Interview: practitioners on net-zero strategy & transition planning

Over 6,000 companies globally have now committed to science-based net-zero targets, yet fewer than 4% demonstrate credible transition pathways backed by measurable interim milestones—a gap that practitioners on the ground understand intimately. In conversations with sustainability executives, climate strategists, and transition planning specialists across North America, a consistent theme emerges: the distance between net-zero ambition and operational reality is filled with hidden trade-offs that rarely surface in boardroom presentations or annual sustainability reports. These practitioners reveal that successful transition planning requires navigating complex interdependencies between decarbonization efforts, water stewardship, circular economy principles, regulatory compliance, and stakeholder expectations—all while maintaining competitive positioning in rapidly evolving markets.

Why It Matters

The urgency of corporate net-zero transition has intensified dramatically through 2024 and into 2025. According to the Net Zero Tracker, as of late 2024, companies representing over $12.4 trillion in annual revenue have established net-zero commitments, with North American corporations accounting for approximately 38% of this total. However, the Climate Action 100+ 2024 benchmark assessment found that only 18% of the world's largest corporate emitters have transition plans aligned with limiting warming to 1.5°C, exposing a critical implementation gap that practitioners must bridge.

In North America specifically, the regulatory landscape has shifted substantially. The SEC's climate disclosure rule, finalized in March 2024 (though facing legal challenges), mandates that large public companies disclose Scope 1 and Scope 2 greenhouse gas emissions, climate-related risks, and transition plan details. This regulatory pressure, combined with California's SB 253 (Climate Corporate Data Accountability Act) requiring emissions disclosure from companies with revenues exceeding $1 billion, has transformed net-zero planning from voluntary aspiration to compliance necessity for thousands of organizations operating in the region.

The economic stakes are equally compelling. BloombergNEF's 2024 analysis indicates that achieving net-zero by 2050 requires $215 trillion in cumulative energy transition investment globally, with North America needing approximately $44 trillion of this total. Companies that fail to develop credible transition strategies face not only regulatory penalties but also increasing capital costs, as 78% of institutional investors surveyed by PwC in 2024 indicated they incorporate climate transition credibility into investment decisions.

Key Concepts

Recycling in Transition Context: Within net-zero transition planning, recycling extends beyond traditional waste management to encompass circular material flows that reduce embedded carbon. Practitioners emphasize that recycled materials typically require 60-95% less energy than virgin production, making recycling infrastructure investments a critical lever for Scope 3 emissions reduction. Leading companies now integrate recycling targets directly into their transition pathways, recognizing that material circularity addresses approximately 45% of global emissions according to the Ellen MacArthur Foundation.

SEC Climate Rule: The Securities and Exchange Commission's climate disclosure requirements represent the most significant mandatory climate reporting framework in U.S. history. The rule requires registrants to disclose material climate-related risks, governance structures, risk management processes, GHG emissions data, and—critically for transition planning—specific details about climate transition plans if such plans exist. Practitioners report that SEC rule compliance has accelerated internal alignment between sustainability teams and finance functions, though implementation challenges remain substantial.

Water-Energy Nexus: Water considerations have emerged as essential components of credible net-zero transitions. Energy production consumes approximately 15% of global freshwater withdrawals, while water treatment and distribution account for 4% of electricity consumption in the United States. Transition plans that overlook water dependencies risk creating stranded assets in water-stressed regions and missing material climate risks. CDP's 2024 water security assessment found that 69% of companies with net-zero targets have not adequately integrated water risk into their transition strategies.

Extended Producer Responsibility (EPR): EPR frameworks shift end-of-life product management costs from municipalities to producers, creating financial incentives for design-for-recyclability and circular business models. In North America, EPR legislation has expanded rapidly, with 12 U.S. states and all Canadian provinces now operating packaging EPR programs. Practitioners note that EPR compliance requirements increasingly influence transition planning by mandating recycled content targets, recyclability standards, and producer-funded collection infrastructure.

Measurement, Reporting, and Verification (MRV): MRV systems provide the foundational infrastructure for credible net-zero claims. Third-party verification of emissions data, progress metrics, and offset quality has become non-negotiable for maintaining stakeholder trust. The Greenhouse Gas Protocol's evolving standards, combined with emerging digital MRV technologies using satellite monitoring and blockchain verification, are enabling more granular and real-time tracking of transition progress than previously possible.

