What Is Net Zero? A Simple Guide to Climate Action for Businesses

Earth’s atmosphere acts like a delicate thermostat, controlling the planet’s temperature. Human activities, especially burning fossil fuels and deforestation, generate greenhouse gases that trap heat and disturb this balance. The concept of “net zero” means reaching a state where we put no more carbon into the atmosphere than we take out. For businesses, developing a net zero strategy is not just an environmental responsibility—it has become a vital corporate imperative.

The foundation for credible net zero strategies was laid by the Paris Agreement in 2015, where countries pledged to limit global warming to 1.5°C above pre‑industrial levels. Scientists at the Intergovernmental Panel on Climate Change (IPCC) later confirmed that to meet this target, we must reach net zero emissions by 2050.

Countries like the UK, the EU, Japan, and now even China have made net zero commitments. As a result, businesses have followed suit—especially those with large carbon footprints or a global supply chain.

A net zero strategy is a structured plan that guides an organization to reduce its greenhouse gas emissions to as close to zero as possible and then offset the remaining emissions through climate-positive actions, like planting trees or funding renewable energy projects. The goal? To stop contributing to climate change.

It’s called “net” zero because it's almost impossible to completely eliminate all emissions. So, businesses aim to balance the emissions they produce with those they remove from the atmosphere.

1. Regulatory compliance – Governments are introducing carbon pricing, emissions reporting laws, and bans on high-emission products.

2. Cost savings – Energy efficiency and renewable energy can reduce operating costs in the long run.

3. Financial benefits – Efficiency improves margins, renewables reduce energy costs, while improved brand reputation attracts green financing.

4. Investor confidence – ESG (Environmental, Social, and Governance) investing is on the rise. Investors want to know how companies are managing climate risk.

5. Customer loyalty – Gen Z and Millennial consumers prefer sustainable brands.

6. Talent attraction – Younger employees seek employers who prioritize sustainability.

7. Resilience – Businesses that plan for climate change are better prepared for disruptions.

Creating a net zero strategy is like preparing for a long journey—you need a map, a clear destination, and the right tools. Here are the steps:

Start by understanding your emissions. These are usually categorized into three “Scopes”:

Many companies use tools like the Greenhouse Gas Protocol or hire consultants to help with this step. Below is the GHG Protocol framework:

Once you know your emissions, set a science-based target to reduce them. The Science Based Targets initiative (SBTi) helps companies align with the Paris Agreement by setting short-term, near-term and long-term goals—typically aiming for a 50% reduction by 2030 and net zero by 2050.

This is the heart of the strategy. Focus on:

Start with the biggest emission sources—these are often energy use, logistics, and supply chain impacts.

Even with the best efforts, some emissions will remain. That’s where carbon credits or removal offsets come in. You can invest in projects that reduce or remove emissions elsewhere—like reforestation, direct air capture, or methane capture.

Just be careful—offsetting must be credible, traceable, and only used after maximizing reductions.

Net zero must become part of your company's DNA. That means including it in your:

Monitoring performance is essential. Net zero progress must be tracked using standardized metrics and external verification—such as assurance by auditors—alongside standardized disclosures like CDP, TCFD, and ISSB frameworks. Reporting must be annual and transparent enough to hold senior management accountable. Increased scrutiny of Scope 3 emissions means companies must trace their entire value chain and engage suppliers; for investors and regulators, this transparency underpins trust.

Detailed transition plans support stakeholder engagement. Employees, consumers, investors, and regulators all scrutinize decarbonization efforts. Following Integrity Matters, net zero claims must align with near‑term, science‑based targets and avoid misleading narratives. Companies should disclose their lobbying positions, ensure fossil fuel phase‑outs are credible and inclusive, and plan for just transitions for workers and communities.

To begin, businesses should secure leadership buy‑in, where zero must be a board‑level priority. Next, conduct a comprehensive emissions assessment and validate targets through SBTi or equivalent science‑based criteria. Develop a transition roadmap that includes interim milestones, governance structures, investment plans, and stakeholder engagement. Invest in internal capacity—appoint sustainability leads, form cross‑functional teams, and communicate authentically. Crucially, start now, even if the first plan is imperfect, because delays undermine climate goals and risk reputational damage as “greenwashing” becomes legally actionable.

Net zero strategy development isn’t just a trend—it’s the blueprint for the future of business. Companies that understand this and take meaningful action will be tomorrow’s leaders. Whether you’re running a small startup or managing a global supply chain, the journey to net zero is one you can—and must—begin.

And as you take your first steps, remember this: net zero is not about doing less, it’s about doing better. For your business. For your people. And for the planet.