Do credible climate transition plans matter for carbon performance? Evidence from Fortune Global 500 firms
Corporate climate transition plans are increasingly used to explain how firms intend to align climate commitments with measurable decarbonization actions. However, the credibility and completeness of these plans vary substantially, raising concerns about whether transition planning reflects substantive climate accountability or symbolic climate communication. This study examines whether credible climate transition plans are associated with subsequent carbon performance among Fortune Global 500 non-financial firms. The study uses panel data from 239 Fortune Global 500 non-financial firms, comprising 1,126 firm-year observations during 2018–2023. A Climate Transition Plan Credibility Index is developed across six dimensions: target credibility, emissions scope coverage, implementation strategy, governance and accountability, risk and strategic integration, and progress reporting. Carbon performance is measured using subsequent changes in Scope 1 and Scope 2 greenhouse gas emissions scaled by lagged revenue. Fixed-effects regression models are used for the main analysis. Higher transition plan credibility is significantly associated with lower subsequent carbon emission changes. External assurance strengthens this association, while mandatory or quasi-mandatory disclosure environments provide more modest moderating support. Robustness tests using alternative carbon performance measures, alternative index construction, subsample analyses, and additional fixed-effects specifications generally support the main findings, although the Scope 3 subsample produces weaker evidence. Given the observational panel design, the findings are interpreted as systematic associations rather than causal effects. The study suggests that credible transition plans provide a useful basis for evaluating the alignment between corporate climate commitments and measurable operational carbon outcomes.