ACT Consultation on Proposed Update of Qualitative Modules

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ACT Consultation on Proposed Update of Qualitative Modules

1. Please read before leaving comments

What is this consultation about?

The Assessing low-Carbon Transition (ACT) initiative is proposing an update of four of the qualitative modules that form part of the ACT Performance score. These modules appear in the same form in many of the ACT Methodologies, though some have sector-specific elements. The modules proposed to be updated are:

  • Module 5: Management
  • Module 6: Supplier Engagement
  • Module 7: Client Engagement
  • Module 8: Policy Engagement

We are requesting specific feedback on these four qualitative modules. Your feedback is very important in informing our methodology development. Your feedback will be used only to inform the methodology update process.

Why is now the time to update these ACT qualitative modules?

Recently the ACT team and a group of consultants have been carrying out road-tests of new ACT sector methodologies, including Agriculture & Agrifood, Aluminium, Cement, Chemicals, Iron & Steel, Glass, Pulp & Paper, Oil & Gas and Transport. Alongside this, CDP and the World Benchmarking Alliance (WBA) have undertaken several sector benchmarks, in which a large sample of companies from a specific sector is assessed using the ACT approach.

Feedback from the analysts and companies involved in the projects mentioned above have consistently pointed to two main issues with the four qualitative modules, namely:

  • Not enough guidance was provided around data collection and scoring to aid analysts and companies; and
  • Unclear or confusing maturity matrices made it difficult for analysts to assign maturity levels consistently.

In addition, the ACT team identified several areas in which thought leadership has progressed significantly since the modules were originally developed. For example, recent work by CDP and others (including TCFD) around transition plans meant it is appropriate to update the “Low-carbon transition plan” indicator to take the latest thinking into account. Similarly, it is proposed to add additional guidance to the “Company policy on engagement with trade associations” indicator in light of the publication of the 2022 Global Standard on Responsible Corporate Climate Lobbying. In general, each module has been updated where relevant to take the latest research into account, to ensure that they maintain a high level of relevance and ambition.

What is the aim of this consultation?

Receive feedback that will inform the updates to the four ACT qualitative modules, with the intention of incorporating these updates into new sector methodologies which are scheduled to be published in Summer 2022, (Aluminium, Chemicals, Glass and Pulp and Paper) and releasing updated versions of the already-published methodologies soon thereafter.

How to respond?

If you want to provide comments – click on the new comment button located on the right side.

You will be asked to register by clicking on the yellow register button.  

If you are already registered on ScribeHub, please sign in (top right corner) before accessing the document and commenting.

Registering

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Please note that your name and email address will be used by the ACT team to record the list of people providing comments during this public consultation. Remember the email and password you use to register as this information will always be required to log in to ScribeHub.

Commenting

Once on ScribeHub, please use the comment button:

beside each section header to input your feedback. Pressing on the + sign will open a dialog box where you can input the title of your comment, the related section of the document, and your comment.  You can also attach documents to your comment and assign a label (e.g. editorial comment, technical comment, etc.). Keep in mind that comments are publicly visible.  You can also reply directly to a comment already posted.

Tip for reading maturity matrices

Some of the wording within maturity matrices may appear too small to read easily. In these cases, we recommend zooming your browser window to 150-200%.

Survey

Please also take 30 seconds to fill in the short survey to provide any general feedback on the proposed updates. The survey is accessed on the right-hand panel:

What is the timeline?

The consultation will be open for three weeks, from 16th May 2022 to 6th June 2022.

Contact 

If you encounter any problems at all with the ScribeHub platform or if you have any questions about the content of the document, please contact Jake Buckton at CDP.

You can also download the ACT Assessment methodologies from the ACT website for more context and to compare the proposed updates with the current versions of the qualitative modules. 

Thank you!

We welcome all input - you can provide feedback on as much or as little of the proposed change as you wish, or provide general comments to the survey.

