Emissions and Algorithm Update: September 2023
Summary of what you need to know
This is a minor platform update including several improvements:
The full universe of 46,000 unique public companies are now available for 2022 (Double the 23,000 companies previously available and gap filled with previous emissions).
Minor improvements in modelling created a larger dynamic range and a net change of +5% in Scope 1, -5% in Scope 2 and +15% in Scope 3 estimates for 2022. Median estimates are lower than before.
We improved use of historical reported data and increased model stability
ASX300 portfolio has smaller changes than the full universe.
Decrease in overall universe size to ~46,000 due to moving from duplicate ISINs to EntityID (56,000 unique companies since 2018)
Emmi coverage and prediction quality
We have improved our emissions modelling compared to CDP and sustainability reports by ~2-5% from our March 2023 release due to Improved use of historical reported data where available.
Fora typical portfolio, Dynamic range has increased (smaller low numbers, larger big numbers). in Scope 1 (+5%), Scope 2 decreased 12% and Scope 3 decreased 4%. The medians have decreased by ~5% (Table 1)
Emmi coverage has decreased slightly from 49,829 to 48,052 companies globally due to the removal of duplicate ISINs and our conversion to EntityID.
CY 2022 coverage has increased 96% to 46,088 public entities, up from 23,948 in March.
Improved model stability within the Emmi emissions modelling framework.
Temperature, Capital Loss and Reductions Algorithm Changes
There have been no fundamental changes to the Temperature Alignment, Capital Loss and Reductions requirements algorithms since the data update in May 2023.
However these metrics see decreases between 3-10%, in line with the lower median Scope estimates.
What does it mean for your portfolio?
For a typical medium-large cap portfolio (eg the ASX300), our improved emissions predictions are slightly different but are relatively compared to the previous estimates.
For financed emissions, you should expect roughly the same portfolio footprint (including Scope 1+2),
For portfolio level carbon liabilities that include Scope 3, expect slightly lower carbon liabilities.
Table 1: Percent Difference between Old and New Datasets (2022: 46,000 companies)
Figure 1: Top 20 ASX Companies 2021
ASX Scope 1 Comparison, 2021