Assessing corporate transition plans using a production asset-based planning approach

Area of Science:

• Environmental Science
• Climate Change Economics
• Corporate Sustainability

Background:

• Corporate transition plans (TPs) are vital for assessing climate commitments.
• Current methods for evaluating TP alignment with carbon budgets lack robustness and transparency.
• Limited tools exist to verify corporate climate action credibility.

Purpose of the Study:

• Introduce an open-source methodology, the production asset-based planning approach (APA), for evaluating corporate transition plans.
• Assess the alignment of disclosed TPs with Paris-aligned carbon budgets.
• Quantify potential carbon lock-in risks in key industries.

Main Methods:

• Developed the production asset-based planning approach (APA) using asset-level data.
• Estimated potential CO2 emission trajectories for companies.
• Applied APA to ten electric utilities and ten steel companies.

Main Results:

• Only three out of twenty companies showed TPs broadly compatible with Paris-aligned benchmarks.
• Estimates indicate 12% of electric utility assets and 42% of steel assets may need reinvestment before 2030.
• Significant risk of carbon lock-in identified in analyzed sectors.

Conclusions:

• The APA provides a robust method for evaluating corporate transition plans and climate commitments.
• Stakeholders can use APA to hold corporations accountable for Paris Agreement targets.
• The methodology enhances transparency in assessing corporate climate strategies, even with limited disclosure.