Investor-backed Initiative TPI Launches Sector-Specific Framework to Assess Companies’ Climate Goals & Progress
The Transition Pathway Initiative (TPI) announced today the publication of the TPI Sectoral Decarbonisation Pathways, its detailed framework for guiding investors in order to assess corporate climate targets across high-emitting sectors. TPI’s pathways are used by the Climate Action 100+ investor engagement network, and by major asset managers and owners.
Founded in 2017, the Transition Pathway Initiative is a global initiative led by asset owners and supported by asset managers that assesses companies’ preparedness for the transition to a low-carbon economy and supports efforts to address climate change. TPI provides independent research enabling investors to assess the alignment of their portfolios with the goals of the Paris Agreement and to drive real world emission reductions. The initiative is backed by 120 investors with over $40 trillion of assets under management or advisement.
Simon Dietz, Research Lead for TPI at the Grantham Research Institute on Climate Change and the Environment at LSE said:
“In order to allow investors to see whether a company’s emission reduction plans align with the goals of the Paris Agreement, TPI has translated IEA models into decarbonisation pathways for each sector. This report explains our methodology in an accessible way.
“We hope this report catalyses the real economy transition plans that we urgently need to avoid the most catastrophic effects of global warming. It is now time to turn commitment into action.”
The new framework covers industries across the Energy, Industrials and Transport sectors, including Electricity, Oil & Gas, Aluminium, Cement, Diversified Mining, Paper, Steel, Autos, Aviation, and Shipping. The framework assesses each sector utilizing an economy-wide emissions budget approach to develop sectoral budgets, and considers the unique challenges, where emissions are concentrated, and how costly it is to reduce for each. For each sector, the publication outlines three pathways, based on IEA scenarios for alignment with 1.5 degrees, below 2 degrees, and with National Pledges. For example, for the aviation industry, the framework targets tank-to-wheel (TTW) CO₂ emissions from conventional jet fuel as its primary measure of emissions intensity, and establishes criteria for companies to achieve less than 616 tonnes of CO2/revenue tonne kilometre by 2030 in order to be aligned with a 1.5 degree scenario.
Adam Matthew, Chair, Transition Pathway Initiative, and Chief Responsible Investment Officer, Church of England Pensions Board said:
“In a world where we are faced with multiple interpretations of what the low carbon transition should look like (often with the intention of slowing rather than accelerating the rate of change, and often to argue for less ambitious action by companies), it is imperative that we as investors make decisions based on credible, rigorous analysis that is explicitly focused on the goal of net zero and that reflects the economic, technical and societal realities of the low carbon transition. The TPI sectoral decarbonisation strategies provide that analysis.”