What's Working and What Isn't

What's Working

Integrated Carbon Pricing and Capital Allocation: Practitioners consistently highlight internal carbon pricing as a mechanism that successfully aligns business unit incentives with corporate transition goals. Microsoft's internal carbon fee, now exceeding $100 per metric ton, has catalyzed over $300 million in emissions reduction investments since its implementation. Similarly, Walmart's Project Gigaton has engaged over 5,500 suppliers in emissions reduction efforts by making climate performance a criterion for preferred supplier status, demonstrating that financial mechanisms effectively translate net-zero commitments into operational decisions.

Science-Based Target Initiative Frameworks: Companies utilizing SBTi-validated targets report stronger internal alignment and external credibility. As of 2024, over 2,500 North American companies have committed to SBTi targets, with those achieving target validation demonstrating 25% faster emissions reductions compared to peers with self-defined goals. Practitioners emphasize that the rigor of external validation forces organizations to confront implementation realities during target-setting rather than after public commitments are made.

Cross-Functional Transition Governance: Organizations that have established dedicated transition planning functions with C-suite reporting lines and cross-functional authority demonstrate more consistent progress. Unilever's Climate Transition Action Plan, developed through integrated governance involving operations, procurement, finance, and sustainability teams, has achieved a 65% reduction in operational emissions since 2015 while maintaining business growth—illustrating that embedded governance structures outperform siloed sustainability departments.

What Isn't Working

Scope 3 Measurement Paralysis: Despite Scope 3 emissions representing 70-90% of total corporate footprints, practitioners report widespread measurement paralysis stemming from data gaps, supplier engagement challenges, and methodological uncertainties. A 2024 CDP analysis found that only 38% of companies disclosing Scope 3 emissions cover all 15 categories, with many relying on spend-based estimations of questionable accuracy. This measurement deficit undermines transition planning credibility and delays meaningful supplier decarbonization engagement.

Offset Over-Reliance: Excessive dependence on carbon offsets rather than direct emissions reduction continues to plague transition planning. Academic research published in Science in 2024 indicated that over 90% of rainforest carbon offsets certified by leading standards may be "phantom credits" representing no real emissions reductions. Practitioners observe that organizations using offsets to claim net-zero status without corresponding operational changes face increasing scrutiny from regulators, investors, and activists—with several high-profile greenwashing allegations resulting in material reputational damage.

Misaligned Time Horizons: The mismatch between quarterly earnings pressures and multi-decade transition timelines creates persistent implementation friction. Practitioners report that net-zero commitments targeting 2050 often lack interim milestones with board-level accountability, enabling indefinite deferral of difficult decisions. Companies that have not established binding 2030 targets with executive compensation linkage consistently underperform on transition implementation, regardless of their long-term ambition statements.

Key Players

Established Leaders

Microsoft Corporation: Leading with a carbon-negative commitment by 2030 and pioneering internal carbon pricing mechanisms that fund transition investments across the organization. Their climate innovation fund has deployed over $1 billion in climate technology investments.

Walmart Inc.: Operating Project Gigaton, the world's largest private-sector supplier emissions reduction initiative, engaging thousands of suppliers in measurable decarbonization with 750 million metric tons of avoided emissions reported through 2024.

Apple Inc.: Achieving carbon neutrality for corporate operations since 2020 and pursuing 2030 supply chain neutrality through renewable energy requirements for suppliers and investments in recycled materials innovation.

General Motors Company: Committing to exclusively zero-emission light-duty vehicles by 2035 with $35 billion allocated to EV and autonomous vehicle development through 2025, representing comprehensive transition of core business model.

Brookfield Asset Management: Managing $950 billion in assets with net-zero commitments across portfolio companies and pioneering the Brookfield Global Transition Fund, deploying capital specifically for decarbonization opportunities.

Emerging Startups

Watershed: Providing enterprise carbon accounting software enabling companies to measure, report, and reduce emissions with data integrations and audit-ready reporting capabilities valued at $1.8 billion as of 2024.

