company’s benchmark direct emission intensity at reporting year.

The commitment gap of the company is equal to (1- trend ratio). Thus, when the company’s target pathway is aligned on the company’s benchmark, the trend ratio is equal to 1 and the commitment gap is 0 (see next figure).

2) Final Score

The final score assigned to the indicator is calculated as follows (see Annex 4 for a graphic illustration of the different cases):

Targets that do not cover > 95% of Scope 1+2 (same for Scope 1+2+3 targets) emissions are not preferred in the calculations. If only such targets are available, then the score will be adjusted downwards in proportion with % coverage. If the target coverage of total company emissions at reporting year (CYr) represents less than 95%, the final score is equal to:

Final Score = Score x Target coverage of total company emissions (CYr)

Scope 1+2 targets at global level and covering the required emissions are preferred for this indicator. Should several targets be assessed (e.g. per geography), the consolidation of the scores assigned to each target will be based on the share of emissions covered by the targets. Moreover, the target with the longest time horizon is also preferred in the calculation compared to short-term targets. This is the same for Scope 1+2+3 targets.

A score will be computed for Scope 1+2 targets, and another one for Scope 1+2+3 targets. Then, the best score between the Scope 1+2 and the Scope 1+2+3 will be kept, hence the fact that Scope 1+2+3 targets are not mandatory but it will reward companies setting Scope 1+2+3 targets (if the score is better than the Scope 1+2 score). To reward companies setting Scope 1+2+3 targets and therefore including Scope 3 in their targets, the score for Scope 1+2 targets will be capped at a maximum of 75% while the score for Scope 1+2+3 targets will be set at 100%. Therefore, companies that set at least one target for Scope 1+2+3 will be rewarded for doing so.

Relevance of the indicator:

Scope 1+2 and scope 1+2+3 emissions reduction targets are included in this ACT methodology for the following reasons:

1. Targets are an indicator of corporate commitment to reduce emissions, and are a meaningful metric of the company’s internal planning towards the transition.
2. Targets are one of the few metrics that can predict a company’s long-term plan beyond that which can be projected in the short-term, satisfying ACT’s need for indicators that can provide information on the long-term future of a company.
3. For the sector, scope 1+2 emissions represent a high source of emissions depending on which steps of the value chain the company operates. A GHG emissions reduction target should be assigned to them.

Scope 3 emissions are also included to assess the whole aluminium value chain and all CO2e emissions posts, which enable to have an indicator focusing on decarbonizing the whole aluminium value chain. However, as not all companies have Scope 3 targets, this is not mandatory to have one.

Scoring rationale:

Targets are quantitatively interpreted and directly compared to a low-carbon benchmark build from the company’s current level of emissions at reporting year and converging toward the 2050 value of the sectoral benchmark relevant for this source.

Comparing the trends gives a direct measure of the commitment gap of the company. It was chosen for its relative simplicity in interpretation and powerful message.

NB: In previous ACT methodologies, the calculation was based on the difference between the company’s target and the company benchmark 5 years after the reporting year. The analysis is now based on the difference between the company’s target and the company benchmark at the target year. The previous version assumed that the emission reduction would be linear between reporting year and reporting year + 5, which could affect the result as the low-carbon pathway is not linear, the new version avoid this assumption by using directly data at target year.

Scope 3 is considered by the methodology in target setting, as it is the greatest CO2e emissions post for downstream actors.

The relevant data for this indicator are:

• Target year information for each relevant emissions sources (Year for each reported, target id)

The benchmark indicator involved are the following:

The analysis has two dimensions:

• A comparison of: (a) the longest time horizon of the company’s targets, and (b) the long-term point fixed by ACT assessment methodology.
• The company has interval targets that ensure both short and long-term targets are in place to incentivize short-term action and communicate long-term commitments.

Dimension 1 - Target endpoint: The company’s target endpoint (Te) is compared to LT, a relevant time horizon for the sector- 30 years is proposed for the aluminium sector, as it may be use as a proxy of aluminium plants average lifetime.

The company’s target endpoint (Te) is equal to the longest time horizon among the company’s targets, minus the reporting year:

The analysis compares Te to LT. This analysis measures the horizon gap:

The company’s target endpoint is scored according to the following scoring table:

Dimension 2 - Intermediate horizons: All company targets and their endpoints are calculated and plotted. The ideal scoring company does not have intervals between target endpoints larger than 5 years from the reporting year.

Measurements are done in five-year intervals between the reporting year and LT.

The company’s targets are compared according the following scoring table:

An example is illustrated in the figure below.

Aggregate score: Dimension 1: 50%, Dimension 2: 50%

For all calculations:

• If the company reports “year of target establishment” in the data request, then the calculations may be redone using this as the baseline instead of the reporting year. The company can attain up to 80% of the maximum score with this alternate calculation. The baseline that results in the higher score will be used for the final score.
• Targets that do not cover > 95% of emissions are not preferred in the calculations. If only such targets are available, then the score will be adjusted downwards in proportion with % coverage.

Relevance of the indicator:

The time horizon of targets is included in this ACT methodology for the following reasons:

• The target endpoint is an indicator of how forward-looking the company’s transition strategy is.
• Aside from communicating long-term commitments, short-term action needs to be incentivized. This is why short time intervals between targets are needed. A 5-year interval is seen as a suitable interval to ensure company is taking enough action, holding itself accountable by measuring progress every 5 years.

The relevant data for this indicator are:

For each target set in the past 10 years:

• Base year
• Start year
• Target year
• Percentage of reduction target from base year in absolute emissions
• Percentage of reduction target achieved in absolute emissions
• Percentage of reduction target from base year in emissions intensity
• Percentage of reduction target achieved in emissions intensity
• Percentage of scope 1+2 or scope 1+2+3 emissions covered by the targets

For the performance score, this indicator is assessed on two dimensions, whereby companies achieve the maximum score if:

Dimension 1: The company has achieved all previous emissions reduction targets with a target year in the past 10 years. If all past targets are indeed achieved, the highest score is obtained. If not, the achievement ratio a is computed as follows:

where  E(tref) is the level of emissions of the company on the year the target was set,  T(thorizon)is the target the company set (a given level of emission at a given horizon year, now past), and E(thorizon) is the effective level of emission reached by the company on the year of horizon of the target.

A threshold is set for scoring at 0.5: if the company has achieved less than 50% of its own past target, it shall receive a zero score.

If the company has several past targets over the last 10 years, the ratio a shall be computed for each target, and the average of all a ratio shall be kept for scoring.

Dimension 2: The company is currently on track to meet an existing emissions reduction target, whereby the ratio between the remaining time period and the level remaining to target achievement (Progress Ratio p) is not lower than 0.5:

The highest score is attained if p is 1 or higher. A percentage score is assigned for any value between 0.5 and 1.

Aggregate score - Dimension 1: 25%, Dimension 2: 75%

For all calculations:

• Companies which do not have targets with target years in the past but only with target years in the future are not assessed on dimension 1, but only on dimension 2. Their score for this indicator is based on Dimension 2.
• Targets that do not cover >95% of the company’s GHG emissions scope 1+2 or scope 1+2+3 are not preferred in the calculation of dimension 2, but are not penalized, as other indicators already penalize for not having a large coverage in the target.
• If the company has multiple targets in different scopes that can be assessed according to the above criteria, then the score is an average score based on the progress ratios of all targets assessed.

The performance score does not assess the ambition level of previous targets, and therefore dimension 1 has only a low weight in the final performance score. This information is also qualitatively assessed in the narrative analysis, which will take another look at the following dimensions:

• Achievement level: To what degree has the company achieved its previously set emissions reduction targets.
• Progress level: To what degree is the company on track to meet its currently active emissions reduction targets.
• Ambition level: What level of ambition do the previously achieved emissions reduction targets represent.

