Publicly listed equities
The TPI Centre assesses the largest companies by market capitalisation in the most emissions-intensive sectors, including electricity, aviation and cement.
Companies are assessed on Yes/No indicators related to climate governance and are given a Management Quality (MQ) score based on these outcomes.
Companies’ emissions reduction targets are also assessed against sector-specific benchmarks, to determine their Carbon Performance (CP) alignment with the goals of the Paris Agreement.
Emissions scopes are determined based on the most material emissions in each sector and intensity denominators are similarly sector-specific.
The TPI Centre assesses most sectors against three benchmarks:
· 1.5 Degrees, consistent with holding the temperature increase to 1.5°C with a 50% probability.
· Below 2 Degrees, consistent with holding the global temperature increase to below 1.8°C with a 66% probability.
· National Pledges, consistent with emissions reductions related to policies introduced or under development up to at least mid-2020, depending on the sector; these reductions collectively are insufficient to limit global warming to 2°C or below.
Climate Action 100+
is an initiative made up of 700 investors, responsible for over $68 trillion in assets under management and who are engaging companies on improving climate change governance, cutting emissions and strengthening climate-related financial disclosures. To measure companies’ progress in achieving these three goals the investors under the CA100+ initiative supported by the TPI Centre’s research team developed the net zero company benchmark. This benchmark presents a key measure of corporate progress on climate action and the move to achieve net zero emissions by 2050 or sooner. As of September 2022, the benchmark covered 159 focus companies, which are assessed on 10 high-level indicators. Investors use the benchmark to monitor progress, inform engagement strategies and decisions, and assess the alignment of company decarbonisation strategies with the goals of the Paris Agreement.
The TPI Centre has supported the research and development informing the original disclosure benchmark and continues to inform the ongoing evolution of the benchmark. For each CA100+ publication, the TPI Centre carries out data collection, validation, analysis and data preparation as well as project management of the benchmark data delivery.
Corporate bond issuers
The TPI Centre assesses the top 30 corporate bond issuers by the market value of issued debt in electricity and oil & gas. Bond issuers in other high-emitting sectors will be added in the future. Bond issuers are assessed using the same MQ and CP scoring methodologies used for listed equities. Many of the largest bond issuers are also among the largest companies by market capitalisation, so there is a significant overlap in the listed equities and corporate bonds company universes. The full dataset of bond issuers’ MQ and CP scores are available at the TPI Centre’s online tool
The banking sector has a critical role to play in the low-carbon transition by incentivising emissions reductions in the real economy through climate-aware financing. The TPI Centre, in partnership with the Institutional Investor Group on Climate Change (IIGCC), has developed an investor-led pilot framework of indicators to assess the preparedness of banks for the low-carbon transition. Our framework sets an action-focused roadmap for banks to align their financing activities with the goals of the Paris Agreement. In summer 2022, the TPI Centre published a report
describing our methodology and pilot analysis of 27 banks.
For more detailed information on the project, including the banking assessment methodology, banks’ assessment results, and related publications, see the TPI Centre’s online tool for Banks
Sovereign bond issuers (ASCOR project)
The TPI Centre is the academic partner of the investor initiative Assessing Sovereign Climate-related Opportunities and Risks (ASCOR). This project aims to enable investors to assess countries’ emissions pathways, climate policies and climate-related funding needs. ASCOR will develop a tool to enhance investors’ decision-making capabilities and support investors working towards net zero goals. The project is an international collaboration of investor networks, asset owners and asset managers, representing over $5 trillion AUM and chaired by BT Pension Scheme (BTPS) and the Church of England Pensions Board.
Which sectors have been analysed?
With a focus on assessing sectors contributing most significantly to greenhouse gas emissions, the TPI Centre has analysed over 400 publicly listed companies across 16 high carbon sectors (as of September 2022), including coal mining, oil and gas, electric utilities, autos, aviation, shipping, steel, cement, paper, aluminium and chemicals. Data using a draft framework for the banking sector were published in July 2022. Data releases on further sectors are planned.
Are the analysis results publicly available?
Yes, all sector assessments are available at the TPI Centre’s online tool.
How often are the tool’s data updated?
The online tool is updated annually to ensure the most recent available data from companies’ annual reporting are included. Updates are also made as new sectors and performance assessments are rolled out.
What does it mean when a company has multiple Carbon Performance assessments?
Some key companies operate in more than one sector assessed by the TPI Centre: we conduct a sector-specific assessment for each of the sectors in which a company operates. For example, a company may produce both crude steel and aluminium. In this company’s steel assessment, the TPI Centre would evaluate only the emissions and production data from steelmaking and compare the company's steel-specific pathway with the TPI Centre's steel-specific benchmarks. Other activities undertaken by the company, for example aluminium production, would be assessed separately, considering only the emissions and production data from those separate activities. Targets adopted by the company that are specific to a particular activity are incorporated into the TPI Centre's appropriate sector-specific assessment. We take a case-by-case approach to the interpretation of company-wide targets to evaluate whether targets can reasonably be assumed to apply in proportion to the emissions of the activity under consideration. Investors may want to consider all sector-specific assessments of a given company to understand its overall Carbon Performance. Multi-sector companies can be easily identified in the dropdown list or in the TPI Centre's downloadable file.