Raising the bar: TPI’s new Management Quality framework

This report outlines updates to the TPI Centre's new Management Quality Framework and presents an assessment of over 1,000 companies

The updated Management Quality framework (‘MQ version 5.0’) adds a new Level 5 which tests companies on whether they have transition plans that include defined, quantified and financed actions to get to net zero. In addition, the number of indicators in TPI’s MQ framework has been increased from 19 to 23.

469 companies have been added to the TPI universe, taking the total number of listed companies covered by TPI’s MQ framework to 1,010.

Key insights from this year’s assessment include:

• No more than 5% of companies satisfy any MQ Level 5 indicator, and no company satisfies them all.
• 57% of TPI-assessed companies are on MQ Level 3 (Integrating climate change into operational decision making). 18% of companies are on Levels 0–2.
• The decline in companies scoring on Levels 0–2 is a result of a marked year-on-year improvement.
• While there is sectoral variation in MQ scores, there is no clear correlation between average MQ scores and the perceived difficulties faced in decarbonising different industrial sectors. For example, Airlines and Oil & Gas are two of the best performing sectors on MQ, despite being considered ‘difficult to decarbonise’.
• Scores have an uneven geographical distribution with Australasian, European and Japanese firms scoring higher on both average MQ level and against the new Level 5 indicators than those headquartered in other regions.