Relevance of the indicator:

The historic target ambition and company performance is included in this ACT methodology for the following reasons:

• The ACT assessment looks only to the past to the extent where it can inform on the future. This indicator is future-relevant by providing information on the organizational capability to set and meet emission reduction targets. Dimension 1 of this indicator adds credibility to any company claim to commit to a science-based reduction pathway.
• Dimension 2 of this indicator adds value to the assessment of comparison to the company’s performance with respect to their targets in the reporting year.

Scoring rationale:

Previous target achievement is not straightforward to interpret quantitatively. Therefore, the performance score makes no judgement of past target ambition and leaves it to the assessment narrative for a meaningful judgement on the ambition level of past targets.

• Dimension 1 of the performance score will penalize companies who have not met past targets in the past 10 years, as this means the company has lower credibility when setting ambitious science-based targets
• Dimension 2 uses a simple ratio in order to compare targets. The threshold 0.5 was chosen as it allows companies some flexibility with respect to the implementation of the target, but it does have the ability to flag companies that are not on track towards achievement. When p is lower than 0.5, the company needs to achieve more than twice the reduction per unit of time than the target originally envisioned.

The relevant data for this indicator are:

• Carbon intensity and activity from reporting year to Y-5 and other information if necessary (geography, …) regarding material investment
• Other data per asset (activity, decommissioning year etc.)

The benchmark indicators involved are the following:

This indicator is assessed on two dimensions:

Dim 1: Trend in past emissions intensity (50%)

The analysis is based on the Past Action ratio (Apast) which represents the ratio between the company’s recent (reporting year minus 5 years) emissions intensity from material investment trend gradient and the company’s benchmark recent (reporting year minus 5 years) emission intensity trend gradient.

Calculation of score:

Past Action ratio (Apast) is calculated by dividing the company’s emission intensity from material investment trend (between reporting year and reporting year minus 5 years) and the historic benchmark emission intensity (between reporting year and reporting year minus 5 years):

where EIC(YR) is the company emission intensity at reporting year, EIC(YR − 5) is the company emission intensity at reporting year minus 5, EIB(YR) is the historic benchmark emission intensity at reporting year and EIB(YR − 5) is the historic benchmark emission intensity at reporting year minus 5.

The final score assigned to the indicator is calculated as follows (see Annex 4 for a graphic illustration of the different cases):

As each step of the value chain will be assessed, a weighted average based on the CO2e emissions corresponding to each step will be done to get the final score of dimension 1.

Dim 2: Alignment of past performance with sectoral carbon budget (50%)

Use past data on emissions for the assessed company and compare it to the sector benchmark.

This dimension assesses the alignment of the company’s recent absolute emissions with the past sectoral carbon budget. The recent emissions and carbon budget are measured over a 5-year period to the reporting year (reporting year minus 5 years).

Basically, one should calculate the grey area of the graph in the figure below, multiplied by the company’s activity during the corresponding years. Then, compare this area to the sectoral carbon budget during the same period.

The past performance ratio PP is computed:

Where EIC is the past emissions intensity of the company, EISB is the sectoral emissions intensity benchmark, and A is the activity.

The same calculation and weighted average between all steps of the value chain where the company operates will be applied for dimension 2.

Aggregate score - Dimension 1: 50%, Dimension 2: 50%

Relevance of the indicator:

Past performance indicator is included in this ACT methodology for the following reasons:

• Dimension 1 (trend in past emissions intensity) shows the speed at which the company has been reducing its emissions intensity over the recent past. Comparing this to the low-carbon benchmark pathway on the same historical period gives an indication of the scale of the change that should have been made within the company to bring it onto a low-carbon pathway. Recent emissions intensity performance indicates the company’s progression towards the future emissions intensity necessary to decarbonize in-line with a low-carbon scenario.
• Dimension 2 (Alignment of past performance with sectoral carbon budget) helps the company having an overview of its emissions exceedance in the recent past. This dimension also intends to remind that the carbon budget is set for the global economy and that each sector and each company has a defined carbon budget that cannot be exceeded to reach the overall long-term objective of limiting global warming. The sector benchmark is defined for the next years, assuming it was respected for the past years where it was already defined. The emissions overshooting the benchmark in the past correspond to accumulated CO2 that will remain in the atmosphere for decades. Hence, a company having already exceeded the benchmark should further its efforts to decrease its emissions in the near and remote future. This dimension is a ratio of the values of the emissions over a period of time in the past, as companies are very unlikely to provide data for the same period. What is considered here is the emission excess compared to the sectoral carbon budget, proportionally to the period of time.
• While ACT aims to be as future-oriented as possible, it nevertheless does not want to solely rely on projections of the future, in a way that would make the analysis too vulnerable to the uncertainty of those projections. Therefore, this measure, along with projected emissions intensity and absolute emissions, forms part of a holistic view of company emissions performance in the past, present, and future.
• This indicator is future-relevant by providing information on the organizational capability to meet emission reduction that is aligned with the benchmark. This indicator adds credibility to any company whose past emissions intensity were aligned with their historic benchmark and whose past carbon budget did not exceed the sectoral carbon budget.

Scoring rationale

Comparing the trends gives a direct measure of the past action gap of the company. It was chosen for its relative simplicity in interpretation.

In former ACT methodologies, dimension 1 of the indicator compared the trend in past emissions to the trend of the future benchmark, comparing the past efforts of the company to what it will have to do in the near future. But as benchmarks are not linear - drops can occur when new mitigation technologies are released (e.g. massive implementation of CCS) -, it may be not relevant to compare different timeslots. Therefore, the trends are compared on the same timeslot (reporting year - 5 to reporting year).

The relevant data for this indicator are:

• Carbon intensity and activity from reporting year to Y+15 and other information if necessary (geography, …) regarding material investment
• Other data per asset (activity, decommissioning year etc.)

The benchmark indicators involved are the following:

The analysis is based on the ratio between the company’s installed and planned emissions for the 15 years after the reporting year [LEF(t)], and the emissions budget entailed by the company’s carbon budget [B(t)] over the same period of time.

LEF(t) is calculated as the total cumulative emissions implied by the lifetimes of currently active and confirmed planned assets that are going to be commissioned soon. If unknown, the commissioning year of projects is estimated from the project status (e.g. bidding process, construction, etc.) and data on typical project periods by plant type.

LEF(t) is calculated as the company’s locked-in carbon emissions, up until the chosen time period t, which is derived by taking the area under the company’s future locked-in emissions curve. This curve in turn is derived from the company’s intensity pathway CAG, multiplied by activity AG:

The next figure illustrates locked-in emissions of one facility and of the whole company.

B(yr + 15) is calculated as the company’s carbon budget up to reporting year + 15 years, which is derived by taking the area under the absolute emissions reduction curve. This curve is derived from the company benchmark pathway (CBScopes12) by multiplying it by the projected activity AP for the company:

The company’s benchmark is computed from the company’s current emissions at reporting year and the level of carbon intensity defined by the sectoral benchmark presented in section 6. The carbon budget is illustrated in the figure below.

Depending on the data availability, the computation of these areas may not be as straightforward as the equations shown and will be done by approximation, but the principles will hold.

The locked-in ratio (rLB) is illustrated in the next figure, and calculated as follows:

To be able to give a score regarding the amount of carbon budget consumed, the level of activity performed with the existing and planned assets needs to be taken into account. Therefore, in a similar way to locked-in emissions, the level of activity that the company is able to perform thanks to the existing and planned assets, per year. It is called the secured activity and is illustrated in the figure below.

The secured activity is compared to the level of activity projected by the company up to reporting year + 15 years. If the company does not have any projections or not up to reporting year + 15 years, it will be considered that its market share will remain constant and its activity will evolve at the same rate as the sector and sectoral projection of activity are used (see section 6.1). The company’s projected activity is illustrated in the figure below.

