This report by the Transition Pathway Initiative (TPI) assesses the state of transition of the world’s largest and highest-emitting public companies towards a low-carbon economy. To do this, we have analysed TPI’s database of corporate climate action in its entirety. Currently this comprises 274 companies in 14 sectors of the economy, accounting for around 41 per cent of emissions from the universe of publicly listed companies worldwide.

TPI’s assessment is divided into two parts:

1. Management Quality covers companies’ management/governance of greenhouse gas emissions and the risks and opportunities arising from the low-carbon transition.
2. Carbon Performance involves quantitative benchmarking of companies’ emissions pathways against the international targets and national pledges made as part of the 2015 UN Paris Agreement on climate change, for example limiting global warming to below 2°C.

The framework is aligned with the recommendations of the Financial Stability Board’s Taskforce on Climate-related Financial Disclosures (TCFD), tracking companies in relation to TCFD’s four recommendation areas: governance, strategy, risk management, and metrics and targets.

Results synthesised by this report include:

• Most companies have built basic capacity to manage the low-carbon transition
• Too many big emitters are yet to integrate climate change into their operations, let alone take a strategic approach
• Significant disclosure gaps remain on corporate emissions
• Few companies are aligned with the Paris Agreement but the leaders show what is possible
• Management Quality and Carbon Performance are correlated, but investors need to engage directly on emissions targets