Our Climate Transition Assessment (CTA) is our qualitative opinion of how consistent with a low carbon, climate resilient future we believe an entity's current economic activities and expected future economic activities will be once the entity's planned transition changes are realized, and potential material implementation risks are considered.

For additional information, see "Analytical Approach: Climate Transition Assessments," published May 29, 2025, and "Analytical Approach: Shades Of Green Assessments," published July 27, 2023.

Frequently Asked Questions

What are the components of the CTA?

Summary and conclusion:  This section summarizes the analysis in the other sections of the CTA, and will include:

• Future status: The main outcomes of the CTA are a future status and a transition progress score. The future status indicates our assessment of the expected alignment of a company's activities with a low carbon, climate resilient future once its planned transition changes are realized, considering implementation actions and risks. The future status is depicted using a shade of green (see "Analytical Approach: Shades Of Green Assessments"). The transition progress score expresses our opinion on the extent to which we expect an entity will change its underlying economic activities to align with a low carbon, climate resilient future between the current and future time horizon.
• Current status: This single Shade of Green represents our qualitative opinion of how consistent an entity's current economic activities are with a low carbon, climate resilient future.
• Rationale: This section will provide a climate transition summary describing our opinion and its underlying rationale.
• Strengths, weaknesses, and areas to watch: We will highlight the main attributes that are driving the CTA outcome, and identify risks to implementation. Notably, these will all be drawn from other sections of the report. The content is discussed further below.

Current status:  This shows our assessment of how consistent the company's current activities are with a low carbon, climate resilient future. We will apply shading to the current activities, typically using revenue, and will discuss the rationale for how we shade an entity's economic activities. Our assessment of current activity will be represented by a single Shade of Green.

Climate transition plan:   This includes a description of the company's primary climate-related targets, including those that are not directly emissions related. While we may consider longer term net zero targets, the CTA focuses on shorter term targets which are backed by concrete actions and investments. We may comment on the comprehensiveness and ambition of the targets.

Actions and investments:   This section describes the commitments the company has made to attain its targets for the foreseeable future. This could include an assessment of research and development, mergers and acquisitions, divestitures, and any other actions the company intends to do to reach its targets. Where appropriate, we assign a shade to the company's capital spending and assess whether it is consistent with a low carbon, climate resilient future.

Implementation drivers:   In this section, we describe our analysis of the potential for a company's governance structure, financial status, and external risks to impede its ability to undertake the actions described above. This will not include a general commentary on governance, but rather will opine on whether the company's governance is appropriate for the specific tasks of attaining its climate transition targets.

In addition, we can provide an opinion on alignment with Green Equity principles on request for the exchanges where we are an approved reviewer.

How many potential CTA Shades are there and what do they represent?

An S&P Global Ratings Shade of Green (or Shade) represents our qualitative opinion of how consistent an economic activity or financial investment is with a low carbon, climate resilient future (see "Analytical Approach: Shades Of Green Assessments," published July 27, 2023). There are six possible Shades.

The final single Shade of Green, i.e., the Future Shade, reflects our opinion of how consistent with a low carbon, climate resilient future we expect an entity's economic activities will be once the planned transition changes are realized and any implementation drivers are considered.

How is an Overall Shade of Green derived?

We first assign a Shade of Green to each underlying economic activity . We then apply a weighted average formula, the outcome of which can be modified under certain conditions to derive a single Shade of Green.

The conditions are:

• If the Preliminary Overall Shade is Dark green, are there any Orange or Red activities? If yes, we cap the outcome at Medium green.
• Is the share of Green activities at least 50% and the share of Red is less than 5%? If yes, the outcome is at least Light green.
• Is the share of Red activities 5% or more? If yes, we cap the outcome at Yellow.

We may also adjust the Overall Shade of Green to reflect factors not fully captured in our shading analysis, so that the final outcome reflects our holistic view. For example, when data limitations affect our ability to form a comprehensive view of the breakdown of future economic activities.

What is the transition progress score, and how does it differ from the future status?