Persefoni: Offering AI-powered carbon management and accounting platform specifically designed for regulatory compliance, including SEC climate rule alignment, serving Fortune 500 clients across North America.

Pachama: Deploying satellite imagery and machine learning to verify carbon offset quality, addressing the credibility gap in nature-based solutions that undermines many corporate transition claims.

Crusoe Energy Systems: Converting stranded natural gas that would otherwise be flared into computing power for data centers, demonstrating innovative approaches to emissions reduction in hard-to-abate sectors.

CarbonChain: Providing supply chain carbon intelligence specifically for commodities and industrial supply chains, enabling Scope 3 measurement with transaction-level granularity previously unavailable.

Key Investors & Funders

Breakthrough Energy Ventures: Bill Gates-founded fund with $2 billion in committed capital specifically targeting climate technology companies across energy, transportation, manufacturing, and agriculture sectors.

TPG Rise Climate: $7.3 billion climate-focused fund investing in decarbonization opportunities across North America and globally, backed by institutional investors requiring climate transition alignment.

BlackRock Climate Infrastructure Fund: Deploying institutional capital into renewable energy and climate infrastructure projects supporting corporate transition pathways with over $5 billion in target allocation.

Congruent Ventures: Early-stage venture fund focused on sustainable systems, providing capital and strategic support to companies enabling industrial decarbonization and circular economy transitions.

Generate Capital: Infrastructure platform providing project financing for sustainable infrastructure assets, enabling companies to implement transition projects without balance sheet constraints.

Examples

1. General Motors' Ultium Platform Transition: GM's comprehensive transition to electric vehicles exemplifies both the scale of investment required and the hidden trade-offs practitioners navigate. The company's $35 billion commitment through 2025 includes battery manufacturing facilities in Ohio and Tennessee, supply chain restructuring affecting over 500 suppliers, and workforce retraining programs for 35,000 employees. The transition reduced projected lifecycle emissions by 65% per vehicle but required accepting near-term margin compression of 15-20% during the transition period. Practitioners at GM emphasize that transparent communication with investors about this trade-off was essential for maintaining support during the implementation phase.

2. Pepsico's Positive Agriculture Strategy: Pepsico's net-zero transition addresses Scope 3 agricultural emissions through its Positive Agriculture program, targeting 7 million acres of regenerative farming practices by 2030. In North America, the program engages over 3,500 farmers through demonstration farms, technical assistance, and purchasing premiums for sustainably produced crops. Initial results show 15% soil carbon sequestration improvements and 20% water use efficiency gains on enrolled acreage. The hidden trade-off: premium payments to farmers increased raw material costs by 8%, requiring price optimization across the product portfolio rather than direct consumer price increases.

3. Linde's Clean Hydrogen Expansion: Industrial gas company Linde's transition strategy centers on becoming the world's leading supplier of clean hydrogen, with 80 clean hydrogen projects announced globally through 2024. Their Blue/Green hydrogen production facility in Texas represents a $600 million investment producing 200,000 tons of clean hydrogen annually. The project required navigating complex trade-offs between green hydrogen's zero-carbon credentials (requiring 4x greater capital investment) and blue hydrogen's faster deployment timeline with carbon capture. Practitioners involved emphasize that customer offtake agreements signed before construction began were essential for de-risking the investment decision.

Action Checklist

• Conduct comprehensive Scope 1, 2, and 3 emissions baseline assessment using standardized methodologies aligned with GHG Protocol requirements
• Establish science-based targets through SBTi validation, including near-term (2030) and long-term (2050) milestones with interim checkpoints
• Integrate internal carbon pricing mechanisms into capital allocation processes with price levels sufficient to influence investment decisions
• Develop supplier engagement program addressing Scope 3 emissions with clear requirements, technical support, and accountability mechanisms
• Align executive compensation with transition milestones, linking 15-25% of variable compensation to verified climate performance
• Implement water risk assessment across operations and supply chain, integrating water stress projections into transition planning
• Establish cross-functional transition governance with C-suite oversight and board-level reporting cadence
• Build MRV infrastructure enabling third-party verification of emissions data, transition progress, and offset quality
• Develop SEC climate rule compliance roadmap addressing disclosure requirements for material climate risks and transition plans
• Create stakeholder communication strategy transparently addressing trade-offs, interim challenges, and progress metrics