The secured activity ratio rSA(yr+15) compares the secured activity up to (yr+15) with the projected activity up to (yr+15). It is illustrated in the following figure.

Calculation of the score:

rSA is used as a threshold value for the scoring:

This means that if the company has planned its activity and its locked-in emissions are lower than the carbon budget, it gets 100%, but if the locked-in emissions exceed by more than 50% its carbon budget, it gets 0%.

The case rSA > 1 is unlikely to happen as the company is unlikely to have existing or planned assets able to meet or exceed the projection of activity until (yr+15).

Relevance of the indicator:

Locked-in emissions are included in this ACT methodology for the following reasons:

• Absolute GHG emissions over time are the most relevant measure of emissions performance for assessing a company’s contribution to global warming. Furthermore, the concept of Locked-in emissions allows a judgement to be made about the company’s outlook in more distant time periods than ones of the investment plans.
• Analysing a company’s locked-in emissions alongside science-based budgets also introduces the means to scrutinise the potential cost of inaction, including the possibility of stranded assets.
• Examining absolute emissions, along with recent and short-term emissions intensity trends, forms part of a holistic view of a company’s emissions performance in the past, present, and future.
• The approach using the secured-activity ratio is a coherence check between the company's ambition for emissions reduction, and its investments (and the inevitable emissions associated). It allows showing the leeway for future investments and alerts for the cost of inaction and the risk of stranded assets.

The only assets to be assessed for this indicator are for the alumina extraction and electrolysis steps of the value chain as they are the most carbon intensive ones.

The relevant data for this indicator are:

• Carbon intensity at reporting year and Y+5, other information if necessary (geography, …), regarding material investment
• Other data per asset

Note that all the data need have already been filled for the locked-in emissions indicator.

The benchmark indicators involved are the following:

The analysis is based on the Future Action ratio (Afuture) which represents the ratio between the company’s future (reporting year plus 5 years) emissions intensity from material investment trend gradient and the company’s future benchmark (reporting year plus 5 year) emission intensity trend gradient.

Calculation of score:

Future Action ratio (Afuture) is calculated by dividing the company’s future emission intensity from material investment trend (between reporting year and reporting year plus 5 years) and the future benchmark emission intensity (between reporting year and reporting year plus 5 years):

where EIc(YR) is the company emission intensity at reporting year, EIc(YR + 5)is the company emission intensity at reporting year plus 5 years, EIB(YR) is the benchmark emission intensity at reporting year and EIB(YR + 5) is the benchmark emission intensity at reporting year plus 5 years.

The action gap of the company is equal to (1 − Afuture). Thus, when the company’s future emissions pathway is aligned on the company’s benchmark, the Future Action ratio is equal to 1 and the action gap is 0.

The final score assigned to the indicator is calculated as follows (see Annex 4 for a graphic illustration of the different cases):

As each step of the value chain will be assessed, a weighted average based on the CO2e emissions corresponding to each step will be done to get the final score of indicator 2.3.

Relevance of the indicator:

Trends in future emissions intensity from material investment are included in this ACT methodology for the following reasons:

• The trend shows the speed at which the company needs to reduce its emissions intensity for the coming years. Comparing this to the low-carbon benchmark pathway gives an indication of the scale of the change that needs to be made within the company to bring it onto a low-carbon pathway.
• ACT aims to be future-oriented. Therefore, this particular indicator, with projected emissions intensity, forms part of a holistic view of company emissions performance in the past, present, and future.

Scoring rationale

Comparing the trends gives a direct measure of the future action gap of the company. It was chosen for its relative simplicity in interpretation; it is aligned with most of the other forward-looking indicators. Indeed, the indicator looks at a fix point in the future and assesses the capacity of the company to deploy a range of low-carbon assets in the short term.

The relevant data for this indicator are:

• Qualitative data on the low carbon electricity strategy to fill the maturity matrices

Emissions intensities and self-generated electricity volume (MWh)

The assessment will assign a maturity score based on the company’s contribution to low-carbon electricity assets.

Dimension 1 – Contribution to additional low-carbon electricity generation assets

This indicator aims at rewarding companies which contribute to the development of new low-carbon electricity generation assets, either because they have invested in their own low-carbon electricity generation assets* or through a long-term Corporate Power Purchase Agreement (CPPA) with local or co-located renewable energy generators [12].

* Low carbon electricity generation is defined according to the European Union Taxonomy [27]

Dimension 2 – Contribution to grid flexibility

Grid flexibility is key to enable the integration of more non-dispatchable power generation. This dimension aims at assessing the contribution of the company to grid flexibility.

Dimension 3 - electricity carbon intensity from the company’s assets

Dimension 3 will be assessed only for companies which self-generate electricity. It aims at ensuring companies invest enough to reduce the GHG emission intensity of the electricity they self-generate. The carbon intensity of the self-generated electricity will be assessed for reporting year (Y) and Y+15 years.

Calculation of score for dimension 3:

Future Action ratio (Afuture) is calculated by dividing the company’s future emission intensity trend for self-generated electricity (between reporting year and reporting year plus 15 years) and the future benchmark emission intensity for power production that is based on the SDA from Science-Based Targets (between reporting year and reporting year plus 15 years):

where EIc(YR) is the company self-generated electricity emission intensity at reporting year, EIc(YR + 15) is the company self-generated electricity emission intensity at reporting year plus 15 years, CBLCT(YR) is the power production benchmark emission intensity at reporting year and CBLCT(YR + 15) is the power production benchmark emission intensity at reporting year plus 15 years.

The action gap of the company is equal to (1 − Afuture). Thus, when the company’s future emissions pathway is aligned on the company’s benchmark, the Future Action ratio is equal to 1 and the action gap is 0.

Two special cases are possible:

• If the company did not self-generate electricity at reporting year, but plans to self-generate electricity at reporting year plus 15 years, then EIc(YR) is undefined. In this case, the GHG intensity of the purchased electricity at reporting year will be used for EIc(YR).
• If the company self-generated electricity at the reporting year, but plans not to self-generate anymore at reporting year plus 15 years, then EIc(YR + 15) is undefined. In this case, the GHG intensity of the purchased electricity at reporting year will be used for EIc(YR + 15).

The final score assigned to the indicator is calculated as follows:

Calculation of final score

The final score will be calculated as follows:

Electricity consumption is the main CO2e emissions of the aluminium value chain, and 60% of the electricity consumed by the aluminium sector in the world is self-generated.

Additional low-carbon electricity generation assets will be needed in every country, even in countries with already low carbon electricity mix. As big electricity consumers, aluminium companies shall contribute to enable more low-carbon electricity generation assets being connected to the grid, by direct or indirect investment, and by enabling more grid flexibility through demand-side management.

Moreover, investing in low-carbon electricity assets imply important Capex investments. As a consequence, rewarding companies making these investments in low carbon electricity assets is key. Y+15 has been chosen as the target year for the carbon intensity of the self-generated electricity, as it requires some time to invest in low-carbon power plants.

Relevant and external sources of data used for the assessment of this indicator:

• % of R&D costs/investments in low-carbon technologies of the company over the last 3 years over the total R&D costs/investments of the company over the last 3 years.

R&D Investment Share

The assessment is based on the ratio of the company’s ‘annual R&D expenditure on low-carbon technologies’ over the last 3 years to the company’s ‘total annual capital expenditure in R&D’ over the same span of time.

Final Score

The ratio will be compared to the maturity matrix developed to guide the scoring and a greater number of points will be allocated for companies indicating a higher level of maturity, which means a higher share in R&D costs/investments in these technologies.

