What is implied temperature rise?
Implied temperature rise (ITR) translates an entity's emissions target or projected emissions path into a temperature score, usually stated in degrees Celsius above pre-industrial levels. Under the CDP-WWF Temperature Scoring Methodology version 1.5, a score first calculates the target's compound annual reduction rate. This is the average yearly percentage decrease needed to move from the starting emissions level to the target. The method then compares that rate with benchmarks built from about 1,200 vetted scenarios in the IPCC Sixth Assessment Report database to estimate warming in 2100. It is a model comparison, not a prediction of the temperature one company will cause.
Why does implied temperature rise matter to you?
An investor or lender may use ITR to compare investees, choose engagement priorities, or track a portfolio target. SBTi's July 2025 Financial Institutions Net-Zero Standard implementation list accepts CDP-WWF version 1.5 and MSCI's February 2024 ITR method for specified climate-alignment targets. The list also warns that eligible methods can produce different scores because they use different scenarios, sector mappings, time periods, data and tests of target credibility.
A financial institution using SBTi's Near-Term Criteria version 2.0 must set:
- A separate portfolio temperature target for Scope 1 and Scope 2 that follows a linear path by 2040 to a scenario at least as ambitious as 1.5°C.
- A separate portfolio temperature target for Scope 1, Scope 2 and Scope 3 that follows a linear path by 2040 to a well-below 2°C scenario.
Keep this information beside each result:
- The provider, method version and benchmark.
- The scopes, score date and portfolio coverage.
- The weighting method and share of default scores.
These requirements come from criterion FI-C17.3.
How is implied temperature rise calculated?
The exact calculation depends on the method. CDP-WWF version 1.5 first converts a valid public GHG target into a compound annual reduction rate. Its warming functions compare that rate with vetted scenarios from the IPCC Sixth Assessment Report. The method produces separate scores for Scope 1, Scope 2, Scope 3 and permitted scope combinations within short-, medium- and long-term periods. A company without a valid target receives a 3.4°C default score under section 5.3.
At portfolio level, section 7.2 offers seven weighting options. The simplest, weighted average temperature score (WATS), is the sum of each holding's portfolio weight multiplied by its company score. Other options weight scores by total emissions or an ownership-based share of emissions. State the option and coverage before comparing two portfolios.
What mistakes should you avoid?
- Presenting a 2.1°C score as a precise forecast rather than a model result.
- Comparing scores from different providers without matching the model version, benchmark, scopes and time period.
- Hiding the percentage of portfolio value or portfolio GHG emissions assessed using the 3.4°C default score or estimated data.
- Using ITR alone as proof of current emissions performance or a credible transition plan.
Is implied temperature rise the same as climate scenario analysis?
No. ITR converts a target or projected emissions path into one alignment score. Climate scenario analysis tests how several plausible futures could affect operations and finance. One does not replace the other.
Can two providers give the same company different scores?
Yes. Check the scenario set, sector pathway, emissions data, target-validity rules, Scope 3 treatment, default score and end year. Record a method change as a break in the series; FI-C17.3 requires a financial institution to re-baseline if it changes its temperature-score source during the target period.
What should you send when an investor asks for ITR?
Send the entity and portfolio scores with their as-of date, method and version, benchmark, scopes, time period, weighting formula, holdings coverage, share based on public targets, share using defaults, and key exclusions. Include the target records and emissions data used so the investor can reproduce the stated inputs.