Introduction
We view the energy transition as a global megatrend set to drive capital flows for decades to come. In a complex and fragmented political and policy environment, investors need clarity amid the noise to understand the underlying economics of the transition and be able to identify where the most promising investment opportunities lie.
At Columbia Threadneedle Investments, our research specialists conduct deep and extensive analysis of key areas of risk and opportunity. Our energy transition scoring assessment – launched in 2021 (Figure 1) – sits alongside related research and provides us with a systematic global view of a shifting landscape of risk and opportunity for the companies in which we invest.
Figure 1: Market shifts and our energy transition scoring evolution
Energy transition scoring framework
Our energy transition scoring exercise uses a proprietary methodology. For each business our analysts score six metrics that represent the risks and opportunities from the energy transition. The scores range from -2 to +2 based on assessment of the degree of the positive or negative impact. We then aggregate these into a company-level score. This methodology is consistently deployed and allows us to compare the results over time, thus seeing the evolution in our analysis outputs.
We are on the third iteration of this exercise having first run our analysis in 2021 and again in 2023. In 2025’s iteration we have made two major enhancements:
- Scenarios: these are deployed to capture a range of possible outcomes for companies. While we leverage third-party work such as that of the International Energy Agency (IEA), we decided to develop our own approach and use base case, slow and rapid transition scenarios on a relatively short (three- to four-year) time horizon (Figure 2). We also mapped growth rates for clean energy technologies over these timeframes (Figure 3).
- Sector-level analysis: we do this across the scenarios, based on discussions between our sustainability analysts (experts in climate and transition topics) and fundamental analysts (who research and rate companies). This approach enables us to map out material policy and technology dependencies for key high impact sectors.
We scored around 2,500 securities globally across three scenarios, based on input from 70 analysts. Our analysis spans equities and investment grade and high yield corporate bonds. By covering all geographic regions, we work to capture a wide spectrum of regulatory, market and technological dynamics that affect the energy transition.
Figure 2: Macro scenarios
Figure 3: Growth rate assumptions
The reach of our approach allows us to analyse individual company risks and opportunities from the transition, as well as aggregate sector and industry trends. By comparing the outcomes with previous iterations of the work, we can see the development in our analysts’ understanding of the risks and opportunities for their respective sectors and specific companies.
This in turn allows us to track how company strategies, sector dynamics and risks evolve over time. The findings give portfolio managers a forward-looking view together with actionable insights for making investment decisions. The scoring exercise provides a holistic, comparable and data-driven lens for understanding how different energy transition scenarios will impact companies (Figure 4).
Figure 4: An analytical and systematic tool
2025 energy transition scoring assessment results: key findings
In aggregate, our analysts see more areas of opportunity and fewer negative impacts compared with the previous scoring exercises. This outcome reflects a combination of:
- More thoughtful understanding of the energy transition, supported by the sector-level analysis conducted in 2025.
- The anticipated speed of the transition being less abrupt when compared with our initial exercise in 2021 – this slower pace reduces risks to certain high-impact sectors.
- The market dynamics driving the energy transition, including energy security and greater demand for electrification, are in turn creating demand for low-carbon solutions.
- Companies are making their own progress on transition preparedness. Through strategies and investments they aim to better manage the risks and seize related opportunities.
At an industry level, the most impacted sectors – positively and negatively respectively – are utilities and energy (Figure 5).
Figure 5: More areas of opportunity and fewer negative impacts over time
Our analysts view utility companies as particularly well positioned to take advantage of opportunities, across all scenarios, driven by: greater earnings opportunities from rising power demand from structural drivers such as electrification and artificial intelligence; and lower decarbonisation costs as utilities have typically already invested significantly in clean energy and their own emissions reductions. As a result, they are strategically well-positioned for future change.
We also have a positive view on industrial companies offering energy efficiency solutions. These operators will benefit from greater electrification demand regardless of the pace of the transition. In addition, companies providing building products that help reduce energy consumption and electrical equipment businesses offering power equipment and grid technologies to enhance power infrastructure are well placed.
Conversely, we believe the energy sector could be negatively impacted by the transition – although on balance this impact is set to be less abrupt than we believed in 2021. Along with a less abrupt transition, an important driver of this change is the structural global increase in electricity demand, which is resulting in sustained demand for gas over the three- to fouryear timeframe deployed in this exercise. Additionally, certain companies in the sector have made progress in investing in clean technologies to decarbonise themselves and/or diversify their earning sources, such as carbon capture and storage (CCS) and hydrogen. This gives them more options when responding to future changes in the energy mix, as well as the potential for new earnings sources.
Within the scores we find regional differences. For example, we view the transition for automobiles to be more neutral/ less negative for US companies than their European Union (EU) counterparts. This is due to the more stringent regulatory environment/higher carbon costs in the EU.
Scoring companies across the three scenarios – base, slow and rapid – allows us to consider not only the magnitude of impact, but also the sensitivity of different companies and sectors to the pace of the transition. Those that are most sensitive – ie showing the largest range of scores across the three scenarios – are transport (airlines and automotives), and energy (oil and gas and energy equipment). Changes in policy in these sectors could lead to significant swings in impact in areas such as decarbonisation capex demands, revenues from legacy businesses, and opportunities from new revenue sources.
How our analysis supports client outcomes
Scoring the influence of the energy transition on our research universe has helped us systematically understand and track its evolution. This in turn supports us in our objective of providing portfolio managers with a forward-looking view and actionable insights for making investment decisions.
But the benefits – both for us and our clients – go deeper than that. As we have developed our approach, including the scenarios and sector analysis, so we have broadened and deepened internal dialogue across our business. This spans the 70 analysts directly feeding into the scoring as well as the portfolio managers who can deploy the insights within client portfolios.
Going forward, this analysis will help shape our future research and stewardship programme around the energy transition. Using it in conjunction with other tools we have, such as our net zero ratings, we can also prioritise companies we want to speak to about their preparedness for future energy transition scenarios.
