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

• Reporting year [C0.2](4)
• Company’s target and target year Variation of [C4.1a], [C4.1b]
• For all existing and planned assets: Asset name, Geographic Location (country level), Plant type, Status, Total capacity (metric tonne), Production (metric tonnes of pulp and paper), Emissions factor (kg CO2e/tonne Pulp and Paper), Year of commissioning, Expected lifetime (years), Decommissioning or modernization year, if planned, Ownership stake (%), Attributable to reporting boundary (%)
• % of emissions covered by the targets

(4) The details in the [ ] are the questions in the 2020 CDP Climate Change questionnaire

External sources of data used for the analysis of this indicator are:

• IEA ETP [4] – background scenario data

For pulp producers, paper & board manufacturer and converters of paper & board, emissions from a restricted perimeter of scope 3 downstream or upstream emissions will be considered. The decarbonization pathway for scope 3 upstream or scope 3 downstream will be computed from IEA ETP data set.

• For ‘Pulp producers’ : We will consider downstream scope 3 emissions corresponding to scope 1+2 emissions from paper & board manufacturer
• For ‘Paper & board converters’ : We will consider upstream emissions corresponding to scope 1+2 emissions from ‘Pulp producers’ and downstream scope 3 emissions corresponding to scope 1+2 emission from ‘Converters of paper & board’
• For ‘Converters of paper & board’ : We will consider upstream emissions corresponding to scope 1+2 emissions from scope 1+2 emissions from Paper & board manufacturer’.

The analysis is based on a trend ratio between the company’s Scope 1+2 emissions target (𝑇𝑆12) and the company’s Scope 1+2 benchmark (𝐶𝐵S12) .

The company’s target (𝑇𝑆12) is the decarbonization over time, defined by the company’s emissions reduction target. To compute T, a line is drawn between the starting point of the analysis (i.e. reporting year) and the company’s target endpoint.

The company benchmark (𝐶𝐵S12) pathway is the ‘company specific decarbonization pathway’. See section 6.1.1 for details on the computation of this pathway.

The indicator compares 𝑇𝑆12 to 𝐶𝐵S12, by assessing the difference between these pathways. The pathways are expressed in kilograms of CO2e per unit of activity (intensity measure). The unit of activity for Pulp and Paper sector is tonnes metric tonnes air-dry weight (with 10% moisture content)5 for pulp products and in metric tonnes for paper products. Where necessary, targets shall be normalized to this activity unit. The result of the comparison is the commitment gap.

To assign a score to this indicator, a ratio will be made between, as shown by the purple arrow in Figure 2 below.

Calculation of score:

The score is calculated by dividing the company intensity reduction engagement 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 Scope1+2 emissions intensity at target year, EIc (Yr) is the company scope 1+2 emissions intensity at reporting year, EIb(Yt) is the company’s benchmark Scope 1+2 emission intensity at target year and EIb(Yr) is the company’s benchmark Scope 1+2 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 Figure 1).

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

If the target coverage of total company emissions at reporting year (Cyr) represents more than 95%, the final score is equal to:

Otherwise final score of the indicator is equal to:

For integrated companies , scores obtained for each target will be aggregated by weighting proportionally to emissions that are covered by each target.

Relevance of the indicator:

Targets are included in the ACT assessment for the following reasons:

• Targets are an indicator of corporate commitment to reduce emissions and are a meaningful metric of the company’s internal planning towards low-carbon transition.
• A majority of emissions from the sector are within the sector boundaries of control, so those targets are a very powerful management tool to reduce them. Most emissions (around 80% of emissions) from the Pulp and Paper sector can be captured in targets using existing target-setting frameworks.
• Targets are one of the few metrics that can predict a company’s long-term plan beyond what can be projected in the short-term, satisfying ACT’s need for indicators that can provide information over the long-term.

Scoring rationale:

Targets for each sub-sector are quantitatively interpreted and directly compared to the low-carbon benchmarks for the sector, using the company’s 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 company.

NB: In previous ACT methodologies, the score was the result of the commitment gap calculation based on the difference between the company’s target and the company benchmark 5 years after the reporting year. At the time of redaction of ACT Pulp and paper methodology, this indicator is based on ratio between company’s relevant emissions targets and the company benchmark, in order to be better aligned with Science Based Target Initiative.

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

• Reporting year [C0.2]
• Company’s target and target year Variation of [C4.1a], [C4.1b]
• For all existing and planned assets: Asset name, Geographic Location (country level), Plant type, Status, Total capacity (metric tonne), Production (metric tonnes of pulp and paper), Emissions factor (kg CO2e/tonne Pulp and Paper), Year of commissioning, Expected lifetime (years), Decommissioning or modernization year, if planned, Ownership stake (%), Attributable to reporting boundary (%)

The benchmark indicators involved are:

The analysis has two dimensions:

Dimension 1 : A comparison of: (a) the longest time horizon of the company’s targets, and (b) a relevant time horizon for the sector Lf . The relevant time horizon that will be considered here will be 30 and 60 years, line with the nature of the activities, as well as the life span of the relevant equipment, processes and products contributing to the company's activity (ex : default value of life time assets). For pulp and paper sector, the time horizon considered will be respectively 30 and 60 years for paper machines and pulp machines, as it is the maximum lifespan without upgrading.

Dimension 2 : An analysis of the company interval targets that ensure both short and long-term targets are in place to incentivise short-term action and communicate long-term commitments.

Aggregate score: Dimension 1 (50% weighting) + Dimension 2 (50% weighting)

Yearly CO2 emissions are defined as:

Dimension 1 - Target endpoint (50% of the score):

The company’s target endpoint (Te) is compared to the observed lifespan Lf before an upgrading of the machines for the Pulp and paper sector. If the data is not available, a default value will be provided.

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

If the company is integrated, it can either:

• Set targets by activity, and so a separate analysis is done for each activity: the target endpoint Te of the targets the company has set for the given activity is compared to the lifetime Lf of this activity.
• Set aggregated targets and so Te is compared to the longest lifetime Lf. The horizon gap is used to rate the company on the time horizon relevance of its most long-term target.

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

Dimension 2 - Intermediate horizons (50% of the score):

For each sub-sector, all company targets and their endpoints are calculated and plotted. To get full score, the company must not have time gaps larger than 5 years between targets horizons, starting from the reporting year as baseline.

