Carbon Performance assessment of steelmakers: note on methodology

Abstract

The TPI Centre’s Carbon Performance assessments to date have been predominantly based on the Sectoral Decarbonisation Approach (SDA). The SDA translates greenhouse gas emissions targets made at the international level (e.g. under the 2015 UN Paris Agreement) into appropriate benchmarks, against which the performance of individual companies can be compared. The SDA recognises that different sectors of the economy (e.g. oil and gas production, electricity generation, and automobile manufacturing) face different challenges arising from the low-carbon transition, including where emissions are concentrated in the value chain and how costly it is to reduce emissions. Other approaches to translating international emissions targets into company benchmarks have applied the same decarbonisation pathway to all sectors, regardless of these differences. Such approaches may result in suboptimal insights, as not all sectors have the same emissions profiles or face the same challenges: some sectors may be capable of faster decarbonisation, while others require more time and resources. Therefore, the SDA takes a sector-by-sector approach, comparing companies within each sector against each other and against sector-specific benchmarks, which establish the performance of an average company that is aligned with international emissions targets.