2. Document for review: ACT Consultation on Proposed Update of Qualitative Modules

Module 5 – Management

Module 5 – Summary of changes

Indicator Reference (e.g. indicator description, row title/subdimension) Type(s) of change Details of change(s)
5.1 What is the position of the employee/ committee with highest responsibility for climate change
  • Modified question
  • Added guidance
  • Modified Next practice and Low-carbon aligned levels
  • Added further guidance for each seniority level
5.2 “How the analysis will be done”
  • Modified guidance
  • The wording no longer refers to the binary structure of the original maturity matrix for this indicator
5.2 Does the individual or committee with oversight of climate change issues have relevant climate change- and low-carbon transition-related-expertise?
  • Modified question
  • Added guidance
  • Modified each maturity level, and the wording of the question
  • Added further guidance on characteristics of climate change- and low-carbon transition-related expertise
5.3 “How the analysis will be done”
  • Added guidance
  • Added definition of climate transition plan to aid analysts
5.3 Level of approval within the organisation
  • Removed question
  • Removed this row as it is already covered in 5.1
5.3 Measure of success
  • Modified question
  • Added guidance
  • Modified the wording at each maturity level except Basic
  • Added further guidance on SMART measures of success
5.3 Financial content in plan
  • Modified question
  • Modified the wording at Advanced and Low-carbon aligned levels
5.3 Short-term actions (recent past up to reporting year + 5 years)
  • Modified question
  • Modified the question wording and Basic, Advanced and LCA levels
  • Removed the Standard and Next practice levels
5.3 Long-term actions and vision (from reporting year + 5 years, up to 2050)
  • Modified question
  • Modified the question wording and all maturity level wording
5.3 Scope
  • Modified question
  • Modified the question wording and all maturity level wording
5.3 Internal coherence
  • Added question
  • Added guidance
  • Added the new row to assess the level of coherence between the transition plan and other ACT indicators
  • Added further guidance on what is meant by internal coherence
5.3 Transition timescale
  • Modified question
  • Modified the question wording and all maturity level wording
5.3 Review and update process
  • Added question
  • Added the new row to assess the transition plan review and update process
5.3 Progress reporting process
  • Added question
  • Added the new row to assess the transition plan progress reporting process
5.3 What is the role of a carbon price in the plan?
  • Modified question
  • Modified the question wording and all maturity level wording except Basic
5.4 Type of incentives
  • Modified question
  • Changed the Basic level from “Non-monetary” to “No incentives”
5.5 Scope
  • Modified question
  • Modified the question wording and all maturity level wording
5.5 Timescale
  • Modified question
  • Modified the question wording and all maturity level wording
5.5 Does the company assess the materiality of climate-related risks/opportunities*?
  • Added question
  • Added guidance
  • Added the new row to assess the company’s analysis of risks and opportunities
  • Added further guidance on climate-related risk categories
5.5 What parameters/assumptions are considered?
  • Modified question
  • Modified the question wording and all maturity level wording except Basic
5.5 Are the results expressed in qualitative/ quantitative/ financial terms?
  • Modified question
  • Added guidance
  • Modified the question wording and all maturity level wording except Basic
  • Added further guidance on results of scenario analysis
5.5 Is there a carbon price considered
  • Modified question
  • Minor modifications to Standard and Advanced maturity levels

Indicator 5.1 - OVERSIGHT OF CLIMATE CHANGE ISSUES

5.1 – Guidance

Short description of indicator The company discloses that responsibility for climate change within the company lies at the highest level of decision-making within the company structure.
How the assessment will be done

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

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

5.1 – Maturity matrix

* Further guidance for each level of seniority is given below:

  • Manager/Officer
    • Person 4 or more steps in the corporate structure from the highest level of decision making of the organization. No responsibility or accountability for business unit strategy development.
  • Senior Manager/Officer
    • Person 2 or more steps in the corporate structure from the highest level of decision making of the organization. May have responsibility and accountability for business unit strategy formation and implementation for one business unit.
  • Vice President/Director
    • Person reporting to or accountable to the highest level of decision making of the organization. Inputs into organizational strategy but does not make decisions on it. May have responsibility and accountability for business unit strategy formation and implementation of one or more business units
  • Board or individual/sub-set of the board or other committee appointed by the Bboard/C-Suite Officer (CEO, CFO, CPO, CRO, CSO, etc.)
    • Highest level of accountability or decision making within the organization, with responsibility for overall organizational or corporate strategic direction.

Indicator 5.2 – CLIMATE CHANGE OVERSIGHT CAPABILITY

5.2 – Guidance

Short description of indicator Company board or executive management has expertise on the science and economics of climate change, including an understanding of policy, technology and consumption drivers that can disrupt current business.
How the assessment will be done

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

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

5.2 – Maturity matrix

* “Characteristics of climate change- and low-carbon transition-related expertise” include:

  1. Academic/professional qualification related to climate change and the low-carbon transition, including an understanding of the impacts and risks, and the solutions to implement (e.g., BA, Masters, PhD, certificate, diploma, etc.)
    • A purely energy-related background with no relationship to climate change and the low-carbon transition is not enough to qualify as expertise.
  2. Professional experience related to climate change and the low-carbon transition (e.g., previous employment in climate change/low-carbon transition-related role, or with a climate change/low-carbon transition-related organisation, etc.)
  3. Previous/active membership of organisation(s) driving corporate knowledge and action on climate change and the low-carbon transition (e.g., World Business Council For Sustainable Development, Solar Energy Industry Association, etc.)
  4. Technical knowledge related to climate change and the low-carbon transition (evidenced through published outputs written by the individual/committee, e.g., statements, reports, etc.)

