Moody’s Investors Service, a provider of credit ratings, research and risk analysis, today announced the launch of a framework for Net Zero Assessments (NZAs), a new scoring system to enable investors to evaluate companies’ decarbonization plans and actions and compare.
According to Brian Cahill, Global Head of ESG at Moody’s Investors Service, the new NZAs aim to address the challenges market participants face when comparing emissions reduction plans between companies, which arise from issues such as “inconsistent disclosure requirements, differences in the size, coverage and timing of objectives, as well as differences in the ability of companies to execute their business transformation plans and achieve the set goals.”
NZAs, based on a five-point scale from NZ-1 (highest score) to NZ-5 (lowest score), reflect Moody’s view on the strength of an entity’s low-carbon profile relative to a trajectory consistent with the Paris Agreement to achieve global net zero by 2050. The scores take into account factors such as 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 companies, including public sector and non-profit organizations that have a similar ability to generate revenue.
“NZAs provide an independent and comparable assessment of an entity’s emissions reduction profile, allowing market participants to better understand the relative positioning of non-financial companies in their transition to a low-carbon future.”