Net zero has become one of the most common commitments in corporate sustainability — and one of the most inconsistently defined. The gap between a company that has set a credible, science-aligned net-zero target and one that has simply announced an aspiration is significant. This article provides a practical roadmap for enterprises that want to build a net-zero programme that meets the rigour demanded by the Science Based Targets initiative (SBTi), the CSRD, and institutional investors.
What Net Zero Actually Means
The SBTi Corporate Net-Zero Standard, published in 2021 and updated since, provides the most widely accepted corporate definition. Under this standard, net zero means reducing absolute Scope 1, 2, and 3 emissions by at least 90 percent from a base year, consistent with limiting global warming to 1.5 degrees Celsius, and addressing any residual emissions (up to 10 percent) through permanent carbon removal.
This is fundamentally different from "carbon neutral," which typically allows offsets to compensate for current emissions without requiring reductions. Net zero under SBTi requires actual, deep operational decarbonisation over a multi-decade trajectory, with near-term milestones (typically 5-10 years) and a long-term target aligned with 2050 or sooner.
The 90% rule: You cannot claim SBTi-aligned net zero by purchasing offsets. At least 90 percent of your emissions must be eliminated through operational changes before any residual compensation is applied. The remaining 10 percent must be addressed through permanent carbon removal, not avoidance offsets.
Phase 1: Establish the Baseline
A net-zero roadmap cannot be built without a complete, credible GHG inventory. Before setting targets, enterprises must know their current emissions position across all three scopes.
Set Organisational Boundaries
Define which legal entities, facilities, and joint ventures are included. Choose between the operational control, financial control, or equity share consolidation approaches under the GHG Protocol, and apply consistently.
Complete Scope 1 and 2 Inventory
Collect activity data for all direct combustion, process emissions, fugitive emissions, and purchased energy across all included facilities. Apply location-based and market-based methods for Scope 2.
Screen Scope 3 Categories
Conduct a materiality screening across all 15 Scope 3 categories. Identify which are relevant and estimate order-of-magnitude figures using spend-based proxies to determine where primary data collection is needed.
Select and Lock the Base Year
Choose a base year with complete, representative data (not a COVID anomaly year). Document the base year inventory in a way that supports future restatement if organisational boundaries change significantly.
Phase 2: Set Science-Based Targets
Once the baseline is established, the next step is setting targets aligned with climate science. The SBTi offers two pathways for near-term targets and a single standard for long-term (net-zero) targets.
Near-Term Targets (5-10 Years)
Near-term targets must be consistent with limiting warming to 1.5 degrees Celsius. The SBTi accepts two methods for determining the required reduction rate:
- Absolute Contraction Approach (ACA): Requires a specific percentage absolute reduction in Scope 1+2 emissions per year, typically 4.2 percent per year for 1.5-degree alignment.
- Sectoral Decarbonisation Approach (SDA): Benchmarks the company's emission intensity against a sector-specific decarbonisation pathway. Available for high-emitting sectors including power, cement, steel, and transport.
For Scope 3, near-term targets must cover at least 67 percent of total Scope 3 emissions. If Scope 3 is more than 40 percent of total Scope 1+2+3 emissions (which it usually is), a Scope 3 target is mandatory.
Long-Term Net-Zero Target
The long-term target must commit to reducing all Scope 1, 2, and 3 emissions by at least 90 percent by no later than 2050, relative to the base year. The target must specify the base year, the target year, and the percentage reduction committed. A small number of hard-to-abate residual emissions may remain, addressed through permanent removal.
Phase 3: Build the Decarbonisation Plan
Target-setting is only valuable if it is backed by a credible plan. The decarbonisation plan maps specific actions to the emissions reductions required to meet near-term targets, with accountability owners and milestones.
Scope 1 and 2 Levers
- Energy efficiency: Building retrofits, process optimisation, equipment upgrades. Typically the lowest-cost early action.
- Renewable electricity procurement: Power Purchase Agreements (PPAs), Renewable Energy Certificates (RECs), or on-site generation. Eliminates market-based Scope 2 emissions.
- Fuel switching: Replacing fossil fuel combustion with electrification or green hydrogen where feasible. Critical for hard-to-abate sectors.
- Fugitive emission reduction: Methane leak detection and repair programmes for oil and gas assets, refrigerant management for buildings and refrigeration assets.
- Fleet electrification: Transitioning company vehicle fleets to battery electric or hydrogen fuel cell vehicles.
Scope 3 Levers
- Supplier engagement: Setting supplier emission reduction requirements in procurement contracts, providing technical support to key suppliers, preferencing lower-carbon suppliers in sourcing decisions.
- Product design: Reducing the embodied carbon of purchased goods through material substitution, light-weighting, or design for circularity.
- Logistics optimisation: Modal shift from air and road to rail and sea freight, consolidation of shipments, optimisation of last-mile delivery.
- Business travel policy: Videoconference-first policies for internal meetings, sustainable travel booking tools, carbon budget per employee.
- End-of-life programmes: Take-back schemes, recycled content requirements, and product longevity measures to reduce Category 12 emissions.
Phase 4: Implement Measurement and Governance
A net-zero programme must be governed and tracked with the same rigour as financial performance. The governance elements include:
- Executive ownership: A C-suite sponsor accountable for net-zero delivery, with progress reported to the board at least annually.
- Internal carbon price: A shadow carbon price applied to capital investment decisions to ensure that low-carbon options are preferred when financially comparable.
- Annual GHG inventory update: Full Scope 1, 2, and 3 inventory recalculated each year, with material changes from the prior year explained.
- KPI integration: Net-zero KPIs embedded in executive compensation and business unit performance reviews.
- Third-party assurance: Annual GHG inventory verified by an independent assurance provider to ISAE 3000 or ISO 14064-3 standards.
Phase 5: Report and Disclose
Net-zero programmes are only credible if they are disclosed transparently. The main disclosure channels for enterprise net-zero reporting are:
- CDP Climate Change questionnaire: Annual disclosure covering governance, risks, targets, Scope 1/2/3 emissions, and reduction initiatives. CDP scoring directly influences ESG ratings.
- CSRD/ESRS disclosure: For EU-regulated companies, the mandatory ESRS E1 standard requires disclosure of GHG targets, emission reduction plans, and Scope 1/2/3 inventories in the management report.
- Annual Report and Accounts: TCFD-aligned climate disclosures integrated into the financial statements or a dedicated sustainability report.
- SBTi company dashboard: Once targets are validated by SBTi, they are listed publicly on the SBTi website with target details and submission date.
Common Roadmap Mistakes
Enterprises that struggle with net-zero programmes typically make one or more of these errors:
- Setting targets before having a complete inventory: Without a credible base year, targets are aspirational at best and misleading at worst.
- Excluding Scope 3: A net-zero target that covers only Scope 1 and 2 while Scope 3 accounts for 80 percent of total emissions is not aligned with SBTi or CSRD expectations.
- Treating targets as a communications exercise: Targets without funded decarbonisation plans and executive accountability are pledges, not programmes.
- Confusing offsets with reductions: Purchasing offsets while operational emissions remain unchanged delays the genuine decarbonisation required and creates disclosure risk under tightening greenwashing regulations.
The Technology Foundation
Executing a net-zero roadmap at enterprise scale requires a carbon data platform that can maintain the GHG inventory across multiple years, track progress against targets, manage Scope 3 supplier data collection, and generate the disclosure outputs required for CDP, CSRD, and investor requests. Attempting to manage this workflow in spreadsheets becomes unworkable at the scale and frequency required for annual disclosure under CSRD. The platform is the infrastructure that makes the programme sustainable over a multi-decade commitment.