The matrix is provided below:

Defining ‘Low-carbon technologies’:

Relevant sectoral roadmaps have been used to define a list of low-carbon technologies for the sector. It includes technologies to decarbonise the production assets and improvements of sold product carbon performance. The technologies have been classified as mature and non-mature.

DEFINING ‘NON-MATURE R&D’

A Technology Readiness Level (TRL) should be used to assess the maturity of a technology. Higher scoring levels of this indicator exclude research in technologies that are already considered mature in terms of market penetration, to incentivise a focus on those technologies that have a higher need for R&D investment, in order to break through technical barriers and reduce the levelized costs of deploying these technologies.

Technologies are considered “non-mature” if TRL ≤ 8.

To formalize this distinction in the analysis, the company is asked for a detailed breakdown of R&D expenditure in Section 3 of the data request. Since defining what type of R&D is ‘non-mature’ is theoretically difficult, the classification is inversed, and done based on the principle of exclusion. This methodology excludes only those low-carbon technologies that are considered mature in terms of market position and levelized cost.

The following lists give high-level categories of mature and non-mature technologies (more details on the annex section “Low-carbon technologies landscape). The categories are intentionally broad to allow the analyst to assess the company’s presented technologies; given the technologies achieve electricity decarbonization, direct emissions reduction or recycling & resource efficiency. These high-level categories come from relevant sectoral roadmaps: IAI [19], IEA [4] [25], European Aluminium [10], World Economic Forum [6]. They represent the main emissions reduction levers for the aluminium industry.

The list of mature technologies is:

• Electricity decarbonization
  • Low-carbon electricity self-generation
  • Energy efficiency
  • Other
• Direct emissions reduction
  • Substitute to thermal energy (green hydrogen / electrification / biomass)
  • Refinery and cast house electrification/fuel switching
  • Other
• Recycling & resource efficiency
  • Ecodesign to facilitate the post-consumer scrap collection or extend the lifetime of aluminium products
  • Technologies to improve the quality of the scrap
  • End-of-life scrap collection technologies
  • Integration of heat exchangers to vary energy consumption and production levels
  • Other

The list of non-mature technologies is:

• Electricity decarbonization
  • CCS/CCUS
  • Multipolar cells
  • EnPot (and other electricity demand management technologies)
  • Other
• Direct emissions reduction
  • Inert anodes
  • CCS/CCUS
  • Other
• Recycling & resource efficiency
  • Elimination of pre-consumer scrap generated during the processes
  • Elimination of all metal losses during casting and recycling
  • Other

Relevance of the indicator:

R&D in low-carbon technologies is included in the ACT assessment for the following reasons:

• To enable the transition, the aluminium sector relies heavily on R&D to activate mitigation levers: electricity decarbonisation, direct emissions reduction, resource efficiency. There are technological stakes relies heavily on the development of low-carbon solutions to replace its currently high emitting systems
• R&D is the main proactive action to develop these technologies.
• R&D is also one of the main tools to reduce the costs of a technology in order to increase its market penetration.
• Aside from technology, companies can also invest into R&D on operational practices to optimize the carbon impact where they have direct responsibility.
• Lastly, the R&D investment of a company into non-mature technologies and practices allows for direct insight in the company’s commitment to alternative technologies that may not currently be part of its main business model.

Relevance of the indicator’s 3-year time horizon

Expenditures over the 3 last years are used for the indicator to consider that expenditure for major R&D projects may not be linear over years.

Relevant and external sources of data used for the assessment of this indicator:

• % of patenting activity in low-carbon technologies of the company over the last 5 years over total patenting activity of the company over the last 5 years

Past low-carbon patents activity ratio

The assessment is based on the ratio of the company’s patenting activity dedicated to low-carbon technologies over the last 5 years to the company’s total patenting activity over the same span of time.

Final Score

The ratio will be compared to the maturity matrix developed to guide the scoring and a greater number of points will be allocated for companies indicating a higher level of maturity, which means a higher share in low-carbon technologies patenting activity.

The matrix is provided below:

Defining low-carbon technologies Patents:

See previous indicator.

The following lists give high-level categories of low-carbon technologies. The categories are intentionally broad to allow the inclusion of a diversity of technologies; given the technologies achieve electricity decarbonization, direct emissions reduction or recycling & resource efficiency.

The list of climate change mitigation technologies is:

• Electricity decarbonization
  • CCS/CCUS
  • Multipolar cells
  • Low-carbon electricity self-generation
  • Energy efficiency
  • EnPot
  • Other
• Direct emissions reduction
  • Inert anode
  • Substitute to thermal energy (green hydrogen / electrification / biomass)
  • Refinery and cast house electrification/fuel switching
  • CCS/CCUS
  • Other
• Recycling & resource efficiency
  • Elimination of pre-consumer scrap generated during the processes
  • Elimination of all metal losses during casting and recycling
  • Ecodesign to facilitate the post-consumer scrap collection or extend the lifetime of aluminium products
  • End-of-life scrap collection technologies
  • Technologies to improve the quality of the scrap
  • Integration of heat exchangers to vary energy consumption and production levels
  • Other

Relevance of the indicator:

The indicator on low-carbon technologies patenting activity is complementary to the one dedicated to R&D in low-carbon technologies, as it monitors the technology diffusion whereas R&D expenditures monitor the technology development.

It is included in this ACT methodology for the following reasons:

• To enable the transition, the sector where there are technological stakes relies heavily on the development of low-carbon solutions to replace its currently high emitting systems
• Patent data are commensurable because patents are based on an objective standard (OECD 2015)
• Patent data measure the intermediate outputs of an inventive process, where R&D data expenditures measure the input (OECD 2015)
• Patent data can be disaggregated into specific technological fields (OECD 2015)

Relevance of the indicator’s 5-year time horizon

Patents applications are typically disclosed 18 months after their filing date (OECD 2015). To avoid the effects of this “publication lag” and smooth the ratio used for the assessment, the indicator monitors the last 5 years of the company’s patenting activity.

The relevant data for this indicator are:

• Scope 1+2 CO2e emissions of the steps of the value chain where the company operates at reporting year and Y-5
• Scope 3 upstream emissions at reporting year and Y-5, with ancillary material & transport CO2e emissions included
• Volume data (e.g. metric tonnes of bauxite ores, metric tonnes of alumina extracted etc.): the denominator of the carbon intensity to be used will be the last step of the value chain where the company operates, at Y-5 and at reporting year
• The company is to indicate which steps of the aluminium value chain it considers in the data it provides (both CO2e and activity volume data). This will be used to compute the company’s low carbon pathway

The benchmark indicators involved are the following:

The analysis is based on the Past Action ratio (Apast) which represents the ratio between the company’s recent (reporting year minus 5 years) emissions intensity from cradle-to-gate Scope 1+2+3 CO2e emissions trend gradient and the company’s benchmark recent (reporting year minus 5 years) emission intensity trend gradient.

Calculation of score:

Past Action ratio (Apast) is calculated by dividing the company’s emission intensity from cradle-to-gate Scope 1+2+3 CO2e emissions (between reporting year and reporting year minus 5 years) and the historic benchmark emission intensity (between reporting year and reporting year minus 5 years):

where EIC(YR) is the company emission intensity from cradle-to-gate (until the last step of the value chain where the company operates) Scope 1+2+3 CO2e emissions at reporting year, EIC(YR − 5) is the company emission intensity from cradle-to-gate Scope 1+2+3 CO2e emissions at reporting year minus 5, EIB(YR) is the historic benchmark emission intensity at reporting year and EIB(YR − 5) is the historic benchmark emission intensity at reporting year minus 5.

The final score assigned to the indicator is calculated as follows (see Annex 4 for a graphic illustration of the different cases):

Relevance of the indicator:

This indicator is meant to ensure that companies collaborate along the value chain to provide a low-carbon aluminium at the gate of the sector .

