![]() Scientific consensus suggests that reducing emissions until they reach net zero around mid-century (2050-2070) is how this goal could be met. A net zero emissions economy is one that balances emissions and removals. The ITR metric is calculated by looking at the current emissions intensity of companies within the fund's portfolio as well as the potential for those companies to reduce its emissions over time. ![]() If emissions in the global economy followed the same trend as the emissions of companies within the fund's portfolio, global temperatures would ultimately rise within this band. Note, only corporate issuers are covered within the calculation. A summary explanation of MSCI’s methodology and assumptions for its ITR metric can be found here.īecause the ITR metric is calculated in part by considering the potential for a company within the fund’s portfolio to reduce its emissions over time, it is forward-looking and prone to limitations. As a result, BlackRock publishes MSCI’s ITR metric for its funds in temperature range bands. What are the key assumptions and limitations of the ITR metric? The bands help to underscore the underlying uncertainty in the calculations and the variability of the metric. This forward-looking metric is calculated based on a model, which is dependent upon multiple assumptions. Importantly, an ITR metric may vary meaningfully across data providers for a variety of reasons due to methodological choices (e.g., differences in time horizons, the scope(s) of emissions included and portfolio aggregation calculations).Īlso, there are limitations with the data inputs to the model. There is not a universally accepted way to calculate an ITR. There is not a universally agreed upon set of inputs for the calculation. At present, availability of input data varies across asset classes and markets. To the extent that data becomes more readily available and more accurate over time, we expect that ITR metric methodologies will evolve and may result in different outputs. Where data is not available, and / or if data changes, the estimation methods vary, particularly those related to a company’s future emissions. The ITR metric estimates a fund’s alignment with the Paris Agreement temperature goal. However, there is no guarantee that these estimates will be reached.
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