FAQ

Q: How should companies balance near-term profitability pressures with long-term net-zero transition investments? A: Practitioners consistently recommend framing transition investments as risk mitigation rather than discretionary spending. Companies that have successfully navigated this tension typically establish ring-fenced transition capital budgets reviewed annually by boards, with investment cases evaluated using shadow carbon prices reflecting anticipated future carbon costs. Successful organizations also identify "no-regret" investments delivering both near-term returns and emissions reductions—such as energy efficiency improvements—to build organizational confidence before pursuing larger transformational investments. Executive compensation linkage to transition milestones ensures leadership attention persists through quarterly earnings cycles.

Q: What approaches effectively address Scope 3 emissions measurement and reduction given supplier data limitations? A: Leading practitioners employ tiered supplier engagement strategies prioritizing the 20% of suppliers typically responsible for 80% of Scope 3 emissions. For these priority suppliers, direct data collection through standardized questionnaires and third-party verification is feasible and cost-effective. For remaining suppliers, hybrid approaches combining spend-based estimations with industry average emissions factors provide directional accuracy. Progressive companies are investing in supplier capacity building—providing measurement tools, technical assistance, and in some cases financial incentives—recognizing that supplier decarbonization supports their own transition while building competitive advantage through supply chain resilience.

Q: How are companies navigating the tension between carbon offset use and genuine emissions reduction? A: Credible transition plans employ offsets exclusively for residual emissions that cannot be eliminated through available technologies, typically limiting offset use to less than 10% of baseline emissions. Practitioners emphasize that offset quality varies enormously, with engineered carbon removal (direct air capture, enhanced weathering) commanding premiums of $400-800 per ton compared to $5-20 for questionable forestry credits. Companies maintaining credibility are establishing internal offset quality standards exceeding certification requirements, preferring offsets with permanence guarantees, additionality verification, and co-benefits for local communities. Importantly, they publicly disclose offset volumes and types, enabling stakeholder scrutiny.

Q: What governance structures most effectively support transition plan implementation? A: Organizations demonstrating consistent transition progress typically establish dedicated Chief Sustainability Officer roles reporting directly to CEOs, with board-level sustainability committees providing oversight. Cross-functional transition teams including representatives from operations, procurement, finance, legal, and investor relations ensure implementation decisions incorporate diverse perspectives and organizational constraints. Quarterly transition progress reviews at executive committee level, with annual board deep-dives, maintain accountability. Leading companies are increasingly linking audit committee responsibilities to climate disclosure accuracy, reflecting the materiality of transition commitments.

Q: How should transition plans account for regulatory uncertainty, particularly regarding SEC climate rules facing legal challenges? A: Practitioners advise developing disclosure capabilities aligned with the most stringent anticipated requirements rather than minimizing preparation based on regulatory uncertainty. California's SB 253 and SB 261, European CSRD requirements affecting U.S. subsidiaries, and institutional investor expectations create disclosure obligations regardless of federal rule outcomes. Companies treating regulatory compliance as floor rather than ceiling are building measurement and reporting infrastructure supporting multiple frameworks simultaneously. This approach positions organizations to adapt quickly when regulatory clarity emerges while meeting current stakeholder expectations for transparency.

Sources

• Net Zero Tracker. "Net Zero Stocktake 2024." University of Oxford, NewClimate Institute, and Energy & Climate Intelligence Unit, 2024.
• Climate Action 100+. "2024 Benchmark Assessment." Climate Action 100+ Investor Initiative, October 2024.
• BloombergNEF. "New Energy Outlook 2024." Bloomberg Finance L.P., 2024.
• CDP. "Global Supply Chain Report 2024: Scope 3 Emissions Disclosure." CDP Worldwide, 2024.
• Science-Based Targets Initiative. "SBTi Progress Report 2024." World Resources Institute, CDP, UN Global Compact, WWF, 2024.
• U.S. Securities and Exchange Commission. "The Enhancement and Standardization of Climate-Related Disclosures for Investors." Final Rule, March 2024.
• Ellen MacArthur Foundation. "Completing the Picture: How the Circular Economy Tackles Climate Change." 2021 (updated 2024).