Management Quality assessment of more than 1,000 companies' transition plans
07 November 2023
Research finds that only 5% of companies disclose quantified plans on how they will meet their greenhouse gas targets
An assessment of 1000+ companies’ transition plans has found that only one in 20 quantifies how it will meet its greenhouse gas targets.
- 1% of companies are aligning future capital expenditures with long-term decarbonisation goals.
- 2% of companies have committed to phasing out capital expenditure in carbon-intensive assets or products.
- 2% of companies clarify the role that will be played by offsets and/or negative emissions technologies within their transition plans.
- 52% of companies have undertaken climate scenario planning.
- 48% have incorporated climate risks and opportunities into their long-term strategies.
The analysis includes the largest companies in the highest-emitting sectors, such as oil and gas, steel, and coal mining, collectively constituting at least 90% of the total market capitalisation of those high-emitting sectors. It also identified areas where companies did perform better, with 84% of companies disclosing emissions targets, 98% disclosing policy commitments to act and 92% disclosing Scope 1 and 2 emissions of greenhouse gases.
The TPI Centre doubled the number of companies assessed compared with its analysis last year, in a major milestone, and added a new scoring level to its Management Quality (MQ) methodology to assess the rigour of companies’ transition plans. It also increased the total number of assessment indicators from 19 to 23, containing more ambitious and stretching disclosure demands.
Sectoral variation in MQ scores was found, with no clear correlation between average MQ scores and the perceived difficulties faced in decarbonising economic and industrial sectors. For example, airlines and oil and gas are two of the best performing sectors on the Centre’s MQ but they do not rate equally well when assessed on their Carbon Performance, as measured by the TPI Centre separately, as part of its online tool.
Similarly, firms with headquarters in Australasia, Europe and Japan score relatively higher on average across the TPI Centre’s framework.
These results show that, while companies’ management and governance of climate change have in many ways improved, they have yet to come up with the detailed, quantified and costed transition plans needed in this critical decade - Simon Dietz, TPI Centre’s Research Director and Professor of Environmental Policy at the LSE.