X-Degree Compatibility (XDC)
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The X-Degree Compatibility (“XDC”)
The X-Degree Compatibility (“XDC”) is a science-based climate metric, designed for managing climate risks derived from the quantification of a company’s contribution to global warming. The XDC measures this contribution to global warming by expressing how many °C the earth would warm up to 2050 if all companies were as emission-intensive as the company under consideration, provided the same economic output.
Ex: if a company has an XDC of 2.7 °, this would signify that the earth would heat up 2.7 °C by 2050 if everyone would behave in the same manner as the company under consideration.
Procedure: The XDC is computed via the XDC-model, which can additionally calculate several other metrics, such as an emission reduction pathway to 2 °C.
Formula: for calculating a company´s individual contribution to climate change, the XDC-model processes company-specific data on emissions and economic performance and links it to the impact of that specific contribution to global climate change:
Emissions (Scope 1,2&3) / GVA X Climate Performance
Purpose: This metric serves for detecting, measuring and monitoring climate-related risks. It is an objective metric for determining the impact a company has on man-made climate change and indicating the exposure of a company to climate-related risks.
The metric in practice: Steps for using this metric:
1. Calculate your XDC by getting in touch with right. based on science
2. Assess your XDC: compare it against the 2 °C benchmark, sector-specific averages and the XDC of your biggest competitors
3. Set a climate target by choosing a target XDC in a target year
4. Design a strategy based on your interpretation of your XDC and on your target XDC
5. Assess the impact of (potential) climate measures and investments on reaching the target
The XDC for reaching climate goals within sustainability strategies:
In calculating an XDC its users are able to monitor their performance towards the climate goal they deem appropriate. They can do this by benchmarking all investment decisions against the target selected, allowing for better capital allocations that would all be justified in the attainment of the target selected.
Data Sources:
1. Individual XDC: company-specific data
2. Sector specific XDC: Bloomberg and Engaged Tracking (ET)
3. Climate Performance calculation: IPCC and NOAA
3. Climate Performance calculation: IPCC and NOAA
For more detailed information please contact us via info@right-basedonscience.de
