Goldman Sachs GS SUSTAIN: ESG of the Future Methodologies to forecast GHG emissions Our analysts forecast GHG emissions mainly relying on two alternative methodologies: (1) via emissions intensities; or (2) using percentage changes vs. historicals. While the difficulty to forecast emissions varies widely across sectors — with heterogeneous sectors such as Chemicals and Construction Materials likely the most difficult to forecast emissions due to multiple distinct output streams — our analysts primarily followed these two methodologies to derive Scope 1 and Scope 1+2 emissions in 2021E-2025E. In all cases, our analysts started from historical emissions or emissions intensities per companies disclosures — e.g., sustainability reports or CDP reports — and projected emissions in the forecast period, overlaying companies own emissions targets with various degrees of confidence, depending on the level of granularity provided by corporates in terms of strategic initiatives to achieve those decarbonization targets. Generally, we note analysts often looked for more details regarding medium-term pathways/catalysts before giving companies credit for GHG emissions targets. n Emissions forecast using emissions intensities. Relying on historical emissions intensities per company disclosures and from analysts estimates for the corresponding sector-specific activity metric, our colleagues derive emissions intensities in the forecast years 2021E-2025E. As stated above, these also factor in companies emissions targets to various degrees, depending on the confidence level regarding pathways and strategies to meet those decarbonization objectives. Emissions intensities in the forecast period are then multiplied by the corresponding activity metric to obtain absolute emissions. We note analysts tend to apply this methodology to Scope 1 and Scope 1+2 emissions, most commonly not calculating Scope 2 emissions as a separate component. n Emissions forecast via percentage changes vs. historical emissions. Particularly for heterogeneous sectors, some analysts calculated Scope 1 or Scope 1+2 emissions based on the YoY percentage change vs. 2019/2020 historical emissions per company disclosures, relying on total volumes/productions — or, alternatively, rates of change in those metrics — as proxies to derive emissions.