What a net zero strategy actually involves

A corporate net zero strategy defines how a company will reduce its greenhouse gas emissions across all three scopes to as close to zero as possible, and neutralise any residual emissions through high-quality carbon removals, by a defined date. Under SBTi's Corporate Net Zero Standard, near-term targets must reduce Scope 1 and 2 emissions by at least 42 percent and Scope 3 by at least 25 percent by 2030 (from a 2020 base year, aligned with 1.5C pathways). Long-term net zero targets must achieve at least 90 percent reduction across all scopes, with any remaining emissions addressed only through permanent carbon removal. A credible net zero strategy is grounded in a verified emissions baseline, quantified abatement measures, and a capital plan that funds the required actions.

Why it's harder in practice than it looks

Most net zero commitments lack delivery mechanisms

The gap between pledged net zero commitments and the capital expenditure plans, operational changes, and supply chain programmes required to deliver them is the defining credibility problem in corporate climate action. Investors, regulators, and the media are increasingly scrutinising the delivery infrastructure behind commitments, not just the targets themselves.

Scope 3 reduction requires influencing entities outside the company's control

For most companies, Scope 3 is the majority of the footprint, often 70 to 90 percent. Reducing it requires engagement with suppliers, changes to product design and customer behaviour, and logistics decisions that span thousands of entities the company does not own or directly manage. Supplier engagement programmes take years to build and produce incremental rather than step-change results.

Technology assumptions embedded in net zero strategies may not be realised

Many net zero strategies depend on technologies, green hydrogen, sustainable aviation fuel at commercial scale, large-scale direct air capture, that are not yet commercially available at the costs assumed. Strategies built on optimistic technology cost curves without contingency planning will miss their targets if those curves do not materialise as projected.

Carbon removal quality and availability is uncertain at the volume required

SBTi's Corporate Net Zero Standard limits the use of carbon offsets for residual emissions and requires that any removals used are permanent and high-quality. The supply of permanent removal credits (from geological storage or enhanced weathering, for example) at scale and at accessible costs remains uncertain. Net zero strategies that assume large volumes of cheap, high-quality removals may need significant revision as supply and pricing realities become clearer.

Interim targets must be met, not just ultimate goals

SBTi requires both near-term (typically 2030) and long-term (net zero) targets. Companies that focus on the 2050 commitment without building a credible pathway to the 2030 milestone face growing investor and regulatory pressure. Annual progress reporting against interim targets is expected under most disclosure frameworks.

What good looks like

A credible net zero strategy is built on a verified baseline inventory covering all three scopes, includes a prioritised abatement cost curve for the highest-impact emission sources, has near-term targets validated by SBTi or an equivalent science-based methodology, integrates the required capital expenditure into the company's multi-year financial plan, addresses Scope 3 through specific supply chain and product programmes rather than general commitments, and defines the role of carbon removals as a residual measure rather than a primary strategy. Annual progress reporting is specific, comparable year-on-year, and externally assured.

When to bring in external support

Net zero strategy development requires climate science knowledge, sector-specific decarbonisation expertise, carbon market understanding, and financial modelling capability, a combination that most internal sustainability teams cannot hold simultaneously. Getting the strategy wrong at the outset results in targets that cannot be met, costly course corrections, and reputational exposure.

Leafr's network includes net zero strategy specialists with sector experience across manufacturing, financial services, retail, and built environment, having delivered decarbonisation roadmaps for clients including Melrose Plc and Polestar. Engagements are structured around specific deliverables and typically begin within 48 hours.

Frequently asked questions

What is net zero and how is it defined for companies?

Net zero means reducing greenhouse gas emissions as close to zero as possible and balancing any remaining emissions with an equivalent amount of carbon removal. For companies following SBTi's Corporate Net Zero Standard, this means achieving at least 90 percent absolute reduction in Scope 1, 2, and 3 emissions from a base year aligned with 1.5C science, and neutralising remaining emissions with permanent, high-quality carbon removal. This is more stringent than carbon neutrality, which does not require the same depth of reduction before using offsets.

What is the difference between net zero and carbon neutral?

Carbon neutrality typically means that a company's greenhouse gas emissions are balanced by equivalent offsets, without specifying a minimum level of prior reduction. Net zero, as defined by SBTi and the Oxford Principles on Net Zero, requires at least 90 percent absolute emissions reduction before any residual compensation. A company can claim to be carbon neutral while still having significant absolute emissions; a company claiming net zero under rigorous frameworks must have reduced its emissions to near-zero first. This distinction matters significantly for credibility with sophisticated investors and under emerging greenwashing regulation.

What does SBTi validation of net zero targets involve?

SBTi validation requires companies to submit their near-term and long-term targets for review against the Corporate Net Zero Standard. The near-term target must reduce absolute Scope 1 and 2 by at least 42 percent and Scope 3 by at least 25 percent within approximately ten years. The long-term target must achieve at least 90 percent absolute reduction across all scopes by no later than 2050. Targets are reviewed by SBTi's technical experts and, if validated, the company may use the SBTi badge in communications. Validation does not cover delivery, companies are responsible for meeting the targets they submit.

How does a company reduce Scope 3 emissions as part of a net zero strategy?

Scope 3 reduction requires a combination of supply chain engagement (requiring suppliers to set their own science-based targets), procurement policy changes (shifting spend toward lower-carbon suppliers and materials), product design changes (reducing use-phase emissions through efficiency or fuel switching), and logistics optimisation (electrification, mode shift, route optimisation). The specific lever mix depends on which Scope 3 categories are most material, a retailer's Category 11 (use of sold products) strategy looks very different from a manufacturer's Category 1 (purchased goods and services) strategy.

What role do carbon offsets play in a net zero strategy?

Under SBTi's Corporate Net Zero Standard, carbon offsets from beyond the value chain can only be used for residual emissions, those that remain after maximum feasible reduction. They cannot substitute for in-scope emissions reductions required to meet near-term or long-term targets. Offsets used for residual neutralisation must be permanent, additional, and verified, currently only a small subset of available voluntary carbon market credits meets this standard. Companies should size their residual offset requirements conservatively and build abatement pathways that do not depend on large-scale cheap removal availability.

When will companies be required to disclose net zero strategies?

CSRD requires in-scope companies to disclose their transition plans, including net zero strategies, under ESRS E1. IFRS S2 requires disclosure of transition plans where they exist. The UK Transition Plan Taskforce (TPT) has developed a disclosure framework that is being integrated into UK regulatory requirements for financial institutions and listed companies. In practice, major institutional investors are already requiring credible transition plan disclosures from investee companies regardless of mandatory requirements, making early development of a substantive net zero strategy commercially important.

How should companies report annual progress against net zero targets?

Annual progress reporting should include the year's verified emissions across all three scopes, the percentage change from the base year expressed in absolute terms, an update on the status of key abatement measures (on track, delayed, or cancelled), an explanation of any base year recalculations made, and an assessment of whether the company is on track to meet its interim (2030) target. Reporting that only presents intensity metrics without absolute figures, or that changes methodology between years without clear explanation, undermines the credibility of the net zero commitment.