Interview: practitioners on Net-zero strategy & transition planning — what they wish they knew earlier

Despite over 6,000 companies worldwide having committed to net-zero targets by 2024, a striking 93% of these pledges lack credible implementation pathways according to Net Zero Tracker's 2024 assessment. In North America specifically, corporate transition plans face a sobering reality: the average timeline to navigate federal permitting for major clean energy infrastructure projects now exceeds 4.5 years, while stakeholder alignment on decarbonization investments remains fragmented across supply chains. We spoke with practitioners who have lived through these challenges—sustainability directors, operations leads, and policy advisors—to uncover what they wish they had known before embarking on their net-zero journeys.

Why It Matters

The urgency of credible net-zero transition planning has never been greater. In 2024, global temperatures exceeded the 1.5°C threshold for the first time on an annual basis, accelerating regulatory and investor pressure on corporations to demonstrate actionable decarbonization strategies. The Science Based Targets initiative (SBTi) reported that by late 2024, over 4,200 companies had set validated science-based targets, representing 34% of global market capitalization—yet fewer than 15% had disclosed detailed capital allocation plans to achieve them.

In North America, the landscape is particularly complex. The United States Inflation Reduction Act (IRA) unlocked an estimated $369 billion in clean energy incentives through 2032, fundamentally reshaping the economics of decarbonization. Canada's federal carbon pricing reached CAD $80 per tonne in 2024, with scheduled increases to $170 by 2030. Mexico's energy transition remains constrained by state utility dominance but shows nascent private sector momentum.

For practitioners, the significance extends beyond compliance. A 2024 McKinsey analysis found that companies with credible transition plans attracted capital at 40-80 basis points lower cost than peers lacking climate strategies. Conversely, the "transition risk" of stranded assets now appears on 67% of Fortune 500 10-K filings as a material concern. The stakes are clear: net-zero strategy is no longer a sustainability exercise but a core business imperative affecting access to capital, regulatory license to operate, and long-term competitive positioning.

Key Concepts

Understanding net-zero transition planning requires fluency in several interconnected concepts that practitioners consistently identified as critical—and frequently misunderstood.

Permitting refers to the regulatory approval processes required for infrastructure projects including renewable energy installations, transmission lines, and industrial facility modifications. In the United States, the National Environmental Policy Act (NEPA) review process averages 4.5 years for major projects, with interconnection queue backlogs exceeding 2,000 GW of proposed capacity as of 2024. Practitioners emphasized that permitting timelines, not technology costs, now represent the primary constraint on transition plan execution.

Extended Producer Responsibility (EPR) establishes legal frameworks requiring manufacturers to manage end-of-life product impacts. While traditionally associated with packaging waste, EPR increasingly intersects with transition planning through requirements for battery recycling, solar panel disposal, and circular economy mandates. Five U.S. states enacted comprehensive EPR legislation between 2023-2025, creating compliance obligations that affect net-zero scope 3 accounting.

EU Taxonomy provides a classification system defining environmentally sustainable economic activities. Though originating in Europe, the taxonomy exerts extraterritorial influence on North American companies through investor expectations, supply chain requirements, and emerging alignment between EU and Canadian disclosure frameworks. Practitioners noted that taxonomy alignment increasingly determines access to green finance instruments.

Transition Plan denotes a time-bound, action-oriented strategy translating net-zero commitments into operational changes, capital investments, and governance mechanisms. The Task Force on Climate-related Financial Disclosures (TCFD) established baseline expectations, but the 2024 launch of the Transition Plan Taskforce (TPT) framework introduced more rigorous requirements including sectoral pathways, interim milestones, and accountability mechanisms.

Industrial Policy describes government interventions shaping private sector behavior through incentives, regulations, and public investment. The IRA represents the most significant U.S. industrial policy intervention since the post-war era, while Canada's Strategic Innovation Fund and Clean Fuels Standard similarly blend carrots and sticks to accelerate decarbonization.

What's Working and What Isn't

What's Working

Sector-specific collaborative initiatives have emerged as powerful accelerants. The First Movers Coalition, launched at COP26 and now comprising 95+ members, aggregates demand signals for low-carbon materials including steel, cement, aluminum, and sustainable aviation fuel. Practitioners reported that coalition membership provided procurement leverage impossible to achieve individually, with member companies committing to purchase 10% of industrial materials from near-zero emission sources by 2030. One operations director noted, "We couldn't move our steel supplier alone, but when five Fortune 500 companies coordinate requirements, suddenly decarbonization becomes their competitive advantage."

Internal carbon pricing mechanisms demonstrate measurable impact when designed with genuine budget implications. Microsoft's internal carbon fee, raised to $100 per metric ton in 2024, generated over $200 million annually for sustainability investments while embedding emissions costs into product development decisions. Companies implementing internal carbon prices with actual fund allocation—rather than shadow pricing—reported 23% faster emissions reductions according to CDP's 2024 analysis.

