Moody’s Rolls Out New Scoring System of Companies’ Net Zero Transition Plans

Credit ratings, research, and risk analysis provider Moody’s Investors Service announced the release of its first Net Zero Assessment (NZA), its new scoring system aimed at enabling investors to evaluate and compare companies’ decarbonization plans and actions.

The following report is by ESG Today, on February 9th, 2024:

Officially launched last year, the new NZAs provide an assessment of the strength of a company’s carbon emissions reduction profile relative to a global net zero pathway consistent with the Paris Agreement’s most ambitious goals, considering the entity’s ambitions, as well as its plan and governance around emission reductions. The NZAs utilize a 5-point scale from NZ-1 (highest score) to NZ-5 (lowest score).

For its first NZA, Moody’s assigned Italian energy infrastructure provider Snam’s climate transition plan with a score of “NZ-3” or ‘significant,’ with the company’s ambition rated as “well below 2°C,” consistent with the Paris Agreement goals, and its implementation as “solid,” with its action plan on Scope 1 and 2 emissions based on proven and easy-to-scale-up technology, but partly offset by implementation hurdles for its Scope 3 emissions, including having a relatively high share of emissions arising from hard-to-control sources.

Brian Cahill, Global Head of ESG at Moody’s Investors Service, said:

Market participants confront considerable challenges in comparing decarbonization plans across companies because of 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…