Cradle-to-gate is included in the ACT assessment for the following reasons:

• The trend shows the speed at which the company has been reducing the carbon footprint of their aluminium. Comparing this to the decarbonization pathway gives an indication of the scale of the change that needs to be made within the company to bring it onto a low-carbon pathway.
• While ACT aims to be as future-oriented, it nevertheless does not want to solely rely on projections of the future, in a way that would make the analysis too vulnerable to the uncertainty of those projections. Therefore, this measure, along with projected emissions intensity and absolute emissions, forms part of a holistic view of company emissions performance in the past, present, and future.

Scoring rationale:

Comparing the trends gives a direct measure of the past action gap of the company. It was chosen for its relative simplicity in interpretation.

The questions comprising the information request that are relevant to this indicator are:

• What are the commitments (target, timescale)? What is the applied method? How is the strategy’s monitoring done?

The analyst evaluates the description and evidence of the scrap reduction strategy for the presence of best practice elements and consistency with the other reported management indicators. The company description and evidence are compared to the maturity matrix developed to guide the scoring and a greater number of points is allocated for elements indicating a higher level of maturity.

Best-practice elements to be identified in the scrap reduction strategy include:

• Basing it on an exercise costing of the value of scrap
• Commitment to reduce scrap in direct operations (covers all operations and whole organisational boundary)
• Using targets with end dates for scrap reduction
• Having interim targets
• Management at a high level within the organisation
• Monitoring, reporting and verification processes included to track progress
• Continuous improvement/learning feedback mechanisms
• Commitments to employee education
• Linking the scrap reduction strategy to the development of circular economy business models
• Linking the scrap reduction strategy to the core business strategy
• Linking the scrap reduction strategy to core business operations (procurement, product design)

The maximum score (100%) is assigned if all of these elements are demonstrated.

The maturity matrix used for the assessment is the following:

Relevance of the indicator:

Any pre-consumer scrap which can be avoided should be avoided in order to reduce the global carbon emission intensity of aluminium final products. Reducing pre-consumer scrap is a key lever to improve the material efficiency of the aluminium value chain. In 2019, pre-consumer scrap represented about 15,2% of the global production of aluminium semi-products [8]. As aluminium transformation processes are very diverse, it is not possible to define a common objective of scrap reduction in terms of percentage. Therefore, the maturity matrix assess the means implemented by the company in order to reduce its pre-consumer scrap

The questions comprising the information request that are relevant to this indicator are:

• What level of scrap traceability is implemented by the company?
• Can the company demonstrate that it does not contribute to industrial inefficiencies?

The analyst evaluates the description and evidence of the scrap traceability measures for the presence of best practice elements and consistency with the other reported management indicators. The company description and evidence are compared to the maturity matrix developed to guide the scoring and a greater number of points is allocated for elements indicating a higher level of maturity.

Best-practice elements to be identified in the scrap traceability strategy include:

• Management at a high level within the organisation
• Monitoring, reporting and verification processes included to track progress
• Continuous improvement/learning feedback mechanisms
• Linking the scrap traceability strategy to the development of circular economy business models
• Linking the scrap traceability strategy to the core business strategy
• Linking the scrap traceability strategy to core business operations (procurement, product design)

The maturity matrix used for the assessment is the following:

Defining “good pre-consumer scrap reduction practises”

Companies that have a certified environmental management system (e.g. ISO 14001, EMAS…) are assumed to have “good pre-consumer scrap practises”.

Relevance of the indicator:

The share of recycled aluminium is expected to increase in the future. It is crucial that this increase does not occur at the expense of industrial efficiencies in aluminium transformation. This can be prevented by improving transparency and traceability of the pre-consumer scrap that is recycled.

The relevant data for this indicator are:

• Environmental policy and details regarding governance
• The reporter shall provide details on where is the highest level of direct responsibility for climate change within the organization

External sources of data may also be used for the analysis of this indicator.

The benchmark case is that climate change is managed within the highest decision-making structure within the company. The company situation will be compared to the benchmark case, if it is similar then points will be awarded.

The position at which climate change is managed within the company structure will be determined from the company data submission and accompanying evidence.

The maturity matrix used for the assessment is the following:

Successful change within companies, such as the transition to a low-carbon economy, requires strategic oversight and buy-in from the highest levels of decision-making within the company. Evidence of how climate change is addressed within the top decision-making structures is a proxy for how seriously the company takes climate change, and how well integrated it is at a strategic level. High-level ownership also increases the likelihood of effective action to address low-carbon transition.

Changes in strategic direction are necessarily future-oriented, which fits with this principle of the ACT initiative.

Managing oversight of climate change is considered as a good practice.

The relevant data for this indicator are:

• Environmental policy and details regarding governance
• The reporter shall identify the position of the individual or name of the committee with this responsibility and outline their expertise regarding climate change and the low-carbon transition

External sources of data may also be used for the analysis of this indicator.

The presence of expertise on topics relevant to climate change and the low-carbon transition at the level of the individual or committee with overall responsibility for it within the company is assessed. The presence of expertise is the condition that must be fulfilled for points to be awarded in the scoring.

The analyst determines if the company has expertise as evidenced through a named expert biography outlining capabilities. A cross check is performed against 5.1 on the highest responsibility for climate change, the expertise should exist at the level identified or the relationship between the structures/experts identified should also be evident.

The maturity matrix used for the assessment is the following:

Elements of biography outlining expertise might be:

• Achievement of a course with a focus on climate change
• Training in climate change subjects by a certified organism
• Previous experience in an organization specialized in climate change (consulting companies in transition, NGO, …)
• Supervision of studies to assess climate change impact on business and business impact on climate change

Effective management of the low-carbon transition requires specific expertise related to climate change and its impacts, and their likely direct and indirect effects on the business. Presence of this capability within or closely related to the decision-making bodies that will implement low-carbon transition both indicates company commitment to that transition and increases the chances of success.

Even if companies are managing climate change at the Board level or equivalent level, a lack of expertise could be a barrier to successful management of low-carbon transition.

The relevant data for this indicator are:

• Environmental policy and details regarding governance
• The reporter should provide the following description of the transition plan including the following details:
  • Whether the transition plan exists in a documented form and whether that document is public
  • How the results of scenario testing influenced the transition plan
  • Timescale for implementation of the transition plan
  • Who has responsibility for its implementation (at the strategic, not operational, level)
  • How successful implementation of the plan will be measured and monitored. (Should include details of any linked targets, emissions reduction or energy efficiency targets, or KPIs.)

The analyst evaluates the description and evidence of the low-carbon transition plan for the presence of best practice elements and consistency with the other reported management indicators. The company description and evidence are compared to the maturity matrix developed to guide the scoring and a greater number of points are allocated for elements indicating a higher level of maturity.

Among the best practice elements identified to date are:

• The plan includes financial projections
• The plan should include cost estimates or other assessments of financial viability as part of its preparation
• The description of the major changes to the business is comprehensive, consistent, aligned with other indicators
• Quantitative estimates of how the business will change in the future are included
• Costs associated with the plan (e.g. write-downs, site remediation, contract penalties, regulatory costs) are included
• Potential “shocks” or stressors (sudden adverse changes) have been taken into consideration
• Relevant region-specific considerations are included
• The plan’s measure of success is SMART - contains targets or commitments with timescales to implement them, is time-constrained or the actions anticipated are time-constrained
• The plan’s measure of success is quantitative
• The description of relevant testing/analysis that influenced the transition plan is included
• The plan is consistent with reporting against other ACT indicators
• The scope should cover entire business, and is specific to that business
• The plan should cover the short, medium and long terms. From now or the near future <5 years, until at least 2035 and preferably beyond (2050)
• The plan contains details of actions the company realistically expects to implement (and these actions are relevant and realistic)
• The plan is approved at the strategic level within the organisation
• Discussions about the potential impacts of a low-carbon transition on the current business have been included
• The company has a publicly-acknowledged well-below 2°C (or beyond) science-based target (SBT)
• The company has been carrying out a diagnosis of climate change impacts and identified related physical risks

The maximum score (100%) is assigned if all of these elements are demonstrated.