Indicator 5.3 – LOW-CARBON TRANSITION PLAN

5.3 – Guidance

Short description of indicator The company has a plan on how to transition the company to a business model compatible with a low-carbon economy.
How the assessment will be done

From the 2021 CDP Transition Plans discussion paper: “A climate transition plan is a time-bound action plan that clearly outlines how an organization will achieve its strategy to pivot its existing assets, operations, and entire business model towards a trajectory that aligns with the latest and most ambitious climate science recommendations, i.e., halving greenhouse gas (GHG) emissions by 2030 and reaching net-zero by 2050 at the latest, thereby limiting global warming to 1.5°C.”

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

Among the best practice elements identified to date are:

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

5.3 – Maturity matrix

* A measure of success is considered “fully SMART” if it meets each of the following SMART elements (source: FT Essential Guide to Leading Your Team):

  1. Specific: the measure of success is explicit, with no room for misinterpretation.
  2. Measurable: the measure of success is measurable, and it will be clear when it has been achieved.
  3. Achievable: the measure of success is stretching and ambitious, but not so much that it is unachievable.
  4. Relevant: the measure of success contributes to the organisation’s overall objectives, and complements other measures of success.
  5. Time-bound: the measure of success has a set deadline.

For a transition plan to be internally coherent with reporting against other ACT indicators, there shall be no contradictions between the ambition and the means dedicated to this transition plan and the information provided in other indicators (targets, management, business model, etc.). In this way, we assess the credibility of the company’s transition plan. For example, if the company presents a very ambitious low-carbon transition plan, and yet there are no relevant investments disclosed in Module 2, this signal a lack of internal coherence.

Refer for instance to IEA, WEO 2019, Annex B, p 758. CO2 prices are displayed by world regions, predicted values at 2030 and 2050.

Indicator 5.4 - CLIMATE CHANGE MANAGEMENT INCENTIVES

5.4 – Guidance

Short description of indicator The Board’s compensation committee has included metrics for the reduction of GHG emissions in the annual and/or long-term compensation plans of senior executives; the company provides monetary incentives for the management of climate change issues as defined by a series of relevant indicators.
How the assessment will be done 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 the future attainment of emissions reduction targets, or other metrics related to the company’s low-carbon transition plan.

5.4 – Maturity matrix

Indicator 5.5 – SCENARIO TESTING

5.5 – Guidance

Short description of indicator Testing or analysis relevant to determining the impact of transition to a low-carbon economy on the current and projected business model and/or business strategy has been completed, with the results reported to the board or c-suite, the business strategy revised where necessary, and the results publicly reported.
How the assessment will be done

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:

  • full coverage of the company’s boundaries
  • timescale from present to long-term (2035-2050)
  • results are expressed in value-at-risk or other financial terms
  • multivariate: a range of different changes in conditions are considered together
  • changes in conditions 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

5.5 – Maturity matrix

* Climate-related risk categories (source: TFCD technical supplement, p.6):

  1. Market and Technology shifts
  2. Reputation
  3. Policy and Legal
  4. Physical Risks

Results of scenario analysis should be presented as business impacts which can include (source: TCFD Recommendations Technical Supplement: The Use of Scenario Analysis in Disclosure of Climate-related Risks and Opportunities, p.9):

  • Earnings – what conclusions does the organization draw about impact on earnings and how does it express that impact (e.g. as EBITDA, EBITDA margins, EBITDA contribution, dividends)?
  • Costs – what conclusions does the organization draw about the implications for its operating/production costs and their development over time?
  • Revenues – what conclusions does the organization draw about the implications for the revenues from its key commodities/ products/ services and their development over time?
  • Assets – what are the implications for asset values of various scenarios?
  • Capital Allocation/ investments – what are the implications for capex and other investments?
  • Timing – what conclusions does the organization draw about development of costs, revenues and earnings across time (e.g., 5/10/20 year)?

Refer for instance to IEA, WEO 2019, Annex B, p 758. CO2 prices are displayed by world regions, predicted values at 2030 and 2050.

