ESG assessment tool of the year: Transition Pathway Initiative (TPI)

Channels: ESG

Companies: The Transition Pathway Initiative, Shell, Repsol

The Transition Pathway Initiative (TPI) uses forward-looking carbon performance assessments to measure companies' pathways to meeting the goals of the Paris Agreement – and assesses their progress towards meeting these goals.

It provides, free-of-charge to investors, comprehensive, rigorous and impartial data assembled by the Grantham Research Institute at the London School of Economics about which high-emitting companies are aligned with pathways leading to global warming of below 2°C, 2°C, or higher.

The first Climate Action 100+ progress report, informed by TPI research, was published in late 2019 and found that 9% of the 161 target companies now have Paris-aligned targets. Climate Action 100+ is an engagement initiative targeting the highest emitting companies globally.

TPI has expanded its range of assessments by 15% to cover 332 of the world's highest emitting companies, across 16 sectors. This now represents approximately 40% of carbon emissions in the FTSE Global Index.

Besides this, TPI had a successful year, as the number of asset owners that have pledged their support grew 35% to $19 trillion. The initiative now has the support of more than 70 investors. New supporters include PIMCO, New Zealand Super, HESTA and Neuberger Berman.

The year also saw new practical applications of the TPI tool – the first global index to embed its data was launched in January. The FTSE TPI Climate Transition Index includes companies that are aligned with the Paris Agreement, while underweighting or excluding those that are not. Notable inclusions in the oil and gas sector are Shell and Repsol, whereas BP is excluded. EF