The relevant data for this indicator are:

• Management incentives
• The reporter shall report whether the company provides incentives for the management of climate change issues, including the attainment of targets
• The reporter shall provide details on the incentives provided for the management of climate change issues
• The reporter shall provide details on the activities that are usually rewarded by incentives in the company

The analyst verifies if the company has compensation incentives set for senior executive compensation and/or bonuses, that directly and routinely reward specific, measurable reductions of metric tonnes of carbon emitted by the company in the preceding year and/or the future attainment of emissions reduction targets, or other metrics related to the company’s low-carbon transition plan.

Executive compensation should be aligned with overall business strategy and priorities. As well as commitments to action the company should ensure that incentives, especially at the executive level, are in place to reward progress towards low-carbon transition. This will improve the likelihood of successful low-carbon transition.

Monetary incentives at the executive level are an indication of commitment to successful implementation of a strategy for low-carbon transition.

The relevant data for this indicator are:

• The reporter shall provide the details and supporting documents on the organization’s climate change scenario testing

The analyst evaluates the description and evidence of the low-carbon economy scenario testing for the presence of best-practice elements and consistency with the other reported management indicators. The company description and evidence are compared to the maturity matrix developed to guide the scoring and a greater number of points is allocated for elements indicating a higher level of maturity.

Maximum points are awarded if all of these elements are demonstrated.

There are a variety of ways of analysing the potential impacts of climate-related changes on the business, whether these are slow and gradual developments or one-off “shocks”. Investors are increasingly calling for techniques such as use of an internal price on carbon, scenario analysis and stress testing to be implemented to enable companies to calculate the value-at-risk that such changes could pose to the business. As this practice is emergent at this time there is currently no comprehensive survey or guidance on specific techniques or tools recommended for the sector. The ACT methodology thus provides a broad definition of types of testing and analysis which can be relevant to this information requirement, to identify both current and best practices and consider them in the analysis.

Scenario stress testing is an important management tool for preparing for low-carbon transition. For businesses likely to be strongly affected by climate change impacts (both direct and indirect), it has even greater importance.

The relevant data for this indicator are:

• Methods of supplier engagement, strategy to prioritizing supplier engagements and measures of success
• Number of suppliers engaged and proportion of total spend
• Data on suppliers’ GHG emissions and climate change strategies

The assessment will assign a maturity score based on the company’s formalized strategy with their suppliers, expressed in a maturity matrix.

This maturity matrix is indicative but does not show all possible options that can result in a particular score. Companies responses will be scrutinized by the analyst and then placed on the level in the matrix where the analyst deems it most appropriate.

Examples of action levers:

• Awareness campaign,
• Purchasing rules
• Joint R&D
• Supporting/leading industry environmental groups
• Sanctions
• Audits
• Sharing patents
• Sustainability manager involved in appointment/can veto new supplier appointments

Relevance of the indicator:

Supplier engagement is included in this ACT methodology for the following reasons:

• It might have a significant impact in terms of GHG emission
• Achieving decarbonization of the whole supply chain is also key to reach the ambitious goals in most of the companies of the value chain
• Engaging suppliers through contract clauses and sales incentives is necessary to take them on board.

Scoring the indicator:

Because of data availability and complexity, a direct measure of the outcome of such engagement is not very feasible at this time. It is often challenging to quantify the emissions reduction potential and outcome of collaborative activities with the supply chain. Therefore, the approach of a maturity matrix allows the analyst to consider multiple dimensions of supplier engagement and assess them together towards a single score for Supplier Engagement.

The relevant data for this indicator are:

• List of initiatives implemented to influence suppliers to reduce their GHG emissions, green purchase policy or track record, supplier code of conduct

The assessment will assign a maturity score based on the company’s formalized strategy with their suppliers, expressed in a maturity matrix.

This maturity matrix is indicative but does not show all possible options that can result in a particular score. Companies responses will be scrutinized by the analyst and then placed on the level in the matrix where the analyst deems it most appropriate.

Relevance of the indicator:

Activities to influence suppliers are included in this ACT methodology for the following reasons:

• It might have a significant impact in terms of GHG emission
• Achieving decarbonization of the whole supply chain is also key to reach the ambitious goals in most of the companies of the value chain
• Engaging suppliers through contract clauses and sales incentives is necessary to take them on board.

Scoring the indicator:

Because of data availability and complexity, a direct measure of the outcome of such engagement is not very feasible at this time. It is often challenging to quantify the emission reduction potential and outcome of collaborative activities with the supply chain. Therefore, the approach of a maturity matrix allows the analyst to consider multiple dimensions of supplier engagement and assess them together towards a single score for all the activities related to Supplier Engagement.

The relevant data for this indicator are:

• Strategy to influence clients GHG emissions
• % of products/services
• Data on clients’ choices and preferences towards reducing GHG emissions

The assessment will assign a maturity score based on the company’s formalized strategy to influence clients, expressed in a maturity matrix.

Relevance of the indicator:

Strategies to influence clients are included in this ACT methodology for the following reasons:

1. Companies usually have the ability to influence the strategy and performance of clients regarding climate thanks to their products or services.
2. The downstream can represent a large source of emissions for some companies throughout the value chain and clients should be engaged through a proper ambitious strategy.

Scoring the indicator:

Because of data availability and complexity, a direct measure of the outcome of such engagement is not very feasible at this time. It is often challenging to quantify the emission reduction potential and outcome of collaborative activities with the supply chain. Therefore, the approach of a maturity matrix allows the analyst to consider multiple dimensions of supplier engagement and assess them together towards a single score for a strategy related to Client Engagement.

The relevant data for this indicator are:

• Activities to influence clients GHG emissions
• % of products/services
• Data on clients’ choices and preferences towards reducing GHG emissions

The assessment will assign a maturity score based on the company’s activities to influence clients, expressed in a maturity matrix.

Relevance of the indicator:

Activities to influence clients are included in this ACT methodology for the following reasons:

1. Companies usually have the ability to influence the strategy and performance of clients regarding climate thanks to their products or services.
2. The downstream can represent a large source of emissions for some companies throughout the value chain and clients should be engaged through low-carbon solutions.

Scoring the indicator:

Because of data availability and complexity, a direct measure of the outcome of such engagement is not very feasible at this time. It is often challenging to quantify the emission reduction potential and outcome of collaborative activities with the supply chain. Therefore, the approach of a maturity matrix allows the analyst to consider multiple dimensions of supplier engagement and assess them together towards a single score for all the activities related to Client Engagement.

The relevant data for this indicator are:

• Public climate change policy positions
• Description of this policy (scope & boundaries, responsibilities, process to monitor and review)
• Trade associations that are likely to take a position on climate change legislation

The analyst will evaluate the description and evidence of the policy on trade associations and climate change for the presence of best practice elements and consistency with the other reported management indicators. The company description and evidence will be compared to the maturity matrix developed to guide the scoring and a greater number of points will be allocated for elements indicating a higher level of maturity.

Maximum points are awarded if all these elements are demonstrated.

Trade associations are a key instrument by which companies can indirectly influence policy on climate. Thus, when trade associations take positions, which are negative for climate, companies need to take action to ensure that this negative influence is countered or minimized.

This indicator is consistent with the ACT philosophy, ACT framework and ACT guidelines and common to the other sectoral methodologies.

The relevant data for this indicator are:

• Company policy on engagement with trade associations

The list of trade associations declared in the CDP data and other external source entries relating to the company (e.g. RepRisk database), is assessed against a list of associations that have climate-negative activities or positions. The results are compared to any policy described in 5.1.