Module 6 – Supplier Engagement

Module 6 – Summary of changes

Indicator Reference (e.g. indicator description, row title/subdimension) Type(s) of change Details of change(s)
6.1 Emissions reduction requirements
  • Modified question
  • Added guidance
  • Modified question wording
  • Added guidance: key procurement templates
6.1 Other low-carbon transition-related requirements/recommendations
  • Added question
  • Added guidance
  • New matrix row asking to what extent are other low-carbon transition-related requirements/recommendations integrated in engagement with suppliers?
  • Added guidance: “Other low-carbon transition-related requirements/recommendations”
6.1 Reporting
  • Added question
  • New matrix row asking to what extent are suppliers required to publicly report on their GHG emissions and other low-carbon transition-related requirements/recommendations?

 

6.1 New suppliers/existing suppliers
  • Modified question
  • Modified the question “Suppliers selection process” to ask Are GHG emissions reduction/reporting requirements included in selection of new suppliers, renewal of contract with existing suppliers, neither or both?
6.1 Non-compliance
  • Added question
  • New matrix row asking How does the company respond to supplier non-compliance with GHG emissions reduction requirements?
6.1 Action levers embedded in strategy
  • Modified question
  • Added guidance
  • Modified question wording
  • Added guidance: action levers
6.2 Indicator description
  • Modified guidance
  • Changed the wording to make it clearly about activities
6.2 Action levers used in practice
  • Modified question
  • Added guidance
  • Changed the question wording
  • Added guidance: Action levers 
6.2 Scope
  • Added question
  • Added this question which was originally from 6.1 as it also relates to activities
6.2 Low-carbon offer of suppliers
  • Removed question
  • Removed the question as the action levers row already covers any engagement activities carried out by the company. 
6.2 Impact of engagement
  • Added question
  • Added guidance
  • New matrix row asking How impactful has the company’s supplier engagement been?
  • Added guidance: metrics

Indicator 6.1 - STRATEGY TO INFLUENCE SUPPLIERS TO REDUCE THEIR GHG EMISSIONS

6.1 - Guidance

Short description of indicator The company has a strategy, ideally governed by policy and integrated into business decision making, to influence, enable, or otherwise shift suppliers’ choices and behaviour in order to reduce suppliers’ GHG emissions.
How the assessment will be done

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

A company that is placed in the ‘Low-carbon aligned’ category will receive the maximum score. A company which is at a lower level 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. The company’s responses will be scrutinized by the analyst and then placed on the level in the matrix where the analyst deems it most appropriate.

6.1 – Maturity matrix

* “Key procurement templates” include but are not limited to (source: SME Climate Hub “1.5°C Supplier Engagement Guide”):

  • New supplier contracts
  • Supplier Code of Conduct
  • RFI/RFPs
  • Supplier self-assessments
  • Performance cards

“Other low-carbon transition-related requirements/recommendations” refers to key aspects of a supplier’s low-carbon transition, beyond emissions reductions and targets, that companies can engage them on. These may not be specific requirements, but can be general/high-level recommendations. These aspects can include performance indicators from any ACT performance modules, such as:

  • Intangible investment
    • For example, the company recommends that its suppliers increase their R&D spend in low-carbon technologies.
  • Management
    • For example, the company requires its suppliers to conduct climate change scenario testing.
  • Policy engagement
    • For example, the company only selects suppliers not opposed to relevant climate policies.
  • Business model
    • For example, the company engages with its suppliers to develop new, low-carbon business models.
  • Any other relevant low-carbon transition-related requirement/recommendation

Action levers must be embedded in a strategy document, and not be presented as examples of past/present actions/initiatives (such examples should be scored in indicator 6.2). “Action levers” include, but are not limited to, the following examples, which are grouped into three engagement types (sources: CDP climate change questionnaire 2022, question C12.1a, Les achats au cœur de la stratégie climat : 13 solutions d'entreprises, 2022):

  1. Information collection (understanding supplier behaviour)
    • Collect climate change and carbon information at least annually from suppliers
  2. Engagement & incentivization (changing supplier behaviour)
    • Run an engagement campaign to educate suppliers about climate change/GHG emissions reductions/science-based targets/other low-carbon transition-related topics such as scenario testing, policy engagement, etc.
    • Provide climate-related training, support, and best practices
    • Directly work with suppliers on climate-related topics, such as defining common GHG emission reduction plans (i.e., both companies commit to reduce together X tCO2e), or exploring corporate renewable energy sourcing mechanisms
    • Climate change performance is featured in supplier awards scheme
    • Offer financial incentives for suppliers who reduce your operational emissions (Scopes 1 & 2)
    • Offer financial incentives for suppliers who reduce your downstream emissions (Scopes 3)
    • Offer financial incentives for suppliers who reduce your upstream emissions (Scopes 3)
    • Offer financial incentives for suppliers who increase the share of renewable energy in their total energy mix
  3. Innovation & collaboration (changing markets)
    • Run a campaign to encourage innovation to reduce climate impacts on products and services
    • Collaborate with suppliers on innovative low-carbon business models/R&D projects (providing resources – experts, financial support, building, laboratories etc.)

