- 98% of companies have not disclosed plans to shift capital away from carbon-intensive assets or to align spending with their long-term decarbonisation goals.
- Publicly-listed companies across high-emitting sectors to exceed 1.5°C global emissions intensity budget by 61% between 2020 and 2050 on current trajectory.
An analysis of over 2,000 publicly listed companies has found that they lack the core components of credible climate transition plans, according to
new research published today (17 September 2025) by the TPI Global Climate Transition Centre (TPI Centre) at the London School of Economics and Political Science (LSE).
In ‘
State of the Corporate Transition 2025’, the TPI Centre assessed companies on their Management Quality and Carbon Performance, two distinct but connected types of analysis of companies’ progress on the low-carbon transition. Management Quality focuses on governance processes, while Carbon Performance focuses on benchmarking the emissions reduction targets of companies against Paris Agreement goals.
For the
report, the TPI Centre analysed the Management Quality of 2,000 companies, which collectively represent US$87 trillion in market capitalisation and approximately three-quarters of total publicly listed equities worldwide. These companies span 24 sectors and were selected to capture the largest holdings in investor portfolios, focusing on firms with the largest market capitalisation and the biggest carbon footprints. Management Quality data is provided by LSEG, TPI’s data partner.
In contrast, Carbon Performance is assessed in-house and is a more nuanced, resource-intensive assessment, applied to 554 companies selected primarily based on market capitalisation from 12 high-emitting sectors.
Almost all the companies assessed on Management Quality have a significant gap in transition planning and implementation. The average Management Quality score is at level 3 out of 5, meaning most companies are integrating climate into operational decision-making but falling short on strategic planning. Less than 10% of companies meet any of the level 5 indicators. Phasing out capital away from carbon-intensive assets (<1%) and aligning it with long-term decarbonisation goals (2%) were the indicators for which the lowest scores were recorded, despite being a crucial commitment given the need for companies to invest in new technologies and production routes to achieve net zero.
Although there has been a notable increase in long-term alignment since 2020, the authors found that the 554 companies assessed on Carbon Performance are “collectively set to overshoot their 1.5°C emissions intensity budget by 61% and their 2°C budget by 13% between 2020 and 2050.” Aluminium, oil & gas, and coal mining are the most misaligned sectors, while shipping is the only sector undershooting its 1.5°C benchmark, driven by two large firms with relatively ambitious net zero targets.
Two newly-introduced analyses focusing on credibility found that companies must cut emissions far more rapidly than they have in recent years to align with the Paris Agreement’s goals, and that many rely on unproven technologies, with stark differences emerging across sectors.
The authors also state that between 2020 and 2023, the average company in auto manufacturing and electricity reduced their emissions intensity at nearly five times the rate of their counterparts in cement and steel. They mention that “autos and electricity benefit from clearer, commercially mature decarbonisation options such as electrification and renewables, which can reduce uncertainty and support competitive positioning.”
Ali Amin, Policy Fellow, TPI Centre at LSE, said:
“At a time of increasing transition headwinds, rigorous and transparent analysis is more critical than ever.
“Our analysis shows that companies are making some progress, but the vast majority remain off track for the Paris Agreement temperature goals. Companies need to accelerate emissions cuts and strengthen transition planning to give investors the confidence they need to invest.”
David Russell, Chair of Transition Pathway Initiative Ltd, said:
“Investors want evidence of transition, not just rhetoric. By connecting Management Quality scores with emissions data and decarbonisation levers, this
report provides a clearer view of whether companies are delivering the emissions reductions required to meet their climate targets.”
ENDS
Notes to editors
- The TPI Global Climate Transition Centre (TPI Centre) is an independent, authoritative source of research and data on the progress of corporate and sovereign entities in transitioning to a low-carbon economy. It is part of the Global School of Sustainability at the London School of Economics and Political Science (LSE).
- The TPI Centre is the academic partner of the Transition Pathway Initiative (TPI), a global initiative led by asset owners and supported by asset managers, aimed at helping investors assess companies’ preparedness for the transition to a low-carbon economy. As of September 2025, 156 investors globally, representing approximately US$87 trillion[1] combined Assets Under Management and Advice, have pledged support for TPI.
- LSEG is TPI’s data partner and conducts the Management Quality assessments. TPI data are at the core of FTSE TPI Climate Transition Index Series.
- Market capitalisation coverage is calculated for companies based on which sector represents their primary activity. The calculation can change due to fluctuating corporate valuations, the size of the company universe assessed, or due to company sectoral reclassifications.
- For more information, please visit https://www.transitionpathwayinitiative.org.
[1] This figure is subject to market-price and foreign-exchange fluctuations and, as the sum of self-reported data by TPI supporters, may double-count some assets.
