Report finds that 30% of the biggest corporate emitters have long-term climate targets 1.5°C aligned

According to the State of Transition Report 2024, since 2020, the share of companies with long-term emissions targets aligned with 1.5°C has increased from 7% to 30%. However, the credibility of long-term climate ambitions is often unclear, with many companies lacking intermediate targets and clear quantifications of the key elements of their climate strategies. 

The report bases its analysis on the Carbon Performance Assessment of 409 companies and the Management Quality progress of over 1,000 of the world’s highest-emitting public companies, collectively worth around US$39 trillion, which is tracked across 23 indicators ranging from Level 0 ‘unaware’ of climate change to the newly added ‘transition planning’ Level 5.  

Regarding Carbon Performance Assessment, the results discern that the diversified mining, steel and electricity sectors are most aligned with 1.5°C or below 2°C. The least aligned are food producers and oil & gas companies.  

By region, 66% of European, 64% of Australasian and 56% of Japanese companies have climate targets aligned with 1.5°C or below 2°C in 2050. In China, 82% of companies are either not aligned or lack suitable disclosure of relevant information; while for those headquartered in other Asian countries this figure is 70%.  

When examining Management Quality progress, 57% of the companies analysed operate at Level 3, which specifies that companies moved out of the laggard range and “have recognised climate change as a relevant business risk and/or opportunity, developed a policy commitment to act, set some kind of emissions reduction target, and disclosed their Scope 1 and 2 emissions.”  

This degree of alignment places the majority of companies far off having a strategic approach to climate as represented in Level 4. No company satisfies all Level 5 indicators, highlighting that none of those assessed has created a detailed, actionable transition plan that aligns business practices and capital expenditure decisions with decarbonisation goals. 

Companies headquartered in high-income countries were found to have better Management Quality and Carbon Performance than companies in middle-income countries, which may be explained by differences in regulation, availability of resources and corporate governance norms.   

David Russell, Chair of Transition Pathway Initiative, said: “TPI’s analysis shows that many companies in high emitting sectors failing to implement adequate transition processes and targets.  It also identifies a clear interdependency between local climate policy and company states of transition.   

“Investors therefore need to redouble their efforts to engage with both companies and policy makers to encourage appropriate and urgent responses to the systemic risk that climate change poses.”   

Find out more here.