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

An example is illustrated in Figure 3.

For all calculations:

In order to ensure a wide coverage of company’s emissions, targets that cover < 95% of scope 1 + 2 emissions of the company are preferred in the calculations. If these types of targets only are available, then the score is adjusted downwards equal to the % coverage that is missing. Figure 4 graphically illustrates emissions covered by the targets:

Relevance of the indicator:

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

The target endpoint is an indicator of how forward looking is the company’s transition strategy.

Aside from communicating long-term commitments, short-term action needs to be incentivized. This is why short-time intervals between targets are needed.

Scoring rationale:

The score of this indicator is tied to how the target timeline compares to lifespan of assets between upgrading interventions, in pulp and paper sector.

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

• Reporting year [C0.2]
• Company’s target and target year Variation of [C4.1a], [C4.1b]

For each target:

• Base year
• Start year
• Target year
• Percentage of reduction target from base year in absolute emissions
• Percentage of reduction target achieved in absolute emissions.

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 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.
• Targets that do not cover >95% of ‘Scope 1+2 emissions’ 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 historical target ambition and company performance is included in the ACT Pulp and Paper assessment for the following reasons:

• The ACT assessment looks to the past only to the extent that it can inform on the future. This indicator is future-relevant by providing information on the organizational capability to set and meet emissions reduction targets. Dimension 1 of this indicator adds credibility to any company claim to commitment to a science-based reduction pathway.
• Indicators 1.1 and 1.2 look at targets into the future, setting a theoretical view of the company. Dimension 2 of this indicator adds value to the analysis by doing a concrete comparison of the company’s current performance against their targets in the reporting year.

Scoring rationale:

Quantitative interpretation of previous target achievement is not straightforward. The performance score thus makes no judgement of previous target ambition and leaves it to the narrative analysis to make a meaningful judgement on the ambition level of past targets.

• Dimension 1 of the performance score will penalize companies who have not met previous 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 sourced from existing CDP data points (CC 3.1e) 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 definitely 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.
• Regarding the lifespan of assets, we will consider average lifespan between interventions to modernize owned assets. Indeed in this sector; assets can have widely different lifespan, some equipment’s being kept for 100 years. Thus, if the company cannot provide this value, the default value for assets lifespan between two modernization interventions will be based on Moya J. A. and Pavel C. C [12] with 30 years for paper machines in paper mills and 60 years for pulp machines in pulp mills.

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

• Reporting year [C0.2]
• For all existing and planned assets: Asset name, Geographic Location (country level), Plant type, Status, Total capacity (metric tonne), Production (metric tonnes of pulp and paper), Emissions factor (kg CO2e/tonne Pulp and Paper), Year of commissioning, Expected lifetime (years), Decommissioning or modernization year, if planned, Ownership stake (%), Attributable to reporting boundary (%)
• The reporter shall provide plant activity (tonnes metric tonnes air-dry weight -with 10% moisture content- for pulp products and in metric tonnes for paper products) and emissions data (kgCO2e/tonne of product) by plant type for the last five years and also the total market pulp purchased at corporate level for the last five years

External sources of data used for the analysis of this indicator are:

• IEA ETP – background scenario data
• IPCC (2006)(6) – Fuel emission factors

(6) IPCC. IPCC Guidelines for National Greenhouse Gas Inventories, Volume 3, Chapter 2. 2006.

The benchmark indicators involved are:

There are two dimensions in this indicator, each one weighting 50%.

Dimension 1 (50%) – Trend in past emissions intensity

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 (EIC) from material investment trend gradient and the company’s benchmark recent (reporting year minus 5 years) emission intensity trend gradient (EIB). The company’s benchmark is defined from the company’s current emissions on reporting year, and from the sectoral benchmark presented in section 6.1.

Figure 5 illustrates the various curves and trends used in this indicator.

Four cases are will be used for the scoring, they are describe in the table below :

Dimension 2 (50%) – Alignment of past performance with carbon budget

This metric assesses the alignment of the company’s recent absolute emissions with the past carbon budget. The recent emissions and carbon budget are measured over a 5-year period previous to the reporting year (reporting year minus 5 years). For this dimension, we use data on past emissions from the assessed company and compare it to the sector benchmark.

The ratio is computed with the following calculation: 

The score will be attributed as described in the table below:

Relevance of the indicator:

Regarding dimension 1, trend in past emissions intensity is included in the ACT PP assessment for the following reasons:

• The trend shows the speed at which the company has been reducing its emissions intensity over the recent past. 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 future-oriented, ACT does not want to solely rely on projections in a way that would make the analysis too vulnerable to uncertainty. Therefore, this particular indicator, along with projected emissions intensity and absolute emissions, forms part of a holistic view of company emissions performance in the past, present, and future.

Regarding dimension 2, alignment of past carbon budget is included for the following reasons:

• Assessing the level of past emissions as opposed to the benchmark (for the past years where the benchmark is available) helps the company having an overview of its emissions exceedance in the recent past. This indicator 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 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.
• ACT is a forward looking methodology but does not consider the past to assess directly the future performance. Knowing a trend in the past (on activity or budget) is relevant to assess if in a company has the capacity to reach their future targets.

Scoring rationale:

Concerning dimension 1, while ‘gap’ type scoring is preferred for any indicator where possible, this indicator only looks at past emissions, and would therefore require a different baseline in order to generate a gap analysis. Thus, instead of a gap analysis, a trend analysis is conducted. An advantage of the trend analysis is that it does not require the use of a business-as-usual pathway to anchor the data points and aid interpretation, as trends can be compared directly, and a score can be directly correlated to the resulting ratio.

Concerning dimension 2, a ratio is made between past carbon of the company assessed and the sector benchmark to evaluate how a company have in the past stayed aligned with its carbon budget or otherwise.

NB : in previous methodologies, the comparison of trend was made over two different periods ( pas 5 years of the company emission intensity with the company benchmark over the future 5 years after the reporting year). At the time of redaction of this methodology, trends are compared over the same time period.

