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Carbon and Other Intensity Metrics

Score Updates 

April 2023

 

From April 2023, Morningstar Sustainalytics will update the Carbon Intensity and Carbon Intensity Trend management performance indicators, among other intensity metrics.

Sustainalytics will shift to a new baseline year model for all intensity metrics, which means that any company assessed using these indicators may see a change in their ESG Risk Rating management score.

Frequently Asked Questions

 

 

Carbon Intensity (E.1.9)

Carbon Intensity (CI) measures how much carbon a company releases for Scope 1 and Scope 2 carbon emissions per unit of output. In this case, due to a lack of uniform, consistent output data, Sustainalytics uses revenue instead of unit of output.

  • Formula: CI = (FY Scope 1 + Scope 2)/ FY Total Revenues)
  • Scoring: Based on comparisons to the industry (not subindustry) median. See additional details below.

 

Carbon Intensity Trend (E.1.10)

The Carbon Intensity Trend (CIT) indicator measures a company’s current carbon intensity compared to the average of the past three years.

  • Formula: CIT = (Carbon Intensity for current FY - 3-year trailing CI Average)/ 3-year trailing CI Average
  • Scoring: See additional details below.

 

 

As of April 2023, Morningstar Sustainalytics will use fiscal year 2021 data to update both Carbon Intensity and Carbon Intensity Trend indicator scores.

The three-year Trailing Average is calculated with data from the following three fiscal years:

  • 2020
  • 2019
  • 2018

 

All companies that have Intensity Metric indicators assigned to their subindustry. Those companies that have not reported FY 2021 Scope 1 & 2 emissions data will receive the “inadequate disclosure” score.


 

The following intensity metrics will also be updated. Check to see if your company’s subindustry has the relevant Material ESG Issue (MEI), and if so, check if these indicators are included:

 

Indicator CodeIndicator NameIndicator TypeMaterial ESG Issue
E.1.2.7Water IntensityManagementResource Use
E.1.2.7.2 Water Intensity Trend GeneratorsManagement Resource Use
E.1.2.7.3Freshwater Intensity for GeneratorsManagementResource Use
E.1.13SOx IntensityExposureEmissions
E.1.14NOx IntensityExposureEmissions

 

Sustainalytics' scoring of an intensity metric is based on a comparison to the median intensity of the industry (not subindustry). At this time, Sustainalytics has opted to collect as complete a set of fiscal-year data as possible. Therefore, we update these metrics in the first quarter of the second year following the release of the data. In Q1 2023, we are releasing scoring updates based on FY 2021 data. We expect the collection of FY 2022 data to be completed in Q1 2024.

At this time, Sustainalytics is actively considering moving to a quarterly update system instead of an annual update. Sustainalytics will alert issuers if we decide to make this change.


Click on an indicator to view details. 

 

To calculate Carbon Intensity, Sustainalytics uses total Scope 1 and Scope 2 emissions – in metric tons of carbon dioxide-equivalent – and divides this figure by revenue.

  • Sustainalytics scores carbon intensity by comparing the figure to the industry median.
  • The industry median refers to the median intensity for all companies within the same industry.

Once Sustainalytics reviews details and calculates the carbon intensity, we assign a score based on the following thresholds: 

 

DetailsScoreRange
The company's carbon emissions intensity is well above the industry median.0More than 25% above industry median
Disclosure on carbon emissions is insufficient to determine performance relative to peers.20Company did not report Scope 1 or Scope 2 values for the fiscal year
The company's carbon emissions intensity is above the industry median.25Between 10% and 25% above industry median
This indicator score has been imputed while we complete the relevant research.29 
The company's carbon emissions intensity is in line with the industry median.50Between 10% below and 10% above industry median
The company's carbon emissions intensity is below the industry median.75Between 10% and 25% below industry median
The company's carbon emissions intensity is well below the industry median.100More than 25% below industry median


 

To calculate Carbon Intensity Trend, Sustainalytics examines performance for the defined baseline year and compares it to the average performance of the three preceding years.

  • The calculation is based on the filing currency for revenue.

Once Sustainalytics reviews details and calculates the carbon intensity trend, we assign a score based on the following thresholds: 

 

DetailsScoreRange
The company's carbon intensity trend shows an increase of 25% or more over the last 3 years.0More than 25% above the last 3 years’ average
Disclosure is insufficient to calculate the company's carbon intensity trend over the last 3 years.20Company did not report Scope 1 or Scope 2 values for the fiscal year and at least 1 historical year
The company's carbon intensity trend shows an increase of between 10% and 25% over the last 3 years.25Between 10% and 25% above the last 3 years’ average
This indicator score has been imputed while we complete the relevant research.29 
The company's carbon intensity trend has remained relatively stable (+/- 10% inclusive) over the last 3 years.50Between 10% below and 10% above the last 3 years’ average
The company's carbon intensity trend shows a decline of between 10% and 25% over the last 3 years.75Between 10% and 25% below the last 3 years’ average
The company's carbon intensity trend shows a decline of 25% or more over the last 3 years.100More than 25% below the last 3 years’ average


 

This indicator assesses a company's water withdrawal intensity performance by comparing its water withdrawal intensity in a given fiscal year to the median intensity of its industry group.

