Anticipating future corporate greenhouse gas (GHG) emissions has tremendous potential to help develop cost-efficient long-term investment strategies and to assess climate risks for companies. Traditional projections rely mainly on global estimates broken down by sector and firm characteristics, but lack the information given by their specific decarbonization strategies. In the meantime, many companies have set climate targets that specify their intended emission reductions over different time horizons. This paper presents a methodology to integrate these pledges into firm-level emission projections by aligning them with climate scenario-consistent abatement pathways. By doing so, this method provides a clearer view of future emissions in the economy and how stringent company policies will be. To account for the extent to which firm GHG trajectories support or contradict their ambitions, we introduce a metric called “carbon credibility” that reflects the recent evolution of their emissions relative to their stated targets. This measure serves both as an early indicator of target feasibility and as an adjustment factor for forward-looking projections. Including the carbon credibility of nearly 300 companies in the STOXX 600 index results in almost a 5% increase in projected cumulative GHG emissions up to 2050. Credibility values indicate that half of the sectors in the panel fall short of the efforts required to align with their decarbonization ambition. These results imply higher expected climate risks and call for enhanced corporate actions.