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

• Reporting year [C0.2]
• Company’s target and target year Variation of [C4.1a], [C4.1b]
• For all existing and planned assets: Asset name, Geographic Location (country level), Plant type, Status, Total capacity (metric tonnes), Production (metric tonnes of pulp and paper), Emissions factor (kg CO2e/tonne Pulp and Paper), Year of commissioning, Expected lifetime (years), Decommissioning or modernization year, if planned, Ownership stake (%), Attributable to reporting boundary (%)
• The reporter shall provide plant activity ((kgCO2e/ tonne Pulp and Paper) and emissions data (kgCO2e/ tonne Pulp and Paper) by plant type for the last five years

External sources of data used for the analysis of this indicator are:

• IEA ETP [4] – background scenario data
• IPCC [13] – Fuel emissions factors

The benchmark indicators involved are:

The analysis is based on the Future Action ratio (AFuturewhich 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.

The emission intensity from the company (EIC) is the weighted average plant emissions intensity over time, assuming the continuation of active plants until anticipated decommissioning and the completion of known plant/retrofit projects. 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.

See section 6.1 for details on the computation of the benchmark emission intensity (EIB)

Calculation of the score:

To assign a score to this indicator, the company’s future trend between reporting year and reporting year plus five years, the size of the action gap will be compared to the maximum action gap, which is defined by the business as usual pathway (𝐵𝐴𝑈P). 𝐵𝐴𝑈P is defined as an unchanging (horizontal) intensity pathway, whereby the emissions intensity is not reduced at all over a period after the reporting year.

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 final score assigned to the indicator is calculated as follows:

Relevance of the indicator:

The trend in future emissions intensity is included in the ACT assessment for the following reasons:

• It indicates if the company is in line with a low-carbon scenario
• This indicator is the most valuable in terms of the information it provides on the company’s actual action towards decarbonization.
• This particular measure, along with recent emissions intensity and absolute emissions, forms part of a holistic view of company emissions performance in the past, present, and future.

Scoring rationale:

The comparison of trend gradient in future emissions intensity in the future allow to look at the future. .

NOTE: Where plant lifetime information is unavailable (requested in PP 2.2), the default lifespan in Pulp and Paper sector will be applied.

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

• Share of low-carbon CAPEX
• Emissions reduction resulting from low-carbon CAPEX.

A company that is placed in the ‘aligned’ category will receive the maximum score. Companies who are at lower levels will receive a partial score, with 0 points awarded for having no engagement at all.

This maturity matrix is indicative but does not show all possible options that can result in a particular score. Companies responses will be assessed by the analyst and then placed on the level in the matrix where the analyst deems it most appropriate. A list is proposed of technologies that might be deployed in the pulp and paper sector, that can be completed by the best available techniques (BAT) benchmark developed by the European Commission [14].

The maturity matrix used will be the following:

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

• Reporting year [C0.2]
• Company’s target and target year [C4.1a], [C4.1b]
• For all existing and planned assets: Asset name, Geographic Location (country level), Plant type, Status, Total capacity (metric tonnes), Production (metric tonnes of pulp and paper), Emissions factor (kg CO2e/tonne Pulp and Paper), Year of commissioning, Expected lifetime (years), Decommissioning or modernization year, if planned, Ownership stake (%), Attributable to reporting boundary (%)

External sources of data used for the analysis of this indicator are:

• IEA ETP [4] background scenario data
• IPCC [13] Fuel emissions factors

The benchmark indicators involved are:

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

𝐿(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. An average historical capacity factor over a 5-year period to the reporting year is applied to plant capacities to estimate future production.

𝐿(𝑡) is calculated as the company’s locked-in carbon commitments, 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:

𝐵(𝑡) is calculated as the company’s carbon budget up until time t, which is derived by taking the area under the absolute emissions reduction curve. This curve in turn is derived from the company benchmark pathway (CBscope12) by multiplying it by activity 𝐴𝐺:

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 calculated as follows:

The default value for t is 15 years after the reporting year.

Security activity ratio allows to calculate which part of the company's future activity will be covered by the disclosed assets. The secured activity ratio rSA  (y_r+15) compares the secured activity up to 2050 As (yr+15)with the projected activity up to 2050 Ap (yr + 15).

The security ratio rSA is calculated as follows:

Calculation of the score:

The final score compares the company's locked-in emissions to a theoretical portfolio with a similar locked activity per year and benchmark emission intensity. It should be highlighted that_rSA is used as a threshold value for the scoring. The final score assigned to the indicator is calculated as follows:

Relevance of the indicator:

Locked-in emissions are included in the ACT assessment 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. While the indicator PP 2.1 has a short-term measurement point on reporting year plus 5 years, the concept of locked-in emissions allows a judgement to be made about the company’s outlook in more distant time periods.
• Analyzing a company’s locked-in emissions alongside science-based budgets also introduces the means to evaluate the potential cost of inaction, including the probability 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.

Scoring rationale:

The only data coming in is provided by the asset dataset: currently active plants and plants and modernization / retrofit plans that are ‘in the pipeline’ (which can be estimated to become active in the short-term).

Hence, the locked-in emissions calculated are the locked-in emissions of committed (existing and pipeline) plants only. The indicator describes the proportion of their budget (computed from the reporting year for 15 years ahead) that will be used up by committed activity.

Unlike the ‘gap’ and ‘trend’ comparisons done in all other quantitative indicators, this indicator compares two areas: that of the carbon budget until t and the locked-in emissions until t. It is expected that companies will exceed their budget when t is in the short-term future but will not when it is in the long-term future. However, any short-term exceedance will have to be compensated for in later time periods. This is called carbon budget displacement, which makes the company’s actual decarbonization pathway steeper than the original benchmark. There is a dimension of risk from inaction here.

When the company exceeds its full carbon budget to reporting year + 15 years, it will not be able to displace enough carbon from later time periods to nearer ones and will be faced with stranded assets when the current lifetime estimates are held up. This is a major problem, and this situation will certainly result in a zero score.

When companies have consumed a larger part of their carbon budget than others companies, they will be less flexible in their future strategy as there is more pressure to change their equipment on a plant (modernization on a kiln for example). There is also less room for refurbishment to extend the lifetimes of existing assets as this carries the risk of exceeding the carbon budget. Therefore, there is rationale for intermediate scoring levels that magnify this level of risk due of future flexibility in the future.

Note on calculating LG and BG:

If the company cannot provide a lifespan for assets, the lifetime of the asset is assumed to be the maximum lifespan before modernization of the process equipment (paper and pulp machines). The methodology will propose the following default values:

• For paper machines, the maximum lifespan before modernization is 30 years.
• For pulp machines, the maximum lifespan before modernization is 60 years.