The relevant data for this indicator are:

• The company should attach supporting documentation, if this exists, giving evidence on the position of the company on significant climate policies (public statements, etc.).
• The company shall disclose details of the issues on which it has been directly engaging with policy makers and its proposed legislative solution.

External sources of data shall also be used for the analysis of this indicator (e.g. RepRisk database, press news, actions in standard development)

The analyst evaluates the description and evidence on company position on relevant climate policies for the presence of best practice elements, negative indicators and consistency with the other reported management indicators. The company description and evidence will be compared to the maturity matrix developed to guide the scoring and a greater number of points will be allocated for elements indicating a higher level of maturity.

The relevant data for this indicator are:

• Participation in meetings / collaborations with public authorities
• Contracts with public authorities

The analyst evaluates the description and evidence on the company’s collaboration and pilot tests with local authorities on scrap collection and sorting or/and on contribution to the low-carbon transition of the grid for the presence of best-practice elements, negative indicators and consistency with the other reported management indicators. The company description and evidence are compared to the maturity matrix developed to guide the scoring and a greater number of points are allocated for elements indicating a higher level of maturity.

Examples of actions to contributes to the low-carbon transition of the grid:

• Enhance the development of new low-carbon electricity assets, as defined in the EU Taxonomy [27]
• Participate in demand-side management programs to reduce, flatten or shift power demand when needed by the grid.
• Work with local authority to better collect post-consumer aluminium scrap

The questions comprising the information request that are relevant to this indicator are:

• Details on business model(s)

Best practice elements to be identified in the analysis include:

• the business activity is profitable;
• the business activity is of a substantial size;
• the company is planning to expand the business activity;
• expansion will occur on a defined timescale

If several business models are developed by the company, the final score will be the one given to the most mature business model (usually the one that is best scored too). The company should not be penalized if it has built a mature business model and explores besides other tracks (which would be scored with a lower score) compared to another company having only one mature business model.

The following lists give high-level categories of business activities. The categories are intentionally broad to allow the inclusion and the assessment of a diversity of business activities. Examples of business activities:

• Low-carbon electricity self-generation (according to the EU Taxonomy, low carbon electricity generation corresponds to renewable energies. Discussions on whether gas and nuclear energy are considered low-carbon are still undergoing)
• Adapt the processes of the company to be able to undergo the growing volatility of electricity supply (e.g. through EnPot technologies)
• Integration of heat exchangers to vary energy consumption and production levels
• Actively engage with electricity authorities
• Other

The questions comprising the information request that are relevant to this indicator are:

• Details on business model(s)

Best practice elements to be identified in the test/analysis include:

• the business activity is profitable;
• the business activity is of a substantial size;
• the company is planning to expand the business activity;
• expansion will occur on a defined timescale

If several business models are developed by the company, the final score will be the one given to the most mature business model (usually the one that is best scored too). The company should not be penalized if it has built a mature business model and explores besides other tracks (which would be scored with a lower score) compared to another company having only one mature business model.

Examples of business activities:

• Inert anode
• CCS/CCUS
• Substitute to thermal energy (green hydrogen / electrification / biomass)
• Energy storage
• Retrofitting/upgrading technologies to innovative ones for energy efficiency gains
• Other

The questions comprising the information request that are relevant to this indicator are:

• Details on business model(s)

Best practice elements to be identified in the test/analysis include:

• the business activity is profitable;
• the business activity is of a substantial size;
• the company is planning to expand the business activity;
• expansion will occur on a defined timescale

If several business models are developed by the company, the final score will be the one given to the most mature business model (usually the one that is best scored too). The company should not be penalized if it has built a mature business model and explores besides other tracks (which would be scored with a lower score) compared to another company having only one mature business model.

Examples of business activities:

• Elimination of pre-consumer scrap generated during the processes
• Elimination of all metal losses during casting and recycling
• Ecodesign to facilitate the post-consumer scrap collection
• End-of-life scrap collection technologies
• Technologies to improve the quality of the scrap
• Circular waste good practices to support other industry decarbonization efforts (e.g. aluminium dross replacing clinker in the cement industry)
• Other

To be noted :

Each line (row) of the matrix corresponds to a category that is independent from others. Categories are just grouped by module. The matrix is composed of two dimensions, the physical climate risks and adaption. Each of these dimensions contains several modules.

Scores and weightings are detailed in this document.

The lists of impacts and vulnerabilities for the different activities of a company along its value chain are not exhaustive. Any other impact or vulnerability that is relevant for the company can be considered and analysed.

Any comment or feedback is welcome.

Two questions are for consultation.

A glossary of climate physical risks and adaptation terms is available at the end of this document.

According to the European Taxonomy proposed by the Technical Expert Group, economic activities making a substantial contribution to climate change mitigation or adaptation must be assessed to ensure they do not cause significant harm to all remaining environmental objectives. An activity contributing to climate change adaptation must avoid significant harm to climate change mitigation and the other four environmental objectives (and vice versa):

- Sustainable use and protection of water and marine resources

- Transition to a circular economy, waste prevention and recycling

- Pollution prevention and control

- Protection of healthy ecosystems

This assessment ensures that progress against some objectives are not made at the expense of others and recognises the reinforcing relationships between different environmental objectives. (TEG, 2020)

The process of adjustment to actual or expected climate and its effects. In human systems, adaptation seeks to moderate or avoid harm or exploit beneficial opportunities. In some natural systems, human intervention may facilitate adjustment to expected climate and its effects.

Adaptation options exist in all sectors, but their context for implementation and potential to reduce climate-related risks differs across sectors and regions. Some adaptation responses involve significant co-benefits, synergies and trade-offs. Increasing climate change will increase challenges for many adaptation options.

Adaptation and mitigation responses are underpinned by common enabling factors. These include effective institutions and governance, innovation and investments in environmentally sound technologies and infrastructure, sustainable livelihoods and behavioural and lifestyle choices. (IPCC, 2014)

It is the potential positive impacts related to climate change on an organisation. It will vary depending on the region, market and industry in which an organisation operates.

In the ACT framework, climate-related opportunity focuses on opportunities to adapt to market shifts driven by physical climate impacts and cater to any resulting new market needs, that is to say, the fundamental shifts in climate over the longer term may affect value chains and drive new consumer needs. For example, technology to keep buildings cool, along with water- and energy-efficient technologies, or crops that are better suited to chronic changes in precipitation and temperature. (EBRD)

The potential occurrence of a natural or human-induced physical event or trend or physical impact that may cause loss of life, injury, or other health impacts, as well as damage and loss to property, infrastructure, livelihoods, service provision, ecosystems and environmental resources. In this report, the term hazard usually refers to climate-related physical events or trends or their physical impacts.

Thus, it includes processes that range from brief events, such as severe storms, to slow trends, such as multi-decade droughts or multi-century sea level rise.

(IPCC, 2014)

A climate hazard should be appreciated in function of its likelihood, magnitude and duration.

The potential for negative consequences from physical climate events or trends.

Acute physical risks refer to those that are event-driven, including increased severity of extreme weather events, such as tropical cyclones or floods.

Chronic physical risks are longer-term shifts in climate patterns (e.g., sustained higher temperatures) that may cause sea level change or chronic heat waves.

Risks from climate change impacts arise from the interaction between hazard (triggered by an event or trend related to climate change), vulnerability (susceptibility to harm) and exposure (people, assets or ecosystems at risk). (IPCC, 2014)

The classification of physical hazards is the following :

Scenarios that include time series of emissions and concentrations of the full suite of greenhouse gases (GHGs) and aerosols and chemically active gases, as well as land use/land cover (Moss et al., 2008). The word representative signifies that each RCP provides only one of many possible scenarios that would lead to the specific radiative forcing characteristics. The term pathway emphasizes that not only the long-term concentration levels are of interest, but also the trajectory taken over time to reach that outcome (Moss et al., 2010).

