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- Only 30% of the biggest corporate emitters have climate targets aligned with 1.5°C by 2050, up from 7% in 2020.
- No company has fully aligned its business practices with decarbonization goals, highlighting a gap in actionable transition plans.
- High-income countries outperform middle-income countries in climate performance due to regulatory and resource differences.
A new report by the Transition Pathway Initiative (TPI), based at the London School of Economics, finds that 30% of the world’s largest corporate emitters now have climate targets aligned with the 1.5°C target for 2050. This marks a significant rise from just 7% in 2020, yet many companies still lack credible intermediate targets and quantifiable strategies.
The “State of Transition Report 2024” analyzed over 1,000 public companies, collectively valued at $39 trillion. It assesses their progress in two key areas: Carbon Performance and Management Quality, offering a comprehensive view of corporate climate action.
Carbon Performance: Key sectors such as diversified mining (50%), steel (46%), and electricity (41%) are leading the way in aligning with climate goals. However, food producers (8%) and oil & gas companies (6%) lag far behind. Regionally, European, Australasian, and Japanese companies have the highest alignment rates, while 82% of Chinese companies are either misaligned or lack sufficient data.
Management Quality: The majority of companies (57%) are at Level 3, meaning they acknowledge climate change as a business risk but lack comprehensive strategies. None of the companies analyzed met all criteria for Level 5, indicating a failure to develop actionable, business-wide transition plans.
“The regulatory environment in host countries is likely to influence how well companies manage climate-related risks and opportunities,” said Simon Dietz, TPI Centre Research Director. “This analysis offers unique and in-depth insight.“
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David Russell, Chair of TPI, emphasized, “Investors need to redouble their efforts to engage with both companies and policymakers to encourage urgent responses to the systemic risk that climate change poses.”
This report highlights the critical gaps in corporate climate action, particularly in high-emission sectors and developing markets, urging stronger collaboration between companies, regulators, and investors to drive meaningful progress.