These default values are the same used for indicator PP 2.1

Relevance of the indicator:

This indicator will help to assess and value efforts deployed by companies to acquire assets contributing to low-carbon process or low-carbon products.

A measure of the ratio of R&D investments in mitigation. The indicator identifies the ratio between the company’s R&D investment in technologies for mitigation and total R&D investments.

Climate mitigation technologies for the Pulp and Paper sector may include:

• Enzymatic pre-treatment
• New drying technologies
• Deep eutectic solvent pulping
• Flash condensing with steam
• Black liquor gasification

A list can be found in the annex with a list of ‘mature’ and ‘non-mature’ technology.

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

• Annual amount of capital expenditures R&D (in dollars) Variation of [CDP C-CO9.6/C-CE9.6/C-OG9.6] for the three last years[C-ST9.6a]Annual amount of capital expenditures R&D, financing mitigation technologies (in dollars) [C-ST9.6a]

The analysis is based on the ratio of the company’s ‘annual R&D expenditure on mitigation (CAPEX R&D mit) to the company’s ‘total annual capital expenditure in R&D’ (CAPEX R&D ).

The ratio is defined as the ‘mitigation R&D intensity’ ratio (D ) or:

A maturity matrix is then used to assess this indicator, depending on the value of the ratio D.

Relevance of the indicator:

R&D can be a significant lever for the Pulp and Paper sector with emerging technologies (CO2 Capture and storage, Black Liquor gasification, biorefineries…) and can be a significant step to progress toward a low-carbon aligned company. R&D is also one of the principal tools to reduce the costs of a technology in order to increase its market penetration. Lastly, the R&D investment of a company into non-mature technologies allows for direct insight into the company’s commitment to alternative technologies that may not currently be part of its main business model.

Scoring rationale:

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.

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

• Reporting year [C0.2]
• For all existing and planned assets: Asset name, Geographic Location (country level), Plant type, Status, Total capacity (metric tonnes), Production (metric tonnes of pulp and paper), Emissions factor (kg CO2e/tonne Pulp and Paper), Year of commissioning, Expected lifetime (years), Decommissioning or modernization year, if planned, Ownership stake (%), Attributable to reporting boundary (%)
• The reporter shall provide plant activity (metric tonnes of pulp and paper) and emissions data (kgCO2e/ tonne Pulp and Paper) by plant type for the last five years
• For the past 5 years, for each suppliers, quantity of market pulp and paper purchased and the associated CO2 emissions

External sources of data used for the analysis of this indicator are:

• IEA ETP [4] – background scenario data
• IPCC (2006) [13] – Fuel emissions factors

The benchmark indicators involved are:

See indicator PP 2.1, as it will be the same computation.

The analysis is based on the ratio between the company recent emission intensity (CR’) (reporting year minus 5 years) from product performance trend gradient and the company’s benchmark recent (reporting year minus 5 years) emission intensity from product performance trend gradient (CB’).. The supplier’s benchmark is defined from the supplier’s current emissions on reporting year, and from the sectoral benchmark presented in section 6.1.

Figure 10 illustrates the various curves and trends used in this indicator.

If no data from the suppliers is provided, the score assigned is 0.

Note: if the company cannot collect data about the amount and emission intensity for all its suppliers, the score shall be adjusted downwards proportionally to the percentage of pulp and paper products purchased missing compared to the total amount of pulp and paper purchased.

Relevance of the indicator:

This indicator is meant to ensure that companies have been investing enough in transitioning materials purchased to low-carbon paper and carton board products, in line with their supplier’s benchmark.

Trend in past emissions intensity is included in the ACT PP assessment for the following reasons:

• The trend shows the speed at which the company has been reducing its emissions intensity over the recent past. 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:

While ‘gap’ type scoring is preferred where possible for any indicator, this indicator only looks at past emissions and would therefore require a different baseline to generate a gap analysis. Thus, instead of a gap analysis, a trend analysis is conducted to compare current data of the company to the past data and improvements that have been made since the past data. An advantage of the trend analysis is that it does not require the use of a business-as-usual pathway to anchor the data points and aid interpretation; trends can be compared directly and a score can be directly correlated to the resulting ratio.

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

• Reporting year [C0.2] (7)
• Company’s target and target year Variation of [C4.1a], [C4.1b]
• Production (metric tonnes of pulp and paper),)
• Share of current overall recycled and sustainable fiber for total volume of production Variation of [F6.1], [F6.2],

(7) the details in the [ ] are the questions in the 2020 CDP Climate Change questionnaire

For the performance score, this indicator will be assessed the ratio of recovered fiber used in final products and the share of virgin fiber certified as sustainable:

A ratio will be made, with data from the reporting year, between total volume of recovered fiber used to production pulp or paper products (VRF) on total volume of fiber ( virgin fiber AND recycled fiber) used to produce pulp or paper products (VWRF)

Volume will be reported in metric tons of paper and paperboard products. Any volume bought will be added to the own production volume and any volume sold will be subtracted from the total company’s volume. Pulp and paper product will be reported separately.

The methodology acknowledges the need of a certain level of virgin fiber to manufacture final products of the sector for different reason:

• Limits to the amount of used paper that can be recovered.
• Unavoidable losses occur during recovered paper processing and reuse
• Degradation of fiber quality with multiple uses, hence, require the addition of fresh fiber to meet quality requirements.

This indicator will analyze the remaining volume of virgin fiber and if it beneficiates from a certification ensuring its sustainability such as Forest Stewardship Council (FSC), Programme for the Endorsement of Forest Certification (PEFC) , Sustainable Forestry Initiative (SFI), Preferred by nature Smartlogging. Other forestry certification. schemes can be considered if enough evidence is provided regarding the sustainability dimension of the certification.

The score attributed to the company will be the sum obtained from the ratio of recovered fiber used in final products (SRF) and the ratio of virgin fiber certified as sustainable (SSF).

Fresh fiber production and processing usually requires more energy than recycled fiber processing, but it relies on renewable energy to a greater extent than recycled fiber processing. Thus, ensuring the decarbonization of energy used to produce final products using of recycled fiber is key to ensure a global decrease in GHG emissions. Therefore indicator 4.2 is complementary with indicator 4.5 looking at self-generated electricity and indicator 4.6 addressing low carbon heat.