RCPs usually refer to the portion of the concentration pathway extending up to 2100, for which Integrated Assessment Models produced corresponding emission scenarios. Extended Concentration Pathways (ECPs) describe extensions of the RCPs from 2100 to 2500 that were calculated using simple rules generated by stakeholder consultations and do not represent fully consistent scenarios.

Four RCPs produced from Integrated Assessment Models were selected from the published literature and are used in the present IPCC Assessment as a basis for the climate predictions and projections presented   in WGI AR5 Chapters 11 to 14 (IPCC, 2013b):

RCP2.6

One pathway where radiative forcing peaks at approximately 3 W/m2 before 2100 and then declines (the corresponding ECP assuming constant emissions after 2100). RCP2.6 is representative of a scenario that aims to keep global warming likely below 2°C above pre-industrial temperatures. The increase of global mean surface temperature by the end of the 21st century (2081–2100) relative to 1986–2005 is likely to be 0.3°C to 1.7°C under RCP2.6.

RCP4.5 and RCP6.0

Two intermediate stabilization pathways and scenarios in which radiative forcing is stabilized at approximately 4.5 W/m2 and 6.0 W/m2 after 2100 (the corresponding ECPs assuming constant concentrations after 2150). The increase of global mean surface temperature by the end of the 21st century (2081–2100) relative to 1986–2005 is likely to be 1.1°C to 2.6°C under RCP4.5, 1.4°C to 3.1°C under RCP6.0.

RCP8.5

It is the scenario with very high GHG emissions. One high pathway for which radiative forcing reaches >8.5 W/m2 by 2100 and continues to rise for some amount of time (the corresponding ECP assuming constant emissions after 2100 and constant concentrations after 2250). Scenarios without additional efforts to constrain emissions (’baseline scenarios’) lead to pathways ranging between RCP6.0 and RCP8.5. The increase of global mean surface temperature by the end of the 21st century (2081–2100) relative to 1986–2005 is likely to be 2.6°C to 4.8°C under RCP8.5.

Relative to 1850–1900, global surface temperature change for the end of the 21st century (2081–2100) is projected to likely exceed 1.5°C for RCP4.5, RCP6.0 and RCP8.5 (high confidence). Warming is likely to exceed 2°C for RCP6.0 and RCP8.5 (high confidence), more likely than not to exceed 2°C for RCP4.5 (medium confidence), but unlikely to exceed 2°C for RCP2.6 (medium confidence).

(21)

The capacity of social, economic and environmental systems to cope with a hazardous event or trend or disturbance, responding or reorganizing in ways that maintain their essential function, identity and structure, while also maintaining the capacity for adaptation, learning and transformation. (21)

The technologies, techniques and new solutions that contribute to improving its adaptive capacity. (ADEME, 2019)

Identifying the stages beyond which the operation of a system is significantly or irreversibly compromised, and understanding how climate change interacts with these functional thresholds, threshold analysis enables to identify different levels of risk.

The identification of these different risks thresholds in space and time then allows to prioritize and sequence incremental adaptation solutions. (ADEME, 2020)

A change in the fundamental attributes of natural and human systems. (21) 

The propensity or predisposition to be adversely affected. Vulnerability encompasses a variety of concepts and elements, including sensitivity or susceptibility to harm and lack of capacity to cope and adapt. (22)

Metrics designed to assess the propensity of different parts of a company’s value chain to suffer negative impacts when exposed to and then impacted by physical climate hazards. These metrics should assess specific characteristics of a company’s value chain (e.g., water intensity) that may make that part of the value chain more or less likely to suffer negative impacts from physical climate hazards. (22) 

An indicator is a quantitative or qualitative piece of information that, in the context of the ACT project, can provide insight on a company’s current and future ability to reduce its carbon intensity. In the ACT project, 3 fundamental types of indicators can be considered:

Key performance indicators (KPIs);

Key narrative indicators (KNIs); and

Key asset indicators (KAIs).

The Sectoral Decarbonization Approach (SDA) is a scientifi cally-informed method for companies to set GHG reduction targets necessary to stay within a 2°C temperature rise above preindustrial levels.

The method is based on the 2°C scenario, one of the International Energy Agency’s detailed CO2 sector scenarios modeled in their 2014 Energy Technology Perspectives report. The Energy Technology Perspectives report’s budget is consistent with the representative concentration pathway 2.6 (RCP2.6) scenario from the IPCC’s Fifth Assessment Report, which gives the highest likelihood of staying within the global target temperature of less than 2°C in the year 2100. The probability is estimated by the IPCC at a minimum of 66 percent. The IEA 2°C scenario estimates an overall carbon budget of 1,055 GtCO2 up to 2050.

The SDA is differentiated from other existing methods by virtue of its subsector-level approach and global least cost mitigation perspective. SDA results and assumptions are based on mitigation potential and cost data from the IEA’s TIMES model 2ºC scenario, which identifies the least-cost technology mix available to meet final demand for industry, transport, and buildings services. The SDA is intended to help companies in homogenous, energy intensive sectors align their emissions reduction targets with a global 2ºC pathway. The SDA is best suited for companies in the following subsectors with well-defi ned activity and physical intensity data: electricity generation; iron and steel; chemicals; aluminium; cement; pulp and paper; road, rail, and air transport; and commercial buildings.

Scope 1 emissions

Direct GHG emissions and removals

All direct GHG emissions (GHG Protocol Corporate Standard).

Category 1 from ISO 14064-1:2018: Direct GHG emissions and removals occur from GHG sources or sinks inside organizational boundaries and that are owned or controlled by the [reporting] organization. Those sources can be stationary (e.g. heaters,electricity generators, industrial process) or mobile (e.g. vehicles).

Scope 2 emissions

Indirect GHG emissions from imported energy

Indirect GHG emissions from consumption of purchased electricity, heat or steam (GHG Protocol Corporate Standard).

Category 2 from ISO 14064-1:2018: GHG emissions due to the fuel combustion associated with the production of final energy and utilities, such as electricity, heat, steam, cooling and compressed air [imported by the reported company]. It excludes all upstream emissions (from cradle to power plant gate) associated with fuel, emissions due to the construction of the power plant, and emissions allocated to transport and distribution losses.

Scope 3 emissions

Indirect GHG emissions

Other indirect emissions, such as the extraction and production of purchased materials and fuels, transport-related activities in vehicles not owned or controlled by the reporting entity, electricity-related activities (e.g. T&D losses) not covered in Scope 2, outsourced activities, waste disposal, etc. (GHG Protocol Corporate Standard). Scope 3 also encompass the emissions related to the use of sold-products.

ISO 14064-1:2018: GHG emission that is a consequence of an organization’s operations and activities, but that arises from GHG sources that are not owned or controlled by the [reporting] organization. These emissions occur generally in the upstream and/or downstream chain.

Category 3 : indirect GHG emissions from transportation

Category 4: Indirect GHG emissions from products used by an organization

Category 5: Indirect GHG emissions associated with the use of products from

the organization

Category 6: Indirect GHG emissions from other sources

A quantifiable goal (e.g. to reduce GHG emissions).

The following are examples of absolute targets:

metric tonnes CO2e or % reduction from base year

metric tonnes CO2e or % reduction in product use phase relative to base year

metric tonnes CO2e or % reduction in supply chain relative to base year

The following are examples of intensity targets:

metric tonnes CO2e or % reduction per passenger. Kilometre (also per km; per nautical mile) relative to base year

metric tonnes CO2e or % reduction per square foot relative to base

metric tonnes CO2e or % reduction per MWh