Corporate climate action: Turning net-zero ambition into reality

The climate crisis is no longer a distant threat on the horizon; it is a present, daily reality reshaping the world and the global economy. Rising sea levels, flooding, wildfires, and unpredictable weather patterns are already disrupting supply chains, threatening corporate assets, and altering consumer behaviors.

In response, a growing number of companies are stepping up and announcing ambitious targets to achieve net-zero emissions by 2050. With these commitments, corporations are taking responsibility in shifting their roles from being part of the problem to helping drive the solution. Yet beneath these headline pledges lies a complex journey—one that demands more than just goodwill. Setting meaningful targets aligned with credible global frameworks, transforming operations, and engaging supply chains are all easier said than done.

What are frequent challenges encountered by corporations setting Net-Zero targets?

1. Lack of clear GHG emissions data (mainly scope 3)

As often said: “you can’t manage what you can’t measure.” GHG inventories are expected to be accurate, complete, consistent, and transparent. This is usually the first hurdle met by corporations due to poor data quality or availability, inconsistent measurement methods across business units, and limited supplier and customer cooperation.

2. Misunderstanding of Target-setting framework and associated requirements

Some companies are setting vague or non-science-aligned targets, often due to a lack of understanding of the Net-Zero requirements presented in various target setting frameworks, such as the Science-Based Target Initiative (SBTi), Net-Zero Investment Framework (NZIF), and the International Organization for Standardization (ISO) Net Zero Guidelines.

Unfortunately, publicly committing to Net-Zero without a credible plan or roadmap can leave companies vulnerable to green washing accusations, potential reputational damage, loss of ESG scores, or access to green finance.

3. Misalignment between Net-Zero goals and business strategy (lack of governance)

Targets are often set without prior understanding of their impact on the operations and without clarity on who is responsible for tracking and taking ownership of the target deliverable. Usually, there is a disconnect between corporate sustainability, finance, and operations leading to the exclusion of Net-Zero target actions from core business strategies or key performance indicators.

4. Limited internal technical expertise

Many companies lack internal resources and expertise to develop a complete and credible GHG inventory (Scope 1, Scope 2 and Scope 3), to model reduction pathways in line with SBTi and other relevant frameworks and properly evaluate mitigation strategies and decarbonization technologies to meet reduction targets.

How to deal with these challenges and what do successful organizations do differently?

In a world where environmental risk is increasingly tied to financial risk, business as usual is no longer an option. Transparency, accountability, and collaboration are key to ensuring that corporate climate action is effective and contributes to a sustainable future while addressing the challenges discussed above.

Key challenges & strategies for overcoming them

Challenge 1: Quality of GHG Inventory

Strategy:

• Clear GHG emissions quantification methodology supported by a detailed Inventory Management Plan (IMP)
• Invest early in GHG accounting capacity and credible consultants specializing in this domain
• Third-party verification
• Transparent reporting

Challenge 2: Target setting framework

Strategy:

• Use credible, science-based frameworks (SBTi, NZIF, ISO Net-Zero Guidelines) to set Net-Zero target in line with 1.5 deg C target ambition
• Work with reputable consultants to support target development

Challenge 3: Corporate governance and net-zero target

Strategy:

• Appoint executive sponsors and a dedicated sustainability team
• Link GHG emission reduction targets to executive key performance indicators
• Integrate GHG target and reduction strategies into core operations, procurement policies and capital planning
• Engage with suppliers and customers to drive value chain alignment
• Evaluate progress annually and disclose results publicly

Challenge 4: Technical expertise

Strategy:

• Combine target setting with the development of a decarbonization roadmap and pair actions with target dates