Credit ratings, research, and risk analysis provider Moody’s Investors Service announced today the launch of a framework for Net Zero Assessments (NZAs), a new scoring system aimed at enabling investors to evaluate and compare companies’ decarbonization plans and actions.
According to Brian Cahill, Global Head of ESG at Moody’s Investors Service, the new NZAs aim to address the challenges facing market participants in comparing emissions reduction plans across companies, stemming from issues including “inconsistent disclosure requirements, differences in the magnitude, coverage and timing of targets, as well as differences in the capacity of firms to implement their business transformation plans and meet their stated targets.”
NZAs, based on a 5-point scale from NZ-1 (highest score) to NZ-5 (lowest score), indicate Moody’s opinion of the strength of an entity’s decarbonization profile relative to a Paris Agreement-consistent pathway of achieving global net zero by 2050. The scores consider factors including the strength of an entity’s ambitions, the implementation of its plan and its governance around emissions reductions.
Moody’s new NZA framework applies to non-financial corporates, including public sector and non-profit entities that have business-like revenue-raising capacity.
“NZAs provide an independent and comparable assessment of an entity’s emissions reduction profile, enabling market participants to better understand the relative positioning of non-financial corporates as they transition to a low-carbon future.”