Implied temperature rise metrics: a compass without direction?

Abstract Implied temperature rise (ITR) metrics translate corporate emissions pathways into a temperature-based measure of climate alignment at the company and portfolio levels. This paper examines the consistency across providers and the practical relevance of ITR metrics. Using data from four major providers, we document substantial disagreement in reported climate-alignment outcomes. Cross-provider correlations at the company level are close to zero. Observable company characteristics explain little of the variation, indicating that provider-specific methodological choices are the main source of divergence. This disagreement does not diminish at the portfolio level and materially affects reported climate alignment for optimized portfolios and Paris-aligned benchmark funds. We find no evidence of meaningful convergence between 2021 and 2022, despite improvements in climate-related disclosure. Overall, our findings suggest that ITR metrics should be used thoughtfully when aligning portfolios with climate goals.