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

• Commitments and implementation of actions on deforestation – Variation of [F6.1], [F6.2],[F6.3],[F6.4]
• Commitment on responsible procurement of wood fibers - Variation of [F6.1], [F6.2],[F6.3],[F6.4]

External sources of data used for the analysis of this indicator are:

• Global Canopy, The Forest 500: 2019 Company Assessment Methodology, 2019 [15]
• WWF, Questionnaire for Pulp and Paper Companies to participate in the environmental paper company index, 2019 [16]

For the performance score, this will be assessed on two dimensions:

DIMENSION 1: Action on deforestation

This maturity matrix is derived from indicators from the company’s assessment methodology of Forest 500 by Global Canopy

DIMENSION 2: Ensuring sustainable wood procurement

This maturity matrix is loosely derived from the questionnaire developed by the WWF, the Environmental Paper Company Index (EPCI) for the two sub-dimension. They focus on what are the current policies implemented to exclude controversial furnishing of fibre and what are the targets in the near future to increase responsible and sustainable sourcing. The last sub-dimension aimed at assessing company efforts to ensure the sustainability dimension of woody biomass used for energy pusposes.

Relevance of the indicator:

Sustainable management is a key factor for wood-based products and is represented in the dimension 2. Additionally, procurement of wood can be related to deforestation although Pulp and paper companies may not be directly involved in deforestation but have a strong role to play in tracking their supplies.

Scoring rationale:

• Dimension 1 (50%): Based on the maturity matrix presented in the precedent section
• Dimension 2 (50%): Based on the maturity matrix presented in the precedent section

Note:Other aspects not included in dimension 2 but related to responsible sourcing (e.g biodiversity considerations…) will be appreciated in the narrative score.

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

• Biogenic carbon stored for each product category

External sources of data used for the analysis of this indicator are:

• Biogenic carbon footprint calculator – (WWF)

If a company does not have an LCA providing information on biogenic carbon stored in its products, they can use the tool developed by WWF(14) on calculating biogenic carbon footprint of wooden products. The analyst will use this tool as way to compute the biogenic carbon stored in wood-based product, the section allowing to compute the “carbon debt” will not be considered for this indicator.

(14) The tool is in annex or can be accessed at the following address : https://www.worldwildlife.org/projects/biogenic-carbon-footprint-calculator-for-harvested-wood-products  

For all products, companies can use the basic module of the biogenic carbon footprint calculator, which requires the following information: volume (in kgC), share of recycled/virgin fiber, product lifespan. For the latter, default values are available in the tool. 

If results from a specific LCA is used, the scenario of reference “net-zero” emission for impacts from harvesting can be used. The result used shall be in kgCO2e and the carbon stored shall be evaluated with a global warming potential (GWP) with a period of 100 years. 

The score will be the average biogenic carbon footprint for one tonne of product. If the result is higher than 100, the company is awarded the highest score. Otherwise, the company is awarded the score corresponding to the average carbon stored in one tonne of product. As product lifespan is one of the main factors affecting the computation of carbon stored in final products, the analyst will use the default value of products from the pulp and paper industry which is between 1 and 4 years, depending if the . A different lifespan could be used by the analyst, if a LCA has been conducted for a specific product category

Relevance of the indicator:

This indicator will value biogenic carbon stored in wood-based products from the pulp and paper companies, with an emphasis on certified sustainable forest management.

Scoring rationale:

The scoring will be equal to the amount kgCO2e stored in wood-based products from the pulp and paper companies. One of the main parameters allowing to increase the volume of carbon stored in wood-based products if the lifespan of products, so the rationale is to incentive the pulp and paper sector in producing final products with higher share of carbon and longer lifespan.

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 low carbon electricity assets.

A company that is placed in the ‘aligned’ category will receive the maximum score. Companies who are at lower levels will receive a partial score, with 0 points awarded for having no engagement at all.

Relevance of the indicator

Decarbonization of energy is key for the pulp and paper industry. Since heat and electricity are particularly linked through the industrial process, this indicator is divided into three complementary dimensions : company’s strategy to invest in low-carbon strategy, the carbon intensity of self-generated electricity of the company the current share of low-carbon heat.

Scoring rationale:

Dimension 1 (35%): Based on the maturity matrix presented in the precedent section

Dimension 2 (35%): Based on the maturity matrix presented in the precedent section

Dimension 3 (30%): Based on the maturity matrix presented in the precedent section

The purpose of this indicator is to analyze the strategy and implemented actions to reduce GHG emissions due to inbound/outbound transportation (including internal transportation - transport of material produced by same company from one mill to another, such as pulp to the paper mill)

When the company totally outsources its transportation activities, the indicator assesses how robust is the reporting of GHG emissions from transportation companies, if the company has defined a specific GHG emission reduction target or included it in a global GHG emission reduction target, and the past and present actions that the company implemented to reduce these emissions.

When the company partially performs the inbound/outbound transportation related to its pulp and paper activities (more than 25% of the GHG emissions is due to transportation performed with the company’s own vehicle fleet), then the company is also assessed on the following topics: how robust is the GHG emission and fleet carbon efficiency (in gCO2e/t.km) measurement, and the past and present actions that the company implemented to reduce these direct emissions (actions on both material and operations – only for truck and utility vehicles).

When the company totally performs the inbound/outbound transportation related to its pulp and paper activities, then the company is not assessed on the outsourced transportation topics.

The needed data to answer the questions in the maturity matrix are:

• [For in house transportation]
  • Details on GHG emissions reporting (GHG emissions, traveled tons, traveled km, coverage)
  • Details on targets
  • Details on implemented actions on operations and material to reduce these direct GHG emissions
• [For outsourced transportation]
  • Details on GHG emissions reporting from transportation companies
  • Details on targets
  • Details on strategy and implemented actions to reduce these indirect GHG emissions

* Actions eligible for GHG emission reduction on material (only truck and utility vehicles) are:

• Use of low-carbon vehicles (using 100% electricity, hybrid, using low-carbon hydrogen, using BioGNV, or using sustainable biofuels)
• Fuel efficiency devices
• Preventive maintenance
• Speed limitation devices
• Predictive cruise control devices
• Real-time fuel economy monitors (linked to driving methods)
• Tire pressure monitoring systems
• Low rolling resistance tires

