Scope of Analysis Worksheet
Describing what is in and out of analysis, and why
To measure greenhouse gas (GHG) impact, analysts begin by characterizing the scope of analysis, which defines what you are assessing, who analysis is for, and other factors that inform the structure of the methodology used.
Within the context of Project Frame, certain elements of the scope of analysis are standardized. Others are up to the investor.
This document offers some guiding questions to inform how you communicate your Scope of Analysis to readers or decision makers. Review Frame’s latest Guidance for the core Scope of Analysis defining our community's purpose. Consider these questions an initial guide to ensure that your approach to analysis is clear for readers who may have different assumptions about terminology used or the goals of assessment.
If you have feedback, please contact impact@primecoalition.org.
Purpose
What is the purpose of analysis?
Who are your primary audiences and how will they access the content? What are they using it for?
Who are secondary audiences (if applicable), and how will they receive the content? (Groups or individuals that may see the analysis but are not the primary users)
Methodologies are typically designed to help users make specific kinds of decisions. Understanding who users are and the decisions they seek to make are essential to understanding methodology design. For example, Project Frame’s methodology is designed to help investors assess the future impact of climate solutions prior to investment as well as report avoided emissions post-investment. It is meant to align investors with solutions from pre-seed stage into growth equity that are on a path to sustainable, scalable impact. This directly affects the calculation structure.
What Is or Is Not Analyzed
Impact Metrics or Topics Assessed
Which topics are being considered in analysis? Which metrics will be quantified?
Among GHGs:
Do you plan to report all values in CO2e?
Will you disaggregate GHGs and consider how your solution affects warming over different time scales, such as by calculating GWP-20?
What you are measuring will inherently change how you measure it. While Frame’s methodology currently focuses exclusively on GHGs (and recommends clear differentiation between emissions types), many investors also integrate other environmental, social, and governance factors. In addition, many investors use GWP-20 to normalize for GHGs that have significant short-term warming effects. To learn more, see Global Warming Potential (GWP) in Frame’s methodology.
Types of Methodologies Applied
Are you quantifying planned, potential, and/or realized GHG impact?
Are you quantifying GHG footprint(s)?
Are you using another type of assessment?
Frame’s methodology focuses on planned, potential, and realized GHG impact, but those are not the only ways to assess impact. Investors combine methods according to their theories of change and goals. Examples of other methodologies often applied include GHG footprint, comprehensive life cycle assessment, and various approaches to avoiding harm.
Units & Markets
Solution Unit: What is the solution unit?
Incumbent Unit (if applicable, also called reference flow in Life Cycle Assessment): What are potential comparable incumbent units to the solution unit? If there is more than one incumbent, and if so, how do you plan to account for differences in unit impact among them?
Assessment of a climate solution is initially based on defining the smallest replicable instance of the solution, called a solution unit. Over time, a commercially scalable solution takes market share away from the incumbent(s) as it is sold. As such, the incumbent should be directly defined by markets targeted by the solution, with identical granularity applied in business planning. GHGs associated with both solution and incumbent units can drastically vary from market to market, due to factors including grid emissions, weather, customer use, and more. Furthermore, Project Frame’s intended audience is venture, meaning that when analyzing a company, the analyst often assesses a singular solution. Assessing later-stage companies with multiple offerings adds an additional layer of complexity.
Investors should explain the market profiles for their solution to their audience. Because many of these details depend on the stage of the solution and market characteristics, a concise summary may show up in discussions on volumes, rather than in a scope of analysis.
Critical Workflows
Decision-Making Context
What investment criteria, governance structures, or goals inform your approach to analysis?
Investment goals and contexts drive a variety of methodological processes in investing firms. For example, while there are plenty of proposed climate solutions, fewer have a significant unit impact, and far fewer of those have the realistic potential to scale. Even within that smallest pool, there are not enough investment dollars available to support all. Investors filter, or downselect, solutions to drive capital towards solutions that have the highest probability of clearing the investor’s respective impact and business targets.
This may mean that commercial viability comes first in analysis and informs specific impact targets for unit impact, volumes, or GHG impact, while others prioritize unit impact first.
Time
If you are assessing planned or potential GHG impact, how far into the future are you projecting?
Will you consider how incumbent and solution unit emissions will change over time?
How many scenarios for future unit emissions will you model?
How many scenarios for volumes will you model?
GHG footprinting focuses on emissions that have occurred in the past. If investors are assessing GHG footprint, they should define the time frame of past assessments, such as if values reflect a single year or a quarter.
In planned and potential GHG impact, investors compare GHGs associated with a solution and incumbent into the future. Investors should clearly define how many years into the future they look and how they calculate cumulative values.
For example, Frame recommends quantifying annual unit impact and volumes, even if additional cumulative values over a defined time are also reported.
The future is inherently uncertain and many investors take time to model different potential outcomes. In addition to reporting quantified results of scenario analysis, investors should clearly explain how the values drive decision-making. For example, if every investment must clear a quantified impact target, investors should explain whether all scenarios must clear the target to move forward.
System Boundaries
Among the following lifecycle stages, which are you considering?
Upstream (cradle-to-gate)
Operational emissions
End-of-life emissions
Describe any granular inclusions or exclusions within each category as appropriate.
Describe if and how materiality informs distinctions between qualitative and quantitative analysis.
An analyst may encounter a material source of difference at any lifecycle stage. Frame thus emphasizes that a cradle-to-grave system boundary is essential in generating a quality analysis.
But investors in early-stage solutions must quickly parse through dozens if not hundreds of solutions to deploy capital in a short period of time. It is often unrealistic and inaccurate to attempt to quantify every potential source of difference between an undeveloped solution and the incumbent.
In addition, some sources of difference massively outweigh others. To account for this challenge, some investors qualitatively assess from cradle-to-grave but limit quantification to the most material sources of difference.
Want to learn more? Read Project Frame GHG Impact Methodology to dive into emissions impact assessment and reporting.
