Investment data and research provider MSCI disclosed a troubling finding: less than 40% of global listed companies are on the right track toward aligning with the key climate objective of keeping the temperature rise below 2°C compared to preindustrial levels. Despite efforts to set environmental targets, the pace of transition remains insufficient. This reality emerges as MSCI evaluates the transition finance landscape, using metrics that include the “Implied Temperature Rise” to gauge how investment portfolios measure up against global climate ambitions. Recent data reflect a growing urgency for improved climate commitments.
Looking back, MSCI has consistently monitored global companies’ alignment with climate goals. Previous reports indicated a gradual increase in companies attempting to meet their climate responsibilities, but recent data suggest that a significant portion still falls short. Earlier years highlighted a marginally lower percentage of companies meeting alignment targets compared to current assessments, pointing to some progress but also highlighting the challenge of achieving substantial global cooperation. These historical observations provide context for the urgency required in climate action today.
Are Companies on Track?
MSCI reports show that only 38% of evaluated companies align with a warming trajectory below 2°C, while 12% meet the stricter 1.5°C target. However, a concerning 62% of companies appear to be on a path exceeding the 2°C boundary. Approximately 26% expect to surpass a 3.2°C increase. These findings demonstrate significant challenges ahead for many firms despite rising climate awareness. Countries like Italy, Germany, France, and Japan lead in lower temperature increases, contrasting sharply with emerging markets such as Saudi Arabia and Indonesia, which track much higher increases.
What are Companies Doing About It?
In response to this disparity, companies are attempting to bolster their climate actions. According to MSCI, around 60% of listed companies have set climate commitments, a modest increase from previous years. The presence of Science Based Targets initiative (SBTi)-approved goals has risen to 19%, indicative of greater ambition despite the slow pace. A noticeable shift is occurring toward more comprehensive climate policies, though significant room for progress remains.
MSCI noted, “While most companies are not yet aligned, the integrity of climate goals is increasing.”
Companies expand both the breadth and depth of their environmental strategies, raising the bar for climate-related performance measures.
The examination includes climate reporting improvements. By the end of 2024, 79% of firms disclosed Scope 1 and Scope 2 emissions—an improvement that marks a critical step in transparency. Companies disclosing Scope 3 emissions also increased. The shift signals a positive trend toward comprehensive environmental accountability but underscores ongoing challenges in data consistency and complexity.
MSCI observed, “The proportion of companies with net zero targets rose slightly to 32% in 2025.”
This statement reflects an upward trend but highlights the necessity for accelerated commitments and actions to meet global climate ambitions effectively.
Overall, MSCI’s analysis serves as a wake-up call for corporations worldwide. The journey toward achieving targeted emissions reductions is far from complete. While there’s been some growth in ambitious climate-target setting and reporting, the result remains misalignment with essential global warming mitigation goals. Companies must reflect on these findings to enhance their strategic approaches, focusing on rigorous target achievement and authentic reporting practices. This path is vital to meeting climate obligations and maintaining sustainable business operations globally.