*** Actions eligible for GHG emission reduction on operations (only trucks and utility vehicles) are:

• Eco-driving (above 50% of the drivers have received a specific training)
• Routing optimization
• Load factor optimization
• Reduction of empty runs
• Improve backhauling
• Speed regulation with Intelligent Speed Adaptation
• Platooning
• Co-loading

*** Actions eligible for GHG emission reduction due to outsourced transportation:

• Modal shift towards less emission intensive means of transportation
• Implementation of a multi-modal fret system that allows overall GHG emission reductions
• Inclusion of carbon criteria in the specifications for transport suppliers (in gCO2e/t.km) with a high weighting in the scoring grid for suppliers
• Change of input suppliers in order to reduce the travelled distance (local sourcing)
• Co-development of sustainable offers with transportation companies (each action below is considered as 1 eligible action):
  • Signing of long-term contracts with guaranteed volume on low-carbon vehicles to incentivize transportation companies to purchase new low-carbons vehicles (lower the risk for them)
  • Co-investment in new low-carbon vehicles
  • Initiative to maximize the filling rate of the trucks/containers (e.g., load pooling with other companies, use of slip sheet instead of pallets, etc.)
  • Initiative to avoid empty returns
  • Increased spending in order to use sustainable and well sourced biofuels via for instance an internal carbon fund
  • Slowing down the speed of the vehicles to consume less fuel
  • Initiative to optimize route

Other actions than the ones listed above may be eligible, if judged relevant (significant climate impact) by the analysts.

For each action reported, the company shall ask to its 3 main contributors (subcontractors) to its carbon footprint, and report to the analyst:

• The type of action
• A short description of the action (goals, the implementation process, the monitoring of the action)

Relevance of the indicator:

Transportation activity represents a significant GHG emission source for companies in the pulp and paper sector. It aims at evaluating 3 key aspects of a GHG emission reduction strategy: GHG emissions measurement, target definition, implementation of actions. It looks at both the past and the present and considers transportation that is performed by the company (in house) and transportation companies (outsourced).

Scoring rationale:

A higher weighting on the topics related to strategy and implemented actions regarding measurement and targets.

Totally outsourced transportation weighting applies to companies which outsource 100% of its inbound / outbound transportation related to pulp and paper activities.

Transportation partially performed in house weighting applies to companies which own a vehicle fleet, and for which in house transportation GHG emissions account for more than 25% of total GHG emissions due to transportation.

Transportation totally performed in house applies to companies which own a vehicle fleet and performs 100% of its inbound / outbound transportation related to pulp and paper activities.

The relevant data for this indicator are:

• Environmental policy and details regarding governance - Variation of [C1.1], [C1.2] & - Variation of [CDP C1.1a], [CDP C1.2a]
• 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 when available

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.

A company that is placed in the ‘Low-carbon aligned’ category receives the maximum score. Companies that are at lower levels receive a partial score, with 0 points awarded for having no engagement at all.

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. For the PP sector, a change in strategy and potentially business model will be required and this cannot be achieved at lower levels within an organization. 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 the low-carbon transition.

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

Management oversight of climate change is considered good practice.

The relevant data for this indicator are:

• Environmental policy and details regarding governance - Variation of [CDP C1.1a], [CDP C1.2a]
• 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 will be assessed. The presence of expertise is the condition that must be fulfilled for points to be awarded in the scoring.

The analyst will determine if the company has expertise as evidenced through a named expert biography outlining capabilities. The analysis is binary: expertise is evident or not. A cross check will be performed against [CDP 3.1 question] 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.

A company that is placed in the ‘Low-carbon aligned’ category receives the maximum score; 0 points awarded for a company that is placed in the “Basic” category.

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, a lack of expertise could be a barrier to successful management of a low-carbon transition [16].

This disclosure is in line with Governance (a) of the TCFD: "a) Describe the board’s oversight of climate-related risks and opportunities.”

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 - [C3.1a] , [C3.1b] , [C3.1c] , [C3.1d] , [C3.1e] , [C3.1f]:
  • 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 assessment 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) has been taken into consideration
• Relevant region-specific considerations are included
• The plan’s measure of success is SMART (specific, measurable, acceptable, realistic, time bound) - 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, including product carbon hotspotting if this has been undertaken
• The plan is consistent with reporting against other ACT indicators
• Scope – should cover the 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 has been approved at the strategic level within the organization
• Discussions about the potential impacts of a low-carbon transition on the current business have been included
• The company has a publicly-acknowledged 2°C (or beyond) science-based target (SBT).

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

A company that is placed in the ‘Low-carbon aligned’ category receives the maximum score. Companies that are at lower levels receive a partial score, with 0 points awarded for having no engagement at all.

The last criteria of the maturity matrix on “Adaptation to climate change” will be considered for companies who manage forests, as part of their supply chain.

The relevant data for this indicator are:

• Management incentives -[C1.3] & [C1.3a]
• 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 tons of carbon emitted by the company in the preceding year and/or to the future attainment of emissions reduction targets, or other metrics related to the company’s low-carbon transition plan.

The maturity matrix used for the assessment is the following:

Companies that are placed in the ‘Low-carbon aligned’ category receives the maximum score. Companies that are at lower levels receive a partial score, with 0 points awarded for having no engagement at all.

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 a low-carbon transition. This will improve the likelihood of a successful low-carbon transition plan.

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

The questions comprising the information request that are relevant to this indicator are - [C3.1a] , [C3.1b] , [C3.1c] , [C3.1d] , [C3.1e] , [C3.1f] :

• Details on the organization’s climate change scenario testing
• Consideration of risk types in organization's climate-related risk assessments
• Details of risks identified with the potential to have a substantive financial or strategic impact on business

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.

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

• entire coverage of the company’s boundaries
• timescale from present to long-term (2035-2050)
• translation of results into value-at-risk or other financial terms
• multivariate: a range of different changes in conditions are considered together
• changes in conditions that are specific to a low-carbon climate scenario
• climate change conditions are combined with other likely future changes in operating conditions over the timescale chosen.

Maximum points are awarded if all of these elements are demonstrated. Partial points might be awarded in case scenario testing has been carried out by the company even if not achieved.

Changes predicted to occur due to climate change could have a number of consequences for the PP sector, including increased costs, a dramatically changed operating environment and major disruptions to the business. 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 that 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 the low-carbon transition. For businesses likely to be strongly affected by climate change impacts (both direct and indirect), it has even greater importance.