Indicator 6.2 – ACTIVITIES TO INFLUENCE SUPPLIERS TO REDUCE THEIR GHG EMISSIONS

6.2 – Guidance

Short description of indicator This indicator assesses the extent to which the company implements activities and initiatives that help, influence or otherwise enable suppliers to reduce their GHG emissions. The indicator aims to be a holistic measure of these activities and initiatives, with evidence of implementation and outcomes in the value chain across all products/services.
How the assessment will be done

The assessment will assign a maturity score based on the company’s demonstration of recent and current activities and initiatives with its suppliers, expressed in a maturity matrix.

A company that is placed in the ‘Low-carbon aligned’ category will receive the maximum score. A company which is at a lower level 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. The company’s responses will be scrutinized by the analyst and then placed on the level in the matrix where the analyst deems it most appropriate.

6.2 – Maturity matrix

* Action levers must be presented as examples of past/present actions/initiatives, and not be theoretical/embedded in a strategy document (such examples should be scored in indicator 6.1). “Action levers” include, but are not limited to, the following examples, which are grouped into three engagement types (sources: 2022 CDP Climate Change questionnaire C12.1a, Les achats au cœur de la stratégie climat : 13 solutions d'entreprises, 2022):

  1. Information collection (understanding supplier behaviour)
    • Collect climate change and carbon information at least annually from suppliers
  2. Engagement & incentivization (changing supplier behaviour)
    • Run an engagement campaign to educate suppliers about climate change/GHG emissions reductions/science-based targets/other low-carbon transition-related topics such as scenario testing, policy engagement, etc.
    • Provide climate-related training, support, and best practices
    • Directly work with suppliers on climate-related topics, such as defining common GHG emission reduction plans (i.e., both companies commit to reduce together X tCO2e), or exploring corporate renewable energy sourcing mechanisms
    • Climate change performance is featured in supplier awards scheme
    • Offer financial incentives for suppliers who reduce your operational emissions (Scopes 1 & 2)
    • Offer financial incentives for suppliers who reduce your downstream emissions (Scopes 3)
    • Offer financial incentives for suppliers who reduce your upstream emissions (Scopes 3)
    • Offer financial incentives for suppliers who increase the share of renewable energy in their total energy mix
  3. Innovation & collaboration (changing markets)
    • Run a campaign to encourage innovation to reduce climate impacts on products and services
    • Collaborate with suppliers on innovative low-carbon business models/R&D projects (providing resources – experts, financial support, building, laboratories etc.)

The metric used to measure impact depends on the action lever the metric refers to. Examples of “evidence of impact” might include:

  1. Engaged suppliers have reduced their annual GHG emissions by X%
  2. The percentage of engaged suppliers setting science-based targets has increased annually by X%
  3. The percentage of engaged suppliers conducting scenario testing has increased annually by X%

Module 7 – Client Engagement

Module 7 – Summary of changes

Indicator Reference (e.g. indicator description, row title/subdimension)
  • Type(s) of change
  • Details of change(s)
7.1 Emissions reduction objectives
  • Modified question
  • Modified and simplified the wording of the matrix row
7.1 Other low-carbon transition-related recommendations
  • Added question
  • Added guidance
  • New matrix row asking To what extent are other low-carbon transition-related recommendations integrated in client engagement strategy?
  • Added guidance: “Other low-carbon transition-related recommendations”
7.1 Action levers embedded in strategy
  • Modified question
  • Added guidance
  • Modified question wording
  • Added guidance: action levers
7.2 Indicator description
  • Modified guidance
  • Changed the wording to make it clearly about activities
7.2 Action levers used in practice
  • Modified question
  • Added guidance
  • Changed the question wording
  • Added guidance: Action levers
7.2 Scope
  • Added question
  • Added this question which was originally from 7.1 as it also relates to activities
7.2 Low carbon products
  • Removed question
  • Removed the matrix row as already covered in the list of action levers assessed in the first matrix row
7.2 Support provided to clients
  • Removed question
  • Removed the matrix row as paid services provided to clients is more a business model rather than a form of engagement. Other forms of support provided to clients are covered in the list of action levers assessed in the first matrix row
7.2 Impact of engagement
  • Added question
  • Added guidance
  • New matrix row asking How impactful has the company’s client engagement been?
  • Added guidance: metrics

