Goldman Sachs GS SUSTAIN: ESG of the Future also view this as a start, because: (a) Not all corporates disclose emissions; (b) Scope 1 emissions from those that do represent a minority of total global emissions; (c) our analysts do not cover all the companies in the sectors we are focused on; and (d) there is need for further basis for analyst forecasts for some covered companies. Importantly, our analysts forecasts do not include corporate Scope 3 emissions — emissions from consumers and suppliers. At the country level, we address where focus on consumer emissions vs. corporate emissions could have greater initial impact later in the report. Key takeaways: 1. We do not see corporate emissions in the seven high-emitting sectors we forecast moving back up to 2019 levels through 2025, and our forecasts imply a relatively flattish emissions profile post-2021 with 2025 down 9% vs. 2019. 2. We see a more material reduction in emissions intensity, with median sector down 15% (on a market cap-weighted average basis — range -3% to -20%) in 2025 vs. 2019 levels (excludes Chemicals due to insufficient data). 3. Sectors where our analysts forecasts imply the greatest reduction in emissions intensity in 2025 vs. 2019 are Electric Utilities, Oil & Gas Producers, Diversified Metals & Mining and Aluminum (intensities refer to Scope 1 emissions for Electric Utilities and Scope 1+2 for other sectors). We have compared the percentage reduction in emissions intensity through 2025 to the path needed longer term for a <2 degrees and 1.5°C temperature rise scenario laid out by our colleagues Carbonomics reports. While there is no sector where the percentage emissions intensity reductions through 2025 appears consistent with a 1.5°C temperature rise scenario, based on our analysts estimates, we see the percentage reduction in emissions intensity through 2025 most consistent with well below 2°C and 2°C scenarios for Electric Utilities, Steel, Aluminum, Chemicals and Diversified Metals & Mining. Importantly, ESG ownership among these seven sectors is limited... ESG funds are 33% underweight on average the seven most emitting sectors on a market cap weighted basis when including all companies in our GS SUSTAIN database. We attribute this largely to the higher emissions intensity and the predominant focus of overweight positions in sectors levered to solar, water and wind. ... but we see rising interest over time among investors in ESG Improvers. As ESG investor focus shifts from Aspiration to Action, we believe investors will begin to consider owning companies that have historically been high emitters where there is confidence in a meaningful reduction in emissions or where their products contribute to meaningful avoidance of emissions relative to their emissions profiles. However, this requires sufficient engagement to forecast emissions and future product impact. Ultimately, company guidance of emissions targets is not enough; understanding pathways and drivers will be important for funds to make credible cases for impact to their investors, particularly if portfolios are being measured by their carbon footprint.