CIARA Methodological Guide - Climate Change Mitigation

This guide is the second edition of the CIARA (Climate Impact Analytics for Real Assets) methodological documentation.

The first edition, published in 2020, established an assessment framework to help infrastructure investors incorporate climate performance indicators into their portfolios. Since then, the methodology has been enhanced based on client feedback, the tool’s usage, and the development of sector-specific models. This updated version of the guide includes all of these improvements.

This document will focus solely on CIARA’s contribution to climate change mitigation, specifically the reduction of greenhouse gas emissions and the management of transition risks. Additional documentation regarding physical risks and climate change adaptation has been published previously. Finally, a new methodology related to biodiversity indicators and dedicated to infrastructure assets, called BIARA (Biodiversity Impact Analytics for Real Assets), is currently being developed by Carbone 4 and will not be addressed in this document.

Summary:

Infrastructure is essential to the functioning of our economy: it provides services such as energy, transportation, waste management, and water.

Traditional carbon accounting tools are insufficient for financial institutions to assess their climate performance. While traditional companies can gradually decarbonize their operations or adapt their business models, the environmental impact of an infrastructure asset is largely determined during the investment and design phases. Once an asset is operational, the scope for reducing emissions remains limited.

Asset managers, property owners, and financial institutions therefore need a framework that goes beyond simple emissions reporting—one that assesses an asset’s long-term compatibility with decarbonization goals while incorporating the management of transition risks and opportunities.

CIARA was developed to address this methodological need. This tool provides indicators that are useful for decision-making when financing infrastructure, aligned with both operational needs and long-term climate goals. The methodology is based primarily on two complementary indicators:

• Temperature alignment score (2°C scenario)This is CIARA’s core indicator, and what sets it apart from other methodologies. Designed to enhance transparency, it aims to help public and private institutions compare their assets, understand their long-term impacts, and develop a dynamic portfolio management strategy. Based on emissions trajectories tailored to the end uses of each asset, this score provides a forward-looking assessment of the asset’s compatibility with a 2°C scenario. The result is expressed as a “temperature score,” ranging from 1.5°C for highly aligned assets to 5.5°C for the least aligned. The calculation can be performed at different levels (sub-assets, assets, portfolios) and incorporates regional energy mixes, sectoral trajectories, and the end uses of infrastructure.
• Carbon footprintThis indicator provides a snapshot of emissions, making it possible to identify the assets with the highest emissions and the associated reduction levers. It serves as a common foundation for internal monitoring and external reporting. Based on the GHG Protocol, it combines physical data and standardized emission factors to calculate emissions across the five phases of an infrastructure asset’s lifecycle: construction, upstream, Scopes 1 and 2, and operation.It thus enables investors to identify the main sources of emissions and to compare assets within the same sector or across sectors. CIARA therefore provides data consistent with the requirements of PCAF and the SFDR.

One of the key strengths of the CIARA indicators is their relevance at every stage of the financing cycle: the creation of an infrastructure fund, acquisition, management, and, where applicable, divestment. They enable financial institutions to define their goals, select new assets, manage funds, improve the climate performance of assets, and manage their exposure to transition risks.

By highlighting the best-performing assets, CIARA facilitates financing decisions that can improve overall climate performance, making it a practical and operational tool for tracking climate performance.

Contacts

• Morgane Le Guen, Manager: morgane.leguen@carbone4.com
• Project team: ciara@carbone4.com

Acknowledgments: Carbone 4 would like to thank the project’s financial partners and the reviewers of this guide.