Indicator 7.1 – STRATEGY TO INFLUENCE CLIENTS TO REDUCE THEIR GHG EMISSIONS

7.1 – Guidance

Short description of indicator The company has a strategy, ideally governed by policy and integrated into business decision making, to influence, enable, or otherwise shift clients’ (i.e. customers’) choices and behaviour in order to reduce clients’ GHG emissions.
How the assessment will be done

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

A company that is placed in the ‘Low-carbon aligned’ category will receive the maximum score. A company which is at a lower level 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. The company’s responses will be scrutinized by the analyst and then placed on the level in the matrix where the analyst deems it most appropriate.

7.1 – Maturity matrix

* “Other low-carbon transition-related recommendations” refers to key aspects of a client’s low-carbon transition, beyond emissions reductions and targets, that companies can engage them on. These aspects can include performance indicators from any ACT performance modules, such as:

  • Intangible investment
    • For example, the company recommends that its clients increase their R&D spend in low-carbon technologies.
  • Management
    • For example, the company encourages its clients to conduct climate change scenario testing.
  • Policy engagement
    • For example, the company encourages its clients to support relevant climate policies.
  • Business model
    • For example, the company engages with its clients to develop new, low-carbon business models.

Action levers must be embedded in a strategy document, and not be presented as examples of past/present actions/initiatives (such examples should be scored in indicator 7.2). “Action levers” include but are not limited to the following individual action levers, which are grouped into four engagement types (sources: CDP climate change questionnaire 2022, existing ACT matrix wording, SBT Best Practices In Scope 3 Greenhouse Gas Management):

  • Education/information sharing
    • Run an engagement campaign to educate customers about the climate change impacts of (using) your products, goods, and/or services
      • E.g., highlight that the low-carbon product answers to the purchasing rules of the client
      • E.g., promote the low-carbon product highlighting that their client could use it to answer the purchasing rules of their own clients (e.g., low-carbon aluminium to produce a car door).
    • Share information about your products and relevant certification schemes (i.e., Energy STAR)
    • Provide documents and tools
  • Collaboration & innovation
    • Run a campaign to encourage innovation to reduce climate change impacts
    • Collaborate with downstream segments of the value chain to foster circular end-of-life treatment of products and downstream logistic efficiency
    • Organize multi-party working group with meetings taking place at least annually
  • Compensation
    • Provide rebates for environmentally friend actions
  • Customer motivation via marketing and choice architecture (“nudging”)
    • Design marketing campaigns/choice architecture aiming to indirectly encourage customers to reduce their emissions

Indicator 7.2 – ACTIVITIES TO INFLUENCE CLIENTS TO REDUCE THEIR GHG EMISSIONS

7.2 – Guidance

Short description of indicator This indicator assesses the extent to which the company implements activities and initiatives that help, influence or otherwise enable clients to reduce their GHG emissions. The indicator aims to be a holistic measure of these activities and initiatives, with evidence of implementation and outcomes in the value chain across all products/services.
How the assessment will be done

The assessment will assign a maturity score based on the company’s demonstration of recent and current activities and initiatives with its clients, expressed in a maturity matrix.

A company that is placed in the ‘Low-carbon aligned’ category will receive the maximum score. A company which is at a lower level 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. The company’s responses will be scrutinized by the analyst and then placed on the level in the matrix where the analyst deems it most appropriate.

7.2 – Maturity matrix

* Action levers must be presented as examples of past/present actions/initiatives, and not be theoretical/embedded in a strategy document (such examples should be scored in indicator 7.1). “Action levers” include but are not limited to the following individual action levers, which are grouped into four engagement types (sources: CDP climate change questionnaire 2022, existing ACT matrix wording, SBT Best Practices In Scope 3 Greenhouse Gas Management):

  • Education/information sharing
    • Run an engagement campaign to educate customers about the climate change impacts of (using) your products, goods, and/or services
      • E.g., highlight that the low-carbon product answers to the purchasing rules of the client
      • E.g., promote the low-carbon product highlighting that their client could use it to answer the purchasing rules of their own clients (e.g., low-carbon aluminium to produce a car door).
    • Share information about your products and relevant certification schemes (i.e., Energy STAR)
    • Provide documents and tools
  • Collaboration & innovation
    • Run a campaign to encourage innovation to reduce climate change impacts
    • Collaborate with downstream segments of the value chain to foster circular end-of-life treatment of products and downstream logistic efficiency
    • Organize multi-party working group with meetings taking place at least annually
  • Compensation
    • Provide rebates for environmentally friend actions
  • Customer motivation via marketing and choice architecture (“nudging”)
    • Design marketing campaigns/choice architecture aiming to indirectly encourage customers to reduce their emissions

The metric used to measure impact depends on the action lever the metric refers to. Examples of “evidence of impact” might include evidence that engaged clients have reduced their use-phase GHG emissions by X%.

