Net Zero Business Models

FOREWORD

The concept of net zero has quickly evolved as the principal yardstick against which government policy ambitions and private sector activities on climate actions are proclaimed.

Propelled by the UN's Intergovernmental Panel on Climate Change (IPCC)'s conclusion from October 2018 that “limiting temperature rise to 1.5°C and preventing the worst outcomes of climate change implies reaching net zero emission of CO₂ by mid‐century”—net zero has quickly moved from science to policy to mainstream in less than a decade.

Net zero pledges and commitments are everywhere—announced by two‐thirds of the world's governments responsible for more than 90% of global GDP and 80% of the world's population. Concurrently, the private sector with about one‐third of the largest publicly listed corporations representing annual revenues of more than US$25 trillion alongside the US$130 trillion Glasgow Financial Alliance for Net Zero (GFANZ) financial services coalition have announced net zero ambitions.

However, metrics and targets are not a plan, a commitment is not a long‐term business strategy—without the implementation of a credible and bona fide strategic transition plan. While the airwaves have been flushed with net zero announcements, accompanying strategic actions have been amiss.

The Climate Action 100+ Net Zero Company Benchmark in October 2022 showed 75% of focus companies had announced at least a partial net zero target, but only 19% had produced quantified decarbonization strategies ...