Only 30% of the largest corporate emitters have set climate targets aligned with the 1.5°C goal by 2050, up from just 7% in 2020. However, no company has fully integrated decarbonization goals into its business practices, exposing a significant gap in actionable transition plans.

Companies in high-income countries outperform those in middle-income nations due to stronger regulations and more available resources.

A new report by the Transition Pathway Initiative (TPI), based at the London School of Economics, reveals that 30% of the world’s top emitters now have 2050 climate targets aligned with the 1.5°C pathway, a marked increase from 2020. Despite this progress, many companies lack clear intermediate targets and measurable strategies.

The "State of Transition Report 2024," which examined over 1,000 publicly traded companies valued at a combined $39 trillion, evaluated their progress in two key areas: Carbon Performance and Management Quality, providing an in-depth look at corporate climate efforts.

Carbon Performance: Leading sectors like diversified mining (50%), steel (46%), and electricity (41%) are making strides in aligning with climate goals. In contrast, food producers (8%) and oil & gas companies (6%) trail significantly. Regionally, companies in Europe, Australasia, and Japan are most aligned with climate targets, while 82% of Chinese companies are either misaligned or lack sufficient data.

Management Quality: Most companies (57%) are at Level 3, meaning they recognize climate change as a business risk but lack comprehensive strategies. Not a single company has reached Level 5, indicating none have developed robust, business-wide transition plans.

Simon Dietz, TPI Centre Research Director, commented, “The regulatory environment in host countries significantly influences how companies manage climate-related risks and opportunities. This report offers unparalleled insight into corporate climate action.”

David Russell, Chair of TPI, added, "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."

The report highlights substantial gaps in corporate climate action, particularly in high-emission industries and developing markets, calling for enhanced cooperation between companies, regulators, and investors to accelerate progress.