Module 8 - Company Policy on Engagement with Associations, Alliances, Coalitions or Thinktanks

Module 8 – Summary of changes

Indicator Reference (e.g. indicator description, row title/subdimension) Type(s) of change Details of change(s)
8.1 Indicator title
  • Modified title
  • Proposed new indicator title: COMPANY POLICY ON ENGAGEMENT WITH ASSOCIATIONS, ALLIANCES, COALITIONS OR THINKTANKS
8.1 Indicator description
  • Modified guidance
  • Extended “industry associations” to “associations, alliances, coalitions or thinktanks”
8.1 Transparency and scope
  • Modified question
  • Added detail to the existing matrix
8.1 Review process
  • Modified question
  • Added detail and modified wording
8.1 Action plan
  • Modified question
  • Added guidance
  • Updated the row based on corporate lobbying and policy position frameworks
  • Added guidance on actions a company can take when associations, alliances, coalitions or thinktanks are found to be opposing “climate-friendly” policies
8.2 Indicator title
  • Modified title
  • Proposed new indicator title: ASSOCIATIONS, ALLIANCES, COALITIONS AND THINKTANKS SUPPORTED DO NOT HAVE CLIMATE-NEGATIVE ACTIVITIES OR POSITIONS
8.2 Indicator description
  • Modified guidance
  • Added detail to the description of the indicator and “how the analysis should be done”
8.2 Membership/funding
  • Modified question
  • Small modification to the wording (from “trade associations” to “associations, alliances, coalitions and/or thinktanks”)
8.3 Climate policy support
  • Modified question
  • Modified matrix wording, added detail
8.3 Monitoring and review process
  • Added question
  • New matrix row to assess whether the company has a monitoring and review process to ensure that its policy positions are consistent with the goals of the Paris Agreement
8.4 “How the analysis should be done”
  • Added guidance
  • Further guidance on different types of collaboration (policy engagement and collective action/partnerships)
  • Further guidance and definitions: what is meant by “significant partner”, definition of partnership, thematic areas of collaboration.
8.4 Does the company collaborate with and support local authorities to achieve local emissions reductions?
  • Modified question
  • Changed the question wording, and modified the matrix wording to increase ambition and introduce collective action/partnerships alongside policy engagement

Indicator 8.1 – COMPANY POLICY ON ENGAGEMENT WITH ASSOCIATIONS, ALLIANCES, COALITIONS OR THINKTANKS

8.1 – Guidance

Short description of indicator The company has a policy on what action to take when associations, alliances, coalitions or thinktanks of which it is a member or to which it provides support are found to be opposing “climate-friendly” policies.
How the assessment will be done

The analyst will evaluate the description and evidence of the policy on associations, alliances, coalitions or thinktanks of which it is a member or to which it provides support for the presence of best practice elements and consistency with the other reported management indicators. The company description and evidence will be compared to the maturity matrix developed to guide the scoring and a greater number of points will be allocated for elements indicating a higher level of maturity.

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

  • A publicly available policy is in place 
  • The scope of the policy covers the entire company and its activities, and all associations, alliances, coalitions or thinktanks of which it is a member or to which it provides support
  • The policy sets out what action is to be taken in the case of inconsistencies 
  • Action includes option to terminate membership of the associations, alliances, coalitions or thinktanks
  • Action includes option of publicly opposing or actively countering the association, alliance, coalition or thinktank’s position 
  • Responsibility for oversight of the policy lies at top level of the organization 
  • There is a process to monitor and review association, alliance, coalition and thinktank positions 

8.1 – Maturity matrix

* Actions a company can take when associations, alliances, coalitions or thinktanks of which it is a member or to which it provides support are found to be opposing “climate-friendly” policies follow a hierarchy of severity, as follows (sources: Global Standard on Responsible Corporate Climate Lobbying, p.2; AAA Framework, “Align”):

  1. Making public statements challenging associations, alliances, coalitions and thinktanks
    • For example, the company speaks out, publicly distancing itself from statements or lobbying against climate policy by associations, alliances, coalitions or thinktanks of which it is a member or to which it provides support. The company explains how these statements or lobbying are inconsistent with its own emission reduction goals and with its support for climate policy.
  2. Engaging with associations, alliances, coalitions or thinktanks to change their position.
    • For example, the company works to end lobbying against climate policy through transparent and time-bound engagement with those organizations.
  3. Withdrawing funding for/suspending or ending membership of the association, alliance, coalition or thinktank.
    • For example, where attempts to change an association’s position prove ineffective or insufficient, the company discontinues its membership or withdraws funding from the association.