The transition progress score reflects our opinion of the likely extent of change between the entity's current economic activities and expected future economic activities. It is a more granular way to show how much we expect an entity's economic activity mix will change between the current and future status, whereas the future status leverages our Shades of Green approach to represent the extent to which the entity's future economic activity mix is aligned with a low carbon climate resilient future. While better transition progress scores are more likely to be accompanied by a change in shades between current and future status, no transition progress score on its own equates to a particular shading outcome.

What information do you include in the strengths, weaknesses, and areas to watch section of the CTA?

This section provides a summary of key analytical conclusions that we expand on in the rest of the report.

• We consider a strength to be a feature that stands out as positive in the context of our view of the entity's climate transition. For example, we could consider an entity's commitments to retire fossil assets well ahead of the end of their useful life and regulatory requirements a strength.
• We consider a weakness to be a significant limitation, identified in our analysis, that could prevent the entity from being aligned with a low carbon, climate resilient future. For example, we could consider a transition plan's failure to address an entity's primary source of climate risk a weakness.
• We consider an area to watch to be a potential problem or risk that we believe could undermine the entity's transition plan. In general, areas to watch are risks that the entity plans to mitigate or residual risks that will likely remain after the entity has taken mitigating actions. For example, we could consider an entity's exposure to increasing levels of physical risk as an area to watch. If other environmental or social factors are more material for the entity than climate transition, we might highlight that as an area to watch.

Do CTAs inform our credit ratings?

No, CTAs do not inform our credit ratings or our credit rating methodologies. We consider climate risk in credit ratings through the application of our sector-specific criteria when S&P Global Ratings believes these risks are, or may be, relevant and material to assessing creditworthiness. The influence of climate or other environmental risk on creditworthiness can differ by industry, geography, and entity. For more information on the principles that S&P Global Ratings applies to incorporate environmental, social, and governance (ESG) credit factors into its credit ratings analysis, please see "Environmental, Social, And Governance Principles In Credit Ratings", published Oct. 10, 2021.

Our issuer and issue-level credit ratings on a company are not inputs into the CTA.

Do you consider social risks and other environmental risks in the CTA?

We consider non-climate environmental risks in our analysis. While transition and physical risks are the primary drivers of the assigned Shades, we consider the impacts on other environmental risks, such as biodiversity or pollution, and may adjust the Shade upward or downward where appropriate.

We do not consider social risks in our shading analysis, but we may consider them to be implementation drivers. That is, if we believe there are social risks that could undermine a company's ability to enact its transition plan, it could affect the CTA shade. For instance, if a company plans to grow its renewable portfolio by several times, but is doing so in a jurisdiction where there are significant labor constraints, we may be skeptical of the company's ability to install this renewable capacity, and could opt for a lower shade as a result.

Can a company's financial situation affect its CTA outcome?

Companies that have more limited financial flexibility, which can undermine efforts to implement planned transition actions, may have difficulty achieving their transition plans, and we consider this in the CTA outcome.

Is a CTA an assessment of the company's net zero targets? How will the CTA depict the company's targets?

The CTA is not an assessment of the company's net zero targets. Instead, with the CTA future shade, we are assessing the consistency of the company's future activities with a low carbon, climate resilient future. Whereas many net zero targets are distant, reaching as far as 2050, our CTA is meant to analyze more specific actions that the company has planned and the implications of those actions if they are successfully completed.

Nevertheless, we will generally reference net zero targets that the company discloses publicly and will note if the company has sought verification of these targets, as we believe that verification can lend credibility to them, and by extension to plans put in place to support them.

Is the timeline of the assessment consistent with the horizon for the company's net zero plan?

The time horizon for the CTA is not necessarily the same as the timeline for a company's net zero plan. We base the time horizon for our assessment on our expectations of when the company will implement its current plans. These plans can include climate related targets that are supported by near-term actions, such as capital spending, mergers and acquisitions, or research and development. In more capital-intensive sectors, such as oil and gas or utilities, this timeline will generally be longer than for sectors like consumer goods or technology, but it will typically still fall well before net zero target timelines, which are often closer to 2050. The reason for this distinction is that we are not completing a net zero assessment, but rather are focusing on the actions the company plans to undertake to pursue climate transition. Further out, we would not often have much clarity on capital spending or research and development plans.