Sustainalytics adopts the Global Reporting Initiative (GRI) Global Sustainability Standards Board (GSSB) G4-EN8 definition of water withdrawal. We define it as the “sum of all water drawn from surface water, groundwater, seawater, or a third party for any use over the course of the reporting period​."

  • Water Intensity is calculated using the water withdrawal (in cubic meters) divided by revenue (in million USD revenue).
  • The water intensity is scored by comparing the figure to the industry median.
  • The industry median is the median of intensities of all companies within that industry.

Once Sustainalytics reviews details and calculates the water intensity, we assign a score based on the following thresholds:

 

DetailsScore
The company's water intensity is well above the industry median0
Disclosure on water use is insufficient to determine performance relative to peers20
The company's water intensity is above the industry median25
This indicator score has been imputed while we complete the relevant research29
The company's water intensity is in line with the industry median50
The company's water intensity is below the industry median75
The company's water intensity is well below the industry median100

 

This indicator assesses a company's performance, over time, on water withdrawal intensity. It compares the company's water withdrawal intensity in a given fiscal year relative to its three-year average (i.e. the last three fiscal years researched).

Once Sustainalytics reviews details and calculates the water intensity trend, we assign a score based on the following thresholds:;

 

DetailsScore
There has been a major increase in the water intensity of the company, compared to the previous three-year average0
The company does not disclose adequate data to calculate its water intensity trend20
The water intensity of the company has increased significantly, compared to the previous three-year average25
This indicator score has been imputed while we complete the relevant research29
The water intensity of the company has remained roughly stable, compared to the previous three-year average50
The water intensity of the company has decreased significantly, compared to the previous three-year average75
There has been a major decrease in the water intensity of the company, compared to the previous three-year average 

 

This indictor assesses the performance of a company's power generation freshwater intensity by comparing its freshwater intensity in a given fiscal year to the median intensity of its industry group.

  • In the Water Intensity Trend assessment, the defined base year is compared to the average performance of the three preceding years.
  • Water Intensity is calculated as the total volume of freshwater extracted for the current baseline year expressed in cubic meters per megawatt of output from power generation for the same baseline year.
  • The indicator score depends on the level of decrease/increase in water intensity over time.

Once Sustainalytics reviews details and calculates the freshwater intensity for generators, we assign a score based on the following thresholds:

 

DetailsScore
The company's freshwater intensity is well above the industry median0
Disclosure on water use is insufficient to determine performance relative to peers20
The company's freshwater intensity is above the industry median25
This indicator score has been imputed while we complete the relevant research49
The company's freshwater intensity is in line with the industry median50
The company's freshwater intensity is below the industry median75
The company's freshwater intensity is well below the industry median100


 

This indicator assesses sulphur oxide (SOx) intensity performance by comparing the gross SOx emissions of a company in a given fiscal year to the median intensity of its industry group.

Sustainalytics calculates SOx intensity as a company’s annual gross SOx emissions (in metric tons) divided by its annual revenue (in million USD).

This indicator information is reflected within the Exposure score (beta signal) rather than in the Management score.

Once Sustainalytics reviews details and calculates the SOx intensity, we assign a score based on the following thresholds:

 

DetailsScore
The company's SOx intensity is 200% or more above the industry mean0
This indicator score has been imputed while we complete the relevant research19
The company's SOx intensity is 100-199.99% above the industry mean20
The company's SOx intensity is 50-99.99% above the industry mean40
The company's SOx intensity is not disclosed.50
The company's SOx intensity is 25-49.99% above the industry mean60
The company's SOx intensity is within 25% of the industry mean80
The company's SOx intensity is 25-49.99% below the industry mean90
The company's SOx intensity is 50-99% below the industry mean100

 

This indicator assesses nitrous oxide (NOx) intensity performance by comparing the gross NOx emissions of a company in a given fiscal year to the median intensity of its industry group.

Sustainalytics calculates NOx intensity as a company’s annual gross NOx emissions (in metric tons) divided by its annual revenue (in million USD).

This indicator information is reflected within the Exposure score (beta signal) rather than in the Management score.

    Once Sustainalytics reviews details and calculates the NOx intensity, we assign a score based on the following thresholds:

     

    DetailsScore
    The company's NOx intensity is 200% or more above the industry mean0
    This indicator score has been imputed while we complete the relevant research19
    The company's NOx intensity is 100-199.99% above the industry mean20
    The company's NOx intensity is 50-99.99% above the industry mean40
    The company's NOx intensity is not disclosed.50
    The company's NOx intensity is 25-49.99% above the industry mean60
    The company's NOx intensity is within 25% of the industry mean80