The questions from the information request that are relevant to this indicator are

• Details of the methods of supplier engagement, strategy for prioritizing supplier engagements and measures of success - [C12.1a]
• Number of suppliers with whom the company is engaging, the proportion of the total spend that they represent, part of the inclusive Scope 1+2 carbon emissions - [C12.1a]
• If data on suppliers’ GHG emissions and climate change strategies are available, explain how the company makes use of that data- [C12.1a]

OR/AND

• List of environmental contract clauses in purchasing & suppliers’ selection process

The analyst checks if the policy or strategy exists and assesses if it targets suppliers’ behavior through specific actions undertaken by the company. The strategy has to mention whether:

• GHG emissions reduction is part of the goal. If the strategy only mentions other elements of an ecological footprint, then it is not sufficient.
• Suppliers are engaged either directly through education, collaboration or compensation, or indirectly through company regulation.
• It is widespread. The strategy has to apply to the main company suppliers.

Calculation of the score:

A maximum of 100% is scored if the strategy includes all three aspects mentioned above.

A large majority GHG emissions for companies from the PP sector occurs during industrial processes (pulping and paper-making) and as the sector organization lies on an integrated supply chain, each player have a responsibility in trying to engage their suppliers in reducing GHG emissions. The value chain begins from forest harvest areas and goes until converters who complete the final product. This can involve several industrial segments and implicate several intermediaries.

Since a significant part of emissions associated with retailers lies downstream with the use of sold products, and retailers have a lot of influence over what their customers buy and how to influence consumption patterns, an effective and coordinated engagement strategy is essential for a low-carbon transition.

As noted in the CDP Supply chain report [18], supply chains are critical levers for action, with GHG emissions often being outside the company’s operational scope 1+2 emissions. Supply chains are also a key element of a company’s climate-related risks. Supply chains must be resilient systems that consider regulatory risk, minimize adverse contributions to climate change, and adapt to climate-related disturbances ranging from resource scarcity to infrastructure damage from extreme weather events.

Scoring rationale:

The scoring of elements in the way that it is presented is similar to the CDP scoring methodology, whereby a narrative answer that details a certain strategy is checked for whether it includes certain elements that the ACT assessment deems vital for any sound supply chain strategy.

The questions from the information request that are relevant to 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 [C12.1a]

The analyst assigns a maturity score based on the company’s demonstration of engagement with its suppliers, expressed in the following maturity matrix. This indicator evaluates how a company and its suppliers, can paint a picture of the company’s level of active engagement. The choice of sustainable purchased product is an important lever to help the company to apply its low-carbon transition

A company that is placed in the ‘Low-carbon aligned’ category receives the maximum score. Companies that are at lower levels receive a partial score, with 0 points awarded for having no engagement at all.

While measurement of strategy as in PP 6.1 is important, measuring activities and their outcome is more insightful with regard to the company’s actual emissions reduction activities in the supply chain. Because of the difficulty in measuring this, the existing CDP questionnaire, for example, has not yet adopted an approach to do this. The ACT assessment therefore uses this maturity matrix approach that has been piloted by several other institutions (see scoring rationale).

Scoring rationale:

Because of data availability and complexity, a direct measure of the outcome of supply chain engagement activities is not very feasible at this time. Therefore, the approach of a maturity matrix allows the analyst to consider multiple dimensions of supplier engagement and analyses them together towards a single score for supplier engagement.

The relevant data for this indicator are:

• Strategy to influence clients GHG emissions -[C12.1b]
• % of products/services - [C12.1b]
• Data on customers’ choices and preferences towards reducing GHG emissions

The analyst checks if the policy or strategy exists and analyses if it targets customer behaviour through specific actions undertaken by the company. The strategy could mention whether:

• GHG emissions reduction are part of the goal
• Customers are engaged either through education or information sharing, or through collaboration & innovation (e.g : Incentives in recycling etc…)

Scoring of the indicator:

Scoring of this indicator is done on a set of narrative data points that do not have a quantitative interpretation. The maturity matrix shown below is used to assess the company strategy.

Relevance of the indicator:

Strategy to influence consumer behavior to reduce GHG impacts is included in the analysis for the following reasons:

1. Given their size and their decision-making power in the value chain, integrated companies can influence the strategy and performance of clients regarding climate.

2. The downstream segment has a key role to play in influencing customer in offering and incentivizing towards low-carbon products

SCORING RATIONALE:

The scoring of elements in the way that it is presented is similar to the CDP scoring methodology, whereby a narrative answer that details a certain strategy is checked for whether it includes certain elements that the ACT assessment deems vital for any sound customer engagement strategy.

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

• Activities to influence clients/customers to reduce their GHG emissions.- [C12.1b]
• % of products/services
• Data on customers’ choices and preferences towards reducing GHG emissions

The activities must mention whether GHG emissions reduction is part of the goal. The analyst assigns a maturity score based on the company’s demonstration of engagement with its customers, expressed in a maturity matrix. This indicator takes a holistic viewpoint on the interventions reported and assesses how together they paint a picture of the company’s level of active engagement with their customers.

The maturity matrix shown below is used to assess the company strategy.

A company that is placed in the ‘Low-carbon aligned’ category receives the maximum score. Companies that are at lower levels receive a partial score, with 0 points awarded for having no engagement at all.

Relevance of the indicator:

Similarly to indicator PP 7.1, here the assessment is focused on the actions currently implemented by the company to influence its customers. While the indicator PP 7.1 is more future-oriented, this one is assessing the activities that the company has done in the past or is currently doing to influence its customers. Both indicators are complementary.

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

• Public climate change policy positions - [C12.3], include [C12.3f] - [C12.3d]
• 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 list of trade associations declared in the CDP data and other external source entries relating to the company is assessed against a list of associations that have climate-negative activities or positions. If the company is part of trade associations that have climate-positive activities and/or positions, this should be considered for the analysis. The analyst evaluates 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 are 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.

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

• Having a publicly available policy in place
• The scope of the policy covers the entire company and its activities, and all group memberships and associations
• The policy sets out what action is to be taken in the case of inconsistencies
• Action includes the option to terminate membership of the association
• Action includes the option of publicly opposing or actively countering the association’s position
• Responsibility for oversight of the policy lies at the top level of the organization
• There is a process to monitor and review trade association positions

Maximum points are awarded if all these elements are demonstrated.

