MSCI - Implied Temperature Rise
Data category
Climate Metrics
Brief description of the data offering
Implied Temperature Rise from MSCI ESG Research[1] is an intuitive, forward-looking metric, expressed in degrees Celsius, designed to show the temperature alignment of companies, portfolios and funds with global temperature goals. Investors can use Implied Temperature Rise to set decarbonization targets and support engagement on climate risk. The ITR measure, which is also designed to support reporting for the Task Force on Climate-related Financial Disclosures (TCFD), is part of a platform of analytical tools from MSCI ESG Research for institutional investors to navigate the transition to net-zero at every stage.
To help investors navigate the transition to net-zero, MSCI ESG Research has made the Implied Temperature Rise of over 2,900 companies publicly available. Search by company name or ticker to see the Implied Temperature Rise and the company's decarbonization target.
Key features of Implied Temperature Rise:
- Easy-to-grasp metric to express portfolio alignment with global temperature targets
- Covers companies’ Scope 1, 2 and 3 carbon emissions (may include estimates)
- Available for nearly 10,000 issuers[2]
- Forward-looking estimate developed by MSCI Climate Risk Center based on recommendations published by the TCFD portfolio alignment team[3]
- Based on data that can be easily examined and traced, together with analysis of companies’ decarbonization targets
- Supports investors seeking to report to the TCFD
- Supports investors seeking net-zero strategy implementation
[1] https://www.msci.com/our-solutions/climate-investing/net-zero-solutions/implied-temperature-rise
[2] The company-level dataset covers nearly 10,000 publicly listed companies based on the MSCI ACWI Investable Market Index, as of January 2022
[3]Measuring Portfolio Alignment: Technical Supplement Task Force on Climate-related Financial Disclosures, June 2021.
The data offers solutions for:
Climate scenario analysis
Where and how do you source your data?
Overview of methodology[1]:
Assess the companies’ carbon budget:
- We look at the remaining carbon budget left for the world if we are to keep warming this century well below 2 degrees Celsius (2°C)[2]
- We use this budget and allocate an amount to about 10,000 public companies—including all companies within the MSCI ACWI IMI universe
Chart companies’ potential future emissions:
- We then look at all the public companies’ projected emissions over the next five decades, based on their current emissions (company reported for Scope 1 and 2, or estimated when not reported; estimated for Scope 3[3]) and our analysis of their stated reduction targets.
Calculate whether companies overshoot or undershoot their carbon budget:
- All things being equal, a company whose projected emissions are below budget can be said to “undershoot,” while those whose projected emissions exceed the budget “overshoot”
Convert the relative excess or shortfall to an Implied Temperature Rise:
- The over or undershoot is then converted to an implied global temperature rise - meaning how much would the temperature of the world increase if the whole economy had the same carbon overshoot or undershoot as the company in question.
[1] https://www.msci.com/documents/1296102/31997292/Implied-Temperature-Rise-Methodology-Summary.pdf/38022da2-647f-15be-d367-524f351038f2?t=1653405935387
[2] The IPPC Special Report on 1.5 °C provides the remaining global carbon budget for different temperature rises and probabilities (https://www.ipcc.ch/site/assets/uploads/sites/2/2019/02/SR15_Chapter2_Low_Res.pdf, in Table 2.2)
[3] Companies' reported emissions for Scope 3 are sparse and highly inconsistent at present. To improve comparability, MSCI uses a company-specific model to estimate emissions for all 15 Scope 3 categories
Who are the data users?
- Corporates
- Financial institutions
- Investors
- Asset Managers
- Wealth Managers
What is the cost for your data offering?
Please contact esgclientservice@msci.com
What are the key attributes that differentiates the data you offer?
Innovation: MSCI’s Climate Risk Center is an industry leader in climate change risk analytics, modeling and methodology. Carbon Delta, which MSCI acquired in 2019, has pioneered a series of state-of-the-art models for climate-scenario analysis.
A powerful platform: MSCI Net-Zero Solutions is powerful platform for building climate-resilient portfolios at every stage, from risk management and benchmark selection to reporting.
Forward-looking: Our solutions consider a of range climate risk and opportunities, based on forward-looking analysis of both transition and physical risks.
The highest-quality data: Industry-leading datasets from MSCI cover more than 10,000 issuers and greater than 95% of global equity, fixed income and real-estate markets, as of August 31, 2021.
Decision-useful: Scenario-analysis tools from MSCI assess the impact of climate-related risks and opportunities for each issuer on the valuation of its equity and debt.
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Implied Temperature Rise from MSCI ESG Research is designed to show the temperature alignment of companies, portfolios and funds with #globalclimatetargets. Learn more here: https://www.msci.com/our-solutions/climate-investing/net-zero-solutions/implied-temperature-rise
