Transition Plans: Most listed companies still lack credible low-carbon strategies

Fewer than 3% of the world’s largest listed companies have published credible transition plans that explain how they will meet their climate targets, according to new research by the TPI Global Climate Transition Centre at the London School of Economics and Political Science (LSE).

Inside the research

The researchers reviewed the annual reports of more than 2,000 publicly listed companies, assessing whether they have the right governance processes in place to support their environmental goals. They also checked whether companies’ climate targets line up with the Paris Agreement, which aims to limit global warming to 1.5 – 2°C.

While many companies now consider climate change in their decision-making, few have long-term strategies to show how they will invest in the transition:

• Only 2% explained how they will invest in new equipment, technology, or skills to reduce emissions over time.
• Fewer than 1% disclosed how they will reduce or stop investment in carbon-heavy assets.

According to the research, most businesses have ambitions on paper but do not provide clear roadmaps for achieving them.

Performance and sector differences

There has been some progress. The research found a “notable increase” in long-term Paris Agreement alignment:

• 43% of firms now have long-term targets compatible with 1.5°C or “well below” 2°C of warming.
• Only one-third have aligned short- or medium-term goals, which are essential for near-term progress.

Findings suggest that sectors such as shipping and automotive are more likely to be on track, while aluminium, coal mining, and oil and gas lag. When looking at actual emissions performance, the 554 companies assessed are set to overshoot their 1.5°C carbon budget by 61% and their 2°C budget by 13% between 2020 and 2050.

Government and regulatory moves

The UK Government is consulting on rules that would require “economically significant” businesses – including FTSE100 companies and large financial institutions – to publish net zero transition plans. This builds on proposals first suggested in 2021 and forms part of wider reforms to corporate sustainability reporting.

Meanwhile, the European Union (EU) is preparing to introduce a similar requirement through the Corporate Sustainability Reporting Directive (CSRD). Although its scope has been narrowed and timelines delayed to reduce pressure on companies.

What is a transition plan and why is it important?

A net zero transition plan sets out how a business will adapt its operations, investments, and overall strategy to align with climate goals. In the UK, many financial institutions and large listed companies are already required to publish transition plans under TCFD-aligned reporting, with wider adoption expected as the government consults on rules for “economically significant” businesses.

Concerned about your company’s Net Zero transition plan?

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