Traditional sustainable investment approaches depend on present-day data, such as carbon emissions and fossil fuel activity of a company. However, this information alone cannot determine whether a company is genuinely progressing in sustainability.
Forward-looking metrics - including implied temperature rise, science-based targets, and physical and nature risk assessments - help evaluate if companies are transitioning toward low-carbon operations.
Key Metrics
- Implied Temperature Rise - Estimates the global temperature increase that would occur if all companies operated at the same emissions intensity
- Science Based Targets - Identifies companies committed to emissions reductions validated by scientific standards
- Physical Risk - Shows company vulnerability to climate-related damages like flooding and extreme weather
- Nature Risk - Indicates percentage of company activities posing high ecosystem risks
How Illuminate Uses These Metrics
Illuminate's methodology combines current metrics - a minimum 50% carbon emissions reduction from the investable universe and fossil fuel activity exclusions - with forward-looking indicators, including 7% year-on-year decarbonization progress and increased portfolio weights for companies that set evidence-based targets.
In the app, we categorize these as "What's happening now" (current state metrics like carbon emissions) and "What could happen" (forward-looking indicators like science-based targets and implied temperature rise).