Over the past several years, large companies have been taking steps to minimize their carbon footprint by pledging to meet their net-zero goals. These aggressive aims bring greenhouse gas emissions as low as possible, with remaining emissions offset by activities that absorb carbon dioxide from the atmosphere. When only a few years ago, commitments to net-zero status remained a pleasant-to-have, with growing worries over climate change, they have now become a necessity. Customers and investors are pressing for higher sustainability, and many others are keen on being better. How successful are these commitments in practice, and what obstacles do companies encounter?
Understanding Corporate Net-Zero Commitments
For most companies, net-zero commitments translate into efforts to address emissions that arise directly from their operations (Scope 1), energy purchased for their activities (Scope 2), and sometimes the more complex indirect emissions linked to the supply chain and use of their products (Scope 3). Some large manufacturers, like Unilever, and even tech giants Google and Apple have taken bold net-zero pledges that cut these emissions by 2030 or 2040. Yet, this is not easy, with a mix of trailblazing practices, massive investment, and systemic transformation across entire supply chains.
Stories of Success
Many companies are making strong gains. For example, Microsoft committed to being carbon negative by 2030 and even to surpass the net-zero point by removing more carbon than is being emitted. They have invested in the latest cutting-edge carbon capture technologies and renovated data centers and offices into energy-efficient ones. With IKEA, another leader is working to halve its carbon footprint in the whole value chain by 2030. Through innovative approaches such as renewable energy in production and waste reduction, IKEA has proved that huge companies could, in fact, stretch for, or attempt to reach, great heights through some ambition targets.
In addition, heavy industrial firms are innovating too. ArcelorMittal is one of the world's largest steel producers but has started to manufacture steel in a hydrogen-based process instead. This reduces the production of steel by nearly half in terms of carbon intensiveness. Decarbonizing this sector is difficult indeed, but examples of progress in such sectors are made with the help of companies such as ArcelorMittal and illustrate how a business net-zero action makes it possible to achieve such sustainability goals for difficult sectors.
Business Level Challenges
Despite all these successes, net zero has not been achieved without significant obstacles. A reliance on emerging technologies such as carbon capture and hydrogen power acts as the biggest challenge; these technologies cost expensive and are not yet scalable to desired levels. The technology gap slows down the whole process, and this mainly affects small companies with budgets that cannot harbor such extensive investment in new technology.
In addition, scope 3 emissions are difficult to measure and reduce. Emissions in the entire supply chain constitute such emissions. Companies could face difficulties in tracking hundreds of suppliers' emissions, not to mention the implementation of standards across networks as diverse as this. For instance, while Amazon has set its goal to reach net zero by 2040, it has been struggling to adapt its long, globally distributed supply chain.
Lastly, there is still greenwashing—that is, making sustainability claims that do not match their real efforts. Consumers and watchdogs are increasingly questioning the authenticity of corporate sustainability claims. That scrutiny can hurt a company's reputation if their net-zero pledge is more of a marketing move than a real commitment.
Conclusion
Corporate net-zero commitments are an important catalyst in the fight against climate change, but it's not a smooth journey or an easy track with many hurdles. Therefore, if technology is available, genuine efforts will be made to reduce emissions along the value chain and, above all, accountability, for it to make a significant contribution towards sustainability and inspire others.