Finding a path to transition to net-zero

The Transition Pathway Initiative has evaluated the route to net-zero within the oil and gas and diversified mining sectors.

With a combined market cap of more than US$500bln as of February 2025, there are seven oil and gas companies and five diversified mining companies examined in this year’s Net Zero Standard (NZS) assessment from the global Transition Pathway Initiative (TPI) Centre at the London School of Economics.

The mining companies featured are Anglo American, BHP, Glencore, Rio Tinto and Tech Resources, while representatives from oil and gas are Equinor, OMV, Phillips 66, Marathon, Petrobras, Santos and Woodside.

The set of oil and gas companies reviewed are different to those featured in the first assessment conducted in 2024. Diversified mining is included for the first time.

The assessments are based on public disclosures and detailed and transparent methodologies, with the outputs being open access.

Ella Davies, Analyst at the TPI Centre, speaking at a webinar on ‘Transition planning and the route to net-zero in the oil and gas and diversified mining sectors’, shared how the NZS framework is designed as a sector-specific bolt-on to the Climate Action 100+ (CA100+) Net-Zero company benchmark. This assesses the climate-related disclosures of companies with higher greenhouse gas emissions.

The focus is primarily on strategy capital expenditure (CapEx), with smaller sections and targets related to a just transition and disclosure. The NZS also includes specific sub-indicators relevant for the low-carbon transition of diversified mining companies.

Jared Sharp, Project Lead of NZS at the TPI Centre, plotted the companies’ levels of transition planning against the top-line metrics for climate action.

He showed a clear geographical distribution, particularly for the oil and gas companies, with US firms scoring lowest on NZS % Yes Scores and CA100+ % Yes Scores. The South American and Australian companies – Petrobras, Woodside and Santos – appear in the middle, scoring 5-20% on the NZS % Yes Scores and 35%-45% on CA100+ % Yes scores. And then the European companies perform highest on both metrics, scoring 15-55% on NZS % Yes Scores and around 45%-65% on CA100+ % Yes scores.

Similar to last year’s findings, Sharp shared that both methane and emissions disclosure are the two sub-indicators for the oil and gas companies that are performing well, generally at 30% and 43%, respectively. Otherwise, 'it’s still quite disappointing to see climate solutions and production metrics scoring sub 5-10%. These are absolutely crucial for whether or not companies are going to survive the transition.'

Dan Gardiner, Head of Transition Research at the Institutional Investors Group on Climate Change, noted the difference in approach between oil and gas companies. Some are diversifying, while others are continuing production or increasing biofuel production to reduce Scope 1 and 2 emissions.

Diversified mining companies, he shared, generally do better on both standards, with good performance on climate solutions at 65%, operational emissions at 53% and shipping in the downstream portions at 50%. Alternatively, there has not been much progress on methane at 8% and on metallurgical coal production at 4%. Thermal coal production is at 26%.

'Their approach to transition planning is varying quite widely from sub 20% to above 60%,' added Sharp.

All the mining companies had committed to addressing allegations of human rights abuses and mitigating the risk of future abuses. And 40% had committed to achieving a responsible mining certification for all mines and have disclosed a timeline to do so.

Davies noted the complexity of the varied product portfolios of diversified mining companies. 'For example, emissions from iron-ore products are currently incredibly high due to energy- and carbon-intensive processing. And similarly, for coal, high, direct, use-based emissions from burning coal mean that use of products is a major source of emissions to capture transition risks.'

They therefore applied a commodity-by-commodity approach for the mining companies compared to oil and gas companies that extract a smaller number of products.

Sharp noted, 'There’s no reason why metallurgical coal should be something that is not discussed when talking about transition plans. It’s going to be a key aspect of transition risk and is going to continue to be a commodity over the next couple of decades.'

He also highlighted that while emissions disclosure is increasingly being legislated, the energy disclosure remains an 'obtuse aspect'. They tend to involve fossil fuel equivalence transformations, also known as partial substitution methodology.

Sharp added that 'some of the more practical metrics, including disclosing annual budget to implement a just transition plan, is still not being discussed'.

He concluded by saying that while there are a lot of prevailing narratives on companies retreating from climate action, and there are a couple of high-profile cases, the results suggest this isn’t happening en masse across all kinds of areas.

There are leaders while some companies are pulling back, creating disparities in how different companies are transitioning. The easy wins of transition planning are starting to be captured, while the more challenging and expensive topics need much more engagement across the board.