Indicator 8.2 – ASSOCIATIONS, ALLIANCES, COALITIONS AND THINKTANKS SUPPORTED DO NOT HAVE CLIMATE-NEGATIVE ACTIVITIES OR POSITIONS

8.2 – Guidance

Short description of indicator The company is not on the Board of, providing funding beyond membership to, or otherwise supporting any associations, alliances, coalitions or thinktanks that have climate-negative activities or positions.
How the assessment will be done The list of associations, alliances, coalitions and thinktanks declared in the CDP data and other external sources entries relating to the company is assessed against a list of associations, alliances, coalitions and thinktanks that have climate-negative activities or positions (InfluenceMap is usually used for this). Such activities or positions could include lobbying against climate policies and practices. The results will be compared to any policy described in 8.1 (“Company policy on engagement with associations, alliances, coalitions or thinktanks”).

8.2 – Maturity matrix

Indicator 8.3 – POSITION ON SIGNIFICANT CLIMATE POLICIES

8.3 – Guidance

Short description of indicator The company is not opposed to any significant climate relevant policies and/or supports climate friendly policies.
How the assessment will be done The analyst evaluates the description and evidence of the company’s position on relevant climate policies (see Module rationale for the description of relevant climate policies) for the presence of best practice elements, negative indicators and consistency with the other reported management indicators. The company description and evidence 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.

8.3 – Maturity matrix

Indicator 8.4 – COLLABORATION WITH LOCAL PUBLIC AUTHORITIES

8.4 – Guidance

Short description of indicator This indicator evaluates the extent to which the company collaborates with local public authorities to achieve local emissions reductions. While indicator 8.3 “Position on significant climate policies” relates to national and international policies, this indicator assesses the company’s engagement with sub-national public authorities, both in terms of climate-related policy engagement and the establishment of climate-related partnerships.
How the assessment will be done

The analyst evaluates the description and evidence of the company’s collaboration with local authorities for the presence of best-practice elements. Collaboration generally falls into two main categories, policy engagement and collective action/partnerships. Policy engagement could range from dialogue between the company and local authority around the development of new climate-related policies, to participation in local pilot programs to test these policies, to large-scale support for and implementation of these policies. Collective action/partnerships could range from participation in working groups, roundtables, ongoing initiatives, events and/or platforms for local authorities and companies to advance specific issues related to climate change/emissions reduction, to large-scale public-private partnerships (PPPs) with a climate change/emissions reduction focus.

In general, a partnership can only be classed as such if it goes beyond a mere contract between the public authority and the company. It must be a collaboration that works to improve the current system/process and displays additionality (the collaboration reduces GHG emissions beyond business as usual, meaning the reductions would not have happened had the collaboration not been implemented). For example, a contract between a transport operator and a public authority would not be enough to be classed as a partnership by itself, whereas a partnership to reduce local GHG emissions by increasing the share of electric/hybrid/hydrogen buses and promoting greater uptake of public transport within the local area would be sufficient.

While the thematic areas of these collaborations will vary depending on the sector assessed, they should generally fall into one or more of four broad categories:

  1. Electrification and energy (including demand management and grid flexibility)
  2. Transport
  3. Circular economy
  4. Buildings

In each case, the level of maturity will depend on the level of commitment from the company, and whether there is evidence that the collaboration has been successful in achieving local emissions reductions.

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.

8.4 – Maturity matrix

* A company can be classed as a “significant partner” if the policy/partnership would not exist, or be significantly smaller/less successful, without the company’s involvement. The company must be one of the few largest or most invested stakeholders in the policy/partnership.

Analysts should take into account the size of the company assessed. For example, companies operating in a single jurisdiction are not expected to be involved in collaboration with public authorities outside of that jurisdiction, and could still score Low-carbon aligned if they met each of the other criteria (for example, if they had demonstrated emissions reductions as a result of the policy/partnership being implemented, and had a policy to become involved in more collaboration within their operational jurisdiction).