Greenly, the leading carbon accounting platform that helps 1,500+ companies worldwide measure and then reduce their carbon footprint, has announced its new Climate Rating System, using a points and medal system– Bronze, Silver, Gold and Platinum – to measure the reality of their customers' decarbonization trajectory. This recognition reflects companies' commitment to sustainable practices and their significant efforts to address climate challenges. The emphasis on transparency and responsibility of the awarded companies aims to address the current lack of transparency in ESG ratings related to climate. It also enables Greenly's clients to access a catalog of vetted low-carbon solutions.
In 2023, a study from Scientific Beta based on 25 ESG ratings from three major providers (Moody's Analytics, MSCI Inc., and Refinitiv) revealed that well-rated companies do not emit significantly less carbon than those with lower scores. The correlation between ESG scores and carbon intensity is nearly negligible, at around 4%. This means that there is currently no reliable signaling effect to guide consumers or investors toward companies making the most substantial contributions to accelerating the energy transition.
"Despite their popularity among businesses and boards, ESG ratings do not reflect companies' carbon impact," said Alexis Normand, co-founder and CEO of Greenly.
"And with increasing regulation focused specifically on carbon emissions, businesses need to have clear decarbonisation strategies which are grounded in reality."
A Measurable and Transparent Methodology
To address this lack of visibility, Greenly's Climate Analysts created a straightforward rating system that involves a comprehensive assessment of a company's greenhouse gas emissions, climate strategy, and environmental initiatives. Points are allocated in sections:
Creating and fine tuning your Greenhouse Gas report
Establishing a complete, transparent & precise baseline for your GHG journey
Setting Paris Agreement-aligned climate targets
Choosing transparent reduction targets, consistent with limiting global warming to 1.5°C
Building a solid reduction strategy
Building a reduction strategy consistent with meeting chosen targets, including sustainable procurement
Involving your teams in your climate strategy
Integrating the fight against climate change in corporate culture
Offsetting remaining emissions
Setting up an offsetting strategy to contribute to global Net Zero
A company's performance across all parameters generates the Climate Score, with ratings ranging from E to A+. Companies with a rating of C and above are awarded medals, progressing on four levels from Bronze to Platinum:
Bronze Medal: Certifies that a company has achieved a high level of transparency and can comply with potential legal obligations. In particular, it has published an emissions report, calculating its carbon footprint, including scopes 1, 2, and 3, and has published it on ADEME/CDP.
Silver Medal: The company has also defined its action plans and decarbonization strategy.
Gold Medal: The company has also certified its decarbonization efforts over several years, and complying with SBTi standards.
Platinum Medal: The company and its products represent an environmentally responsible alternative compared to market standards.
"We are already proud to have a gold-level Net Zero Contributor Certification from Greenly, which has guided us in reducing our emissions and put us on the path to becoming a sustainable company," said Asif Khan, Executive Director, Supply Chain of Mondetta. "We welcome the addition of the Climate Rating System for us to reinforce our commitment to taking tangible steps including establishing our baseline carbon footprint, committing to the Net Zero Initiative Principles and beginning to implement our action plans."
"We are not on track with the Paris Agreement objectives for decarbonisation. As investors seek to finance the energy transition, and businesses seek to maintain their relevance in a climate-conscious world, they face a dilemma: prioritize real carbon reduction, or simply pursue a high ESG score," explained Normand. "These two goals can often be incompatible, so it's essential to distinguish between a genuine decarbonisation effort and a mere ESG display. Our Climate Rating System sets out to do exactly this."
