Overview
The Transition Pathway Initiative is a global initiative led by asset owners, pension funds and institutional investors, to assess companies’ progress toward a low-carbon economy. It was launched in 2017 and is managed by the Grantham Research Institute on Climate Change and the Environment at the London School of Economics. Unlike many tools in the climate finance space, TPI’s data and assessments are fully publicly available, which makes it useful not just for investors but for journalists, NGOs, and policy professionals.
TPI evaluates companies across two distinct dimensions. The first is Management Quality, how well a company governs climate-related risks and opportunities, whether it has the right policies and disclosures in place, and whether its leadership is accountable for climate performance. The second is Carbon Performance, whether the company’s actual and projected emissions are consistent with the Paris Agreement scenarios modelled by the IPCC.
These two dimensions can diverge in instructive ways. A company can have excellent governance, board-level climate oversight, a dedicated sustainability committee, TCFD-aligned disclosure, while its emissions trajectory remains incompatible with 1.5°C. TPI captures both, which gives a more complete picture than either governance scores or emissions data alone.
What TPI Covers
TPI covers approximately 400 publicly listed companies across 16 high-carbon sectors. The sectors include oil and gas, utilities, steel, cement, aluminium, paper and forestry, airlines, shipping, autos, and several others. The focus on high-carbon sectors is deliberate, these are the industries where the gap between current trajectories and Paris-consistent pathways is largest, and where investor engagement will have the most impact.
Management Quality is assessed on a five-level scale. Level 0 means the company has not acknowledged climate change as a business risk at all. Level 4 means the company is taking a strategic, forward-looking approach, engaging with climate scenarios, setting science-aligned targets, and integrating climate into capital allocation. Most large listed companies in the high-carbon sectors have moved beyond Level 0 under investor pressure, but many remain at Level 2 or 3.
Carbon Performance benchmarks a company’s emissions intensity against a set of pathways derived from IPCC scenarios. It answers a simple question: if this company’s emissions continue at their current trajectory, does that trajectory converge with a 1.5°C, 1.75°C, or 2°C scenario by mid-century? A company “aligned” with 1.5°C under TPI’s carbon performance assessment has credibly demonstrated that its emissions are on track to converge with the most ambitious Paris target.
TPI in the Investor Ecosystem
TPI was set up by asset owners rather than asset managers, the distinction matters. Asset owners (pension funds, sovereign wealth funds, insurance companies) are the ultimate beneficiaries of investment returns. They have longer time horizons and more direct accountability to beneficiaries than fund managers who operate on quarterly cycles. This origin gives TPI a certain credibility as a tool for genuine long-term risk assessment rather than marketing.
TPI data feeds directly into Climate Action 100+ assessments and the Net Zero Company Benchmark. Several of the world’s largest pension funds, including the Church of England Pensions Board, which co-founded TPI, use it as a screening tool for engagement and investment decisions. The tool is also used by journalists investigating corporate climate claims, since it provides documented, methodology-backed assessments that can be cited in stories.
The relationship between Management Quality and Carbon Performance scores creates a useful analytical frame for engagement work. When a company scores high on management quality but low on carbon performance, it suggests the governance structures are in place but aren’t yet translating into real-world emissions reductions. That gap is the conversation that a CA100+ engagement might target.