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Nearly all major publicly listed companies are failing to align with global climate goals and risk overshooting their carbon budgets, with 98 per cent yet to disclose credible plans to shift capital away from high-carbon assets, according to a new analysis by the TPI Global Climate Transition Centre at the London School of Economics and Political Science (LSE).
The report, titled State of the Corporate Transition 2025, warns that companies across 12 high-emitting sectors are on track to exceed the 1.5°C global emissions intensity budget by 61 per cent between 2020 and 2050, and their 2°C budget by 13 per cent, putting the Paris Agreement goals at risk.
“At a time of increasing transition headwinds, rigorous and transparent analysis is more critical than ever,” said Ali Amin, Policy Fellow at the TPI Centre. “Our analysis shows that companies are making some progress, but the vast majority remain off track for the Paris Agreement temperature goals.”
The study assessed over 2,000 publicly listed companies with a combined market value of $87 trillion, covering around three-quarters of global listed equities. TPI evaluated these firms on two dimensions: Management Quality (MQ) — which tracks governance and climate-related decision-making — and Carbon Performance (CP), which benchmarks their emissions reduction targets against Paris-aligned pathways.
The findings show that almost all companies lack the core components of credible climate transition plans. The average MQ score stood at level 3 out of 5, indicating companies are integrating climate concerns into operational decision-making but failing to embed it into strategic planning or capital allocation. Crucially, less than 1 per cent of companies disclosed plans to phase out capital from carbon-intensive assets, and just 2 per cent aligned capital spending with long-term decarbonisation targets. These are considered essential steps to reaching net zero.
“Investors want evidence of transition, not just rhetoric,” said David Russell, Chair of Transition Pathway Initiative Ltd. “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.”
While companies are increasingly setting net zero targets, their emissions trajectories remain far off course. The 554 companies analysed for Carbon Performance were found to be collectively on track to overshoot their 1.5°C carbon budget by 61 per cent, highlighting a growing disconnect between target-setting and real-world emissions cuts. Aluminium, oil & gas and coal mining were named as the most misaligned sectors, while shipping emerged as the only sector undershooting its 1.5°C benchmark, largely due to two large firms with relatively ambitious net zero commitments.
TPI also found stark differences in the speed of emissions reductions across sectors. Between 2020 and 2023, automotive and electricity companies cut emissions intensity nearly five times faster than cement and steel firms, reflecting clearer decarbonisation pathways through electrification and renewables. “Autos and electricity benefit from commercially mature decarbonisation options that reduce uncertainty and support competitive positioning,” the report said.
The TPI Centre warned that many companies are banking on unproven technologies to achieve net zero, creating credibility risks for investors. It urged firms to accelerate near-term emissions cuts, embed transition goals into board-level strategy, and reallocate capital toward low-carbon assets. The report emphasised that clear transition pathways, robust disclosure, and capital alignment will be essential to build investor confidence and to prevent companies from locking in carbon-intensive business models incompatible with global climate goals.
“Companies need to accelerate emissions cuts and strengthen transition planning to give investors the confidence they need to invest,” Amin stressed.