The following maturity matrix is used to score this indicator:

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

• The company shall disclose if (yes or no) it is on the board of any trade associations or provides funding beyond membership - - [C12.3],
• If yes, the reporter shall provide details of those trade associations that are likely to take a position on climate change legislation
• The company should attach supporting documentation, if this exists, giving evidence

External sources of data shall also be used for the analysis of this indicator:

• Press news
• RepRisk database,
• Climate Action 100+
• Ellen Macarthur Foundation (21)
• EP100 – Climate Group www.theclimategroup.org/project/ep100
• Low-carbon Technology Partnerships initiative www.wbcsd.org/Programs/Climate-and-Energy/Climate/Low-Carbon-Technology-Partnerships-initiative

The list of trade associations declared in the CDP data and other external sources entries relating to the company is assessed against a list of associations that have climate-negative activities or positions. The results will be compared to any policy described in PP8.1.

If the company is part of trade associations that have climate-negative activities and/or positions, this should be considered for the analysis.

See also the module rationale.

Policy and regulation that act to promote transition to a low-carbon economy are key to the success of the transition. Companies should not oppose effective and well-designed regulation in these areas but should support it.

The questions comprising the information request that are relevant to 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.). [C12.3f]
• The company shall disclose details of the issues on which it has been directly engaging with policy makers and its proposed legislative solution. [C12.3d]

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 the company’s position on relevant climate policies for the presence of best practice elements, negative indicators and consistency with indicator PP 8.1. 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.

Maturity matrix contents may include (decreasing maturity):

1. The company publicly supports relevant significant climate policies
2. No reports of any opposition to climate policy
3. Reported indirect opposition to climate policy (e.g. via a trade association)
4. Reported direct opposition to climate policy (third-party claims are found)
5. The company publicizes direct opposition to climate policy (e.g. direct statement issues or given by a company representative in a speech or interview)

The following maturity matrix is used to score this indicator.

A company that is placed in the ‘Low-carbon aligned’ category receives the maximum score. Companies that are at lower levels receive a partial score, with 0 points awarded for having no engagement at all.

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

• Public climate change policy positions
• Description of this policy (scope & boundaries, responsibilities, process to monitor and review)

The analyst evaluates the description and evidence on the company’s interaction with local public authorities. 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.

The scoring will be dependent on the type of company. The analyst will evaluate the capacity of influence of the company and adapt the level of indulgence used to assess this indicator.

The following maturity matrix is used to score this indicator.

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

• Details of business model(s) shifting to supplying low-carbon product: Description of business activity, stage of development, activity timeframe, indicator of business size (over activity timeframe), business sizeVariation of [C-ST4.9], [C4.3c]
• What are your future plans for this activity?
• What is the deployment time-frame?
• How do you manage this business plan deployment?

The analysis is based on the company’s degree of activity in one of the future business model areas.

Relevant business activity areas for this indicator could be for example:

• Development of low-carbon pulp and paper products:
  • Light-weight paper making
  • Reusable packaging
  • Development of products as substitute to use of plastics
  • Products integrating new raw materials
• Development of products based on cellulosic fibers for other industries :
  • Bio-chemicals
  • Pharmaceuticals
  • Textiles
  • Etc….
• Development of biorefineries and, eventually, selling biofuels/biogas to other sectors
• Selling waste heat from pulp and paper processes

This list of activities is based on identified business models in reports and literature related to the Pulp and Paper industry (CEPI,2017 [7]; CEPI 2021 [17]; Material economics, 2019 [18]; Reinvent decarbonisation; 2018 [19]; Moya & al, 2017 [12]). The analyst can include other business models related to low-carbon products or the circular economy, if enough evidence is provided by a company.

To be assessed, the company must have at least one business model promoting climate mitigation, climate adaptation being another dimension to integrate. 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 also has the highest score). The company will not be penalized if it has built a mature business model, and also explores other tracks (which would be scored with a lower score).

CALCULATION OF THE SCORE:

For companies to align with a low-carbon future, it is expected that they pursue at least one of these future business model pathways and integrate them into their strategic plans. The analyst evaluates the description and evidence of the company’s degree of activity in one of the future business model areas 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.

The minimum requirement for points to be awarded is that some level of exploration of one or more of these relevant business areas has started. This could include participation in collaborations, pilot projects, or research funding.

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

• The company has developed a mature business model that integrates one or many of the above elements
• 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

Maximum points are awarded if all these elements are demonstrated.

• ACT provides guidelines concerning the scope and boundaries of the sector covered by this methodology to determine which type of GHG emissions are included or excluded. However, it does not provide tools and databases to measure and compute these emissions. In particular, the choice of emission factors does not fall under the responsibility of the ACT methodology. ACT recommends using company-specific emission factors, or if unavailable, standard emission factors recognized in the sector.
• The analyst should pay high attention to the way the GHG emissions are reported by the company and especially if they are aligned with boundaries of the activity benchmark.

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 [25].

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 [23].

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 [26].

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 [23].

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

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).

Note: The definitions of these hazards from the WRI and the IPCC are examples, any other relevant definition and corresponding indicator will be appropriate. 

Sources : WRI based on a review of reports from the IPCC (2014a, 2021, 2018, 2019a, 2019b), Géorisques, and adapted from I4CE

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) [13].

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

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 [28].

• Lightning
• Data automation and control
• Improved mechanical dewatering
• Water and heat saving through inline water cleaning
• Drives and valves
• Adjust pressure levels
• Heat recovery by heat exchangers
• Electrification
• Direct renewable heat sources
• Raw material replacement
• Drying technologies
• Enzymatic pre-treatment
• Black liquor gasification

• New drying technologies (steam/air impingement drying, condensing belt drying and impulse drying…)
• Light-weight paper- making
• Mild repulping technologies (eg deep  eutectic solvent pulping)
• More effective fibre refining technologies
• Innovative mechanical dewatering technologies
• Advanced process control, machine learning and digital twins
• Heat storage during breaks
• Electric drying assisting technologies
• Hydrogen to increase pulp mills product portfolio
• New systems eliminating or minimizing the use of vacuum
• Integral drying and heat recovery processes
• Paper making without water (e. flash condensing with steam)
• Water removal without evaporation
• Biorefineries
• Carbon Capture, Utilization, and Storage (CCUS) technologies