(C3.5) In your organization’s financial accounting, do you identify spending/revenue that is aligned with your organization’s transition to a 1.5°C world?
Question dependencies
This question only appears if “Yes, we have a transition plan which aligns with a 1.5°C world” is selected in column 1 of C3.1.
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Rationale
From a climate mitigation point of view, identifying the spending and revenue that is compatible with a 1.5°C world is a pre-requisite to understanding the extent to which organizations are aligning their finances with their climate transition plan.
Response options
Select from:
- Yes
- No, but we plan to in the next two years
- No, and we do not plan to in the next two years
Requested content
General
- Select “Yes” if, in your financial statements, you identify spending/revenue that is compatible with the level of decarbonization required to keep global temperature increase to 1.5°C compared to pre-industrial temperatures. See “Explanation of Terms” for more information.
- It is up to each company to determine what is considered to be aligned with your organization’s transition to a 1.5°C world, but for example:
- Revenue derived from the sale of low-carbon products or services as defined by recognized taxonomies (e.g. The EU Taxonomy for environmentally sustainable economic activities, Climate Bonds Taxonomy, The IEA Energy Technology Perspectives Clean Energy Technology Guide, etc.) could be considered to be aligned with a 1.5°C world. If you clearly distinguish in your financial statements the revenue generated from the sale of low-carbon products, as opposed to higher-emitting products, you should select “Yes”.
- Spending on the implementation of emissions reduction initiatives and/or investment in new low-carbon assets could be considered to be aligned with a 1.5°C world. If you clearly distinguish in your financial statements the spending which is related to decarbonizing your operations to align with a net-zero by 2050 or sooner pathway, as opposed to spending that would prevent you from reaching net-zero by 2050 (e.g. investment in new high -emitting assets), you should select “Yes”.
- You will have the opportunity to provide further details in the subsequent question.
Explanation of terms
- Climate transition plan: a time-bound action plan that clearly outlines how an organization will achieve its strategy to pivot its existing assets, operations, and entire business model towards a trajectory that aligns with the latest and most ambitious climate science recommendations, i.e., halving greenhouse gas (GHG) emissions by 2030 and reaching net-zero by 2050 at the latest, thereby limiting global warming to 1.5. Please refer to the CDP Climate Transition Plan technical note for more details.
- Alignment with a 1.5°C world: refers to the Paris Agreement long-term temperature goal, as expressed in relevant IPCC reports, in particular the IPCC Sixth Assessment Report (AR6) and the IPCC Special Report on Global Warming of 1.5°C (SR1.5). According to the Science-based Targets initiative, aligning with a 1.5°C world currently means reducing Scope 1, 2 and 3 emissions to zero or close to zero and neutralizing any residual emissions by 2050 at the latest.
