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A universal benchmark that measures a company's financial exposure to a carbon-constrained economy and the pathway needed to transition to net-zero.
The Emmi Score uses science to translate carbon risk for investors.
The Emmi score aggregates corporate carbon emissions and financial data to derive carbon-adjusted financial metrics for companies.
These carbon-adjusted financials are benchmarked against the global benchmarks based on the latest climate science scenarios that allow a score to be calculated ranging from 0-100. The higher the Emmi Score the lower carbon exposure.
What do Emmi Scores mean?
This means a company is aligned with a high carbon future economy.
Equivalent to future climate warming of 3-4°C warming
High Carbon Exposure
This means a company is aligned with a medium carbon future economy.
Equivalent to a limiting future warming to 2°C
Medium Carbon Exposure
This means a company is aligned with a low carbon future economy.
Equivalent to a limiting future warming to 1.5°C future warming
Low Carbon Exposure
How does the Emmi Score work?
1.0 Climate Science Carbon Benchmarks
We translate complex global climate scenarios into three distinct and easy to understand carbon benchmarks for finance:
1. Less than 1.5°C warming
2. About 2°C warming
3. Beyond 3-4°C warming
2.0 Company Carbon Emissions Data
We source carbon emissions data from verified sources.If old or data not available, we use a proprietary model to estimate emissions
3.0 Company Financial Data
We source complete financial performance from over 2000 global companies using third-party providers.
4.0 Carbon Exposures across 12 metrics
12 carbon financial metrics are calculated from the companies' financials and carbon emissions benchmarked against the universal carbon standards.
5.0 The Emmi Score
All metrics combine into a final algorithm to provide an Emmi Score for any company out of 100.
6.0 Net-Zero Emission Compatible
Using future carbon benchmarks, we measure a company's compatibility to a net zero emissions economy by 2050.
What makes up the Emmi Score?
12 Financial Metrics Assessed
Emmi is the first carbon risk tool that allows complete financial assessment for any company across 12 financial metrics. The algorithm translates the whole carbon transition risk problem into an understandable financial risk and reward equation around three broad financial areas.
How reliant is the long term value creation of the company to carbon emissions? Making up 57% of the score, Carbon Value is assessed via 7 metrics including Current Revenue to Carbon, Book Value to Carbon, Market Cap to Carbon, EBITDA Carbon Valuation, P/E Carbon Valuation, Trend of Revenue to Carbon and Dividends to Carbon.
How sensitive is the company's debt position to carbon emissions? Making up 33% of the Emmi Score, Carbon Leverage is assessed by 3 metrics including Debt to Carbon adjusted EBITDA, Net Assets to Carbon and Carbon adjusted interest coverage.
How well can a company's short term assets absorb a carbon price based on recognised benchmarks? Making up 10% of the Emmi Score, Carbon Liquidity is assessed by 2 metrics including Carbon adjusted Cash to Liabilities and Carbon adjusted Operating Cash.
How is Emmi unique from other ESG-related scores?
The Emmi Score is focused on the carbon transition risk - not the physical impact of climate change or the myriad of other ESG factors. Emmi provides a complete financial overview (from debt to value) in relation to carbon performance. All companies are assessed and benchmarked equally under the same carbon standard. One efficient, comparable global carbon benchmark. Open transparent methodology
Why incorporate financials into the Emmi Score?
Climate risk is investment risk and the low carbon transition is fundamentally altering finance. Instead of traditional ESG metrics that offer marketing tools, the Emmi Score creates a financial carbon standard that internalizes carbon risk within business fundamentals. This allows investors to understand the carbon risk landscape to make better decisions.
What carbon emissions and financial data is used for companies?
We source the latest carbon emissions data (Scope 1, 2 & 3) from any globally listed company via ISS. If carbon emissions are old or not reported via our third-party data sources, we use an in-house proprietary model to estimate carbon emissions from financial data. For financial data, we use FactSet.
Why isn't the physical risk of climate change included in the Emmi Score?
We focus on the transition risk of reducing carbon emissions which has a broader financial impact over the next decade. According to a major climate finance analysis, the low carbon shift will “expose companies to a significant level of transition risk, affecting as much as 13.2% of overall portfolio value which would represent a value loss of USD10.7 trillion”.
Why should every company be on the same carbon benchmark?
Capital is globally transportable so a global carbon benchmark is needed that allows companies to be comparable. Consistent use of global benchmarks clarify a company’s true carbon risk – without sector bias.
What makes a company have minimal carbon exposure (ie a high Emmi Score)?
Those who are carbon efficient with their product lines are the companies who will stand to gain from the emerging low carbon market. Carbon-intensive companies can still achieve high Emmi Scores if the company is generating enough extra Return on Equity to justify its higher carbon risk.