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4.2.1 Transition risk metrics

We developed two carbon intensity metrics to explain how a carbon tax would affect an asset’s business, depending on an asset’s absolute carbon emissions. The metrics present the ratio of an asset’s emissions in relation to its revenue and total assets.

  • Carbon-to-revenue ratio: This ratio explains to what extent an asset’s direct operation is linked to its emissions. This value provides insight into how much a potential carbon tax would affect an asset’s revenue.

    • Scope 1 tCO2e / revenue in USDm as of today and for 2030, 2040, 2050

    • Scope 2 tCO2e / revenue in USDm as of today and for 2030, 2040, 2050

    • Scope 3 tCO2e / revenue in USDm as of today

    • Scope 1+2 tCO2e / revenue in USDm as of today and for 2030, 2040, 2050

    • Scope 1+2+3 tCO2e / revenue in USDm as of today

    • Average (Scope 1+2 tCO2e / revenue in USDm) as of today and for 2030, 2040, 2050 for all indices, portfolios, sectors, and markets

  • Carbon-to-total assets ratio: In comparison, the ratio of emissions to total assets provides a long-term perspective on how a carbon tax would influence the asset’s value.

    • Scope 1 tCO2e / total assets in USDm as of today and for 2030, 2040, 2050

    • Scope 2 tCO2e / total assets in USDm as of today and for 2030, 2040, 2050

    • Scope 3 tCO2e / total assets in USDm as of today

    • Scope 1+2 tCO2e / total assets in USDm as of today and for 2030, 2040, 2050

    • Scope 1+2+3 tCO2e / total assets in USDm as of today

    • Average (Scope 1+2 tCO2e / revenue in USDm) as of today and for 2030, 2040, 2050 for all indices, portfolios, sectors, and markets

Furthermore, we calculate the impact of carbon taxes on an asset’s earnings before interest, taxes, depreciation, and amortisation (EBITDA).

  • EBITDA at risk: The metric provides a percentage of an asset’s EBITDA that represents how much an asset would lose in earnings due to a carbon tax based on an asset’s Scope 1+2 carbon emissions. The metric calculates the earnings at risk in per cent:

    • in per cent as of today and for 2030, 2040, 2050

    • Average EBITDA-at-risk in per cent as of today and for 2030, 2040, 2050 for all indices, portfolios, sectors, and markets

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