Climate Transition Assessment
Go beyond net zero targets. Demonstrate the credibility of your transition plans.
What is the Climate Transition Assessment?
The Climate Transition Assessment (CTA) is a qualitative opinion on where a company is on its current transition journey and where we expect it to head into the future, based on an assessment of planned transition activities and implementation drivers.
The CTA outcome is a single Future Shade, based on the award-winning Shades of Green approach, which shows the expected alignment of a company’s activities with a low carbon, climate resilient future (and alignment with the Paris Agreement), based on the feasible transition timeline for the company’s sector and its own transition plan/commitments.
Our Climate Transition Assessment now includes industry peer comparison, a Transition Progress score, and greater transparency into our Shades of Green shading approach.
How does the Climate Transition Assessment differ from a net zero target assessment?
The CTA is not a net zero assessment. Whereas many net zero targets are distant, reaching as far as 2050, the Climate Transition Assessment analyzes near-term actions and investments that the company has planned, and their likely implementation, considering potential risks and blockers.
The CTA can be applied across sectors and all starting points along the climate transition spectrum, including those earlier in their transition journey, and provides a forward-looking opinion based on a company’s transition plan.
We can now offer a Climate Transition Assessment for both non-financial corporates as well as financial institutions. For more detail on how we assess activities for corporates and financial institutions please refer to the Analytical Approach.
Our Approach
A Climate Transition Assessment is our qualitative opinion of how consistent with a low carbon, climate resilient future we expect an entity's economic activities will be once the entity's planned transition changes are realized and potential material implementation risks are considered. We express our opinion using a single Shade of Green ranging from Dark Green to Red.
Our CTA analysis includes:
- Current Shade (based on the Shades of Green spectrum)
- Climate Transition Plan
- Future Shade (based on the Shades of Green spectrum)
- Transition Progress
- Optional Add-Ons: In addition, and upon request from the company, we can assess consistency with green and transition equity designations with certain stock exchanges (e.g.: Nasdaq) and other frameworks.
- Analytical summary of strengths, weaknesses, and areas to watch
We have expanded the CTA analysis so that companies can:
- More easily compare where they are today and where they’re headed on their climate transition journey with the Current and Future Shade, based on the Shades of Green scale.
- Compare progress to industry peers on key environmental performance KPIs to stay ahead of the curve.
- Measure progress towards a low-carbon future with our Transition Progress score.
Learn more about our Analytical Approach and the Shades of Green
Use Cases for the Climate Transition Assessment
Financing: Debt
Demonstrate your company’s transition readiness to obtain sustainability or transition financing. Use the CTA either for labeled debt, in combination with a Second Party Opinion, or for unlabeled debt to demonstrate your commitment to transition at entity-level.
Obtaining a Green Designation on Stock Exchanges
Companies seeking to obtain a green designation on certain stock exchanges (e.g.: B3 Ações Verdes (BAV), Nasdaq Green Designations, or SIX 1.5°C Climate Equity Flag), either when going public as a green equity offering or as a listed company to help provide transparency on their green business models, status and strategies to investors, business and other stakeholders.
Before an IPO Announcement
Companies seeking an external opinion, where relevant, on their activities for listing on stock exchanges or a green equity or Initial Public Offering (IPO) announcement.
Investor and Stakeholder Communications
Demonstrate the credibility of your transition plans in your communications to investors and other stakeholders, particularly for companies in transitioning sectors.
Qualitative Climate Transition Risk Analysis
Provide a qualitative, deeper dive opinion for investors and banks/financial institutions seeking to understand the climate risk of their portfolio companies, including the transition ambition and plan of a particular company.
Green Equity Exchange Designations
S&P Global Ratings is currently an approved reviewer for three major stock exchanges' green equity designations: B3 Ações Verdes (BAV), Nasdaq Green Designations, and the SIX Swiss Exchange 1.5°C Climate Equity Flag.
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