What types of companies are in scope for the CTA?

We can perform CTAs on most companies, financial institutions, and public sector enterprises. To receive a CTA, entities need not be publicly listed companies and may even be in the pre-revenue phase. We wouldn't typically perform CTAs on entities such as project finance or structured finance vehicles that don't have their own climate strategy, and we do not currently offer CTAs on local, regional, or sovereign governments.

The CTA timeline is informed by the horizon over which an entity has committed to specific actions and when we believe those actions will materialize in the entity's economic activity mix. For example, a company may have a 2050 public net zero target but has only committed to actions over 10 years. The time horizon for the CTA would be more informed by the actions over the following 10 years rather than the 2050 end date of the company's overall plan. This is because we believe commitments with supporting actions are more indicative of an entity's future economic activities than commitments without supporting actions.

Is it necessary to have a net zero target to have a CTA?

No, it is not necessary. The CTA is not an assessment of a company's net zero targets. Though these targets are likely relevant to the analysis, we are primarily assessing how we expect the company's mix of economic activities will change as a result of its transition plan. To do so, we consider the company's current status, the actions it plans to take to transition its operations, and what implementation drivers may impede the company from attaining its goals. Net zero targets are typically, though not always, beyond the time horizon that is applicable for our analysis.

How will the peer comparison be done?

As part of our analysis on metrics and targets, we may, where relevant, assess the entity's performance against metrics we believe address its most important climate and environmental risks. We may also compare its performance with other entities to provide further context on the progress the entity has already made or planned. We aim to assess the entity's performance against data we believe is representative of the sector or the markets in which the entity operates.

Our approach may use a comparable peer set of entities, market or national-based averages or regulatory or sector-level targets or a combination of these approaches, depending on the nature of the entity we are assessing. When our assessment is against peers, we use a pre-defined global peer set covering a significant proportion of the sectors' revenues, but for some sectors--such as real estate--we may use regional peers since this will likely reflect market practices more accurately.

Most KPIs will only describe aspects of the climate and environmental risks and impacts and therefore we highlight those which we believe capture the entities' main climate and environmental risks. We recognize that the maturity in reporting of climate and environmental data varies globally--for us to conduct this part of the analysis, the KPI must be quantifiable and of sufficient data availability and quality to be included in our analysis.

How long does it take S&P Global Ratings to complete a CTA and what are the requirements?

Generally, we can complete a CTA in six weeks following the receipt of required information. We will typically require a granular breakdown of revenues and capital expenditures and will meet with the company to ask for clarification. In addition to this analytical meeting, we will meet with the entity at the beginning to explain our process and at the end to provide our feedback in advance of sending the report. The timeline could be somewhat longer if we are dealing with a complex company, or if other conditions warrant it.

If the company is unable to provide sufficiently granular financial information, we are more likely to apply the Shades conservatively, which we describe in more detail in our Shades of Green Analytical Approach. Our review relies on the accuracy, timeliness and completeness of the financial data and information provided by the company, and we do not provide any assurance of this data.

What is Green Equity and how can our company apply?

Green Equity designations or flags are voluntary initiatives from stock exchanges for companies that want to showcase their green credentials. The World Federation of Exchanges has Green Equity Principles that set out a global framework that individual exchanges can adapt and use to establish a "green" offering for listed equities. These principles specify that at least half of a company's turnover must contribute to the green economy. In addition, there may be thresholds for green investments and transparency requirements, for example around disclosure of direct and indirect emissions.

To apply for a Green Equity label, exchanges typically require an evaluation of the extent to which a company meets the requirements in their Green Equity Principles. The CTA is S&P Global Ratings' assessment for the exchanges where we are an approved reviewer. We assess the share of revenue and investments contributing to the green economy using our Shades of Green approach. For companies wishing to pursue a Green Equity label, we offer an optional assessment in which we review alignment with relevant principles at the request of the entity. Each exchange has an application process, which may include submitting information directly to the exchange.

Related Research

• Analytical Approach: Climate Transition Assessments, May 29, 2025
• Analytical Approach: Shades of Green Assessments, July 27, 2023