Cross-functional governance structures correlating executive compensation to climate metrics show strong results. Unilever's linking of 25% of executive bonuses to sustainability targets, Shell's 20% compensation tie to energy transition goals, and similar mechanisms at major North American companies created accountability that purely aspirational targets lacked. A sustainability director shared, "The moment climate KPIs hit compensation, every business unit suddenly found emissions reduction opportunities they'd previously deemed impossible."

What Isn't Working

Scope 3 data collection remains the most frequently cited frustration among practitioners. Despite representing 70-90% of total emissions for most companies, scope 3 accounting relies on supplier disclosures that remain inconsistent, incomplete, or entirely absent. The GHG Protocol's 2024 survey found that 78% of companies used spend-based proxies rather than primary activity data for scope 3 calculations, introducing estimation errors of 40% or greater. One practitioner described it as "building a house on quicksand—we're making multi-million dollar decisions based on emissions numbers we fundamentally don't trust."

Interconnection queue bottlenecks throttle renewable energy deployment regardless of corporate ambition. Lawrence Berkeley National Laboratory's 2024 analysis revealed that 72% of projects entering interconnection queues between 2019-2023 were withdrawn before completion, with average wait times exceeding five years. Virtual power purchase agreements (VPPAs) face increasing scrutiny regarding additionality claims when projects remain queue-delayed for years. Practitioners expressed frustration that their renewable energy procurement timelines extend well beyond their net-zero interim milestone dates.

Misaligned incentive structures between corporate sustainability functions and operational units create persistent implementation gaps. Sustainability teams set targets while operations teams control budgets, procurement decisions, and capital allocation. Without aligned incentives, net-zero strategies become documents rather than operational realities. A operations lead confided, "My bonus depends on cost reduction and uptime. Sustainability is someone else's job. Until that changes, we'll keep optimizing around the wrong objectives."

Key Players

Established Leaders

Microsoft operates one of North America's most mature net-zero programs, achieving carbon negativity in 2024 through a combination of $1 billion climate innovation fund investments, advanced carbon removal purchases, and comprehensive scope 3 supplier engagement requiring 55,000+ suppliers to report emissions.

Apple demonstrates circular economy leadership with 100% recycled aluminum in all product enclosures, a $4.7 billion Green Bond portfolio, and supplier clean energy commitments covering its global manufacturing base—now extending to over 300 suppliers on 100% renewable energy.

Walmart leverages supply chain scale through Project Gigaton, which by 2024 had avoided over 750 million metric tons of cumulative emissions across its supplier network—demonstrating how retail giants can drive upstream decarbonization.

NextEra Energy stands as North America's largest generator of renewable energy from wind and solar, with 34 GW of operating capacity and a $50-55 billion capital plan through 2026 focused on clean energy expansion and grid infrastructure.

Brookfield Renewable Partners manages over 33 GW of renewable power capacity across North America, positioning institutional capital at scale toward transition finance with a $15 billion annual investment pipeline.

Emerging Startups

Watershed provides enterprise carbon accounting software enabling real-time emissions tracking, supplier engagement, and audit-ready reporting—serving over 200 major enterprises with its measurement-to-action platform.

Persefoni offers AI-powered carbon management software achieving CDP and GHG Protocol alignment, recently valued at $850 million following Series B funding and partnerships with major consulting firms.

Arcadia operates the largest energy data platform in North America, connecting utility billing data across 9,500+ utilities to enable distributed energy resource management and renewable energy procurement.

Patch facilitates carbon credit procurement and portfolio management for enterprises, providing API-first infrastructure connecting buyers with verified removal and avoidance projects globally.

Subak accelerates climate-tech development through a not-for-profit accelerator model, supporting data-driven climate ventures with computing resources, mentorship, and community building across North America and Europe.

Key Investors & Funders

Breakthrough Energy Ventures, founded by Bill Gates, has deployed over $3 billion across 100+ climate technology companies, with particular focus on hard-to-abate sectors including industrial decarbonization, long-duration storage, and sustainable aviation fuel.

TPG Rise Climate closed its $7.3 billion fund in 2024, targeting large-scale decarbonization opportunities across clean energy, enabling infrastructure, and industrial transformation.

Generate Capital has deployed $10+ billion in sustainable infrastructure investments, pioneering project finance approaches for distributed energy, water, and waste solutions.

Canada Infrastructure Bank operates with a $35 billion mandate including substantial clean energy allocations, providing low-cost capital for transmission, storage, and transportation electrification projects.

Department of Energy Loan Programs Office administers over $400 billion in loan authority under the IRA, supporting first-of-a-kind clean energy projects with credit enhancement structures unavailable from commercial markets.

Examples

1. Microsoft's Carbon Removal Portfolio (2024-2025) Microsoft committed to removing 2 million metric tons of CO2 by 2030, pioneering the enterprise carbon removal market. In 2024, the company finalized offtake agreements totaling $200+ million with providers including Heirloom, Climeworks, and Charm Industrial. The approach demonstrated willingness to pay premium prices ($200-600/ton) to create market signals enabling technology cost curves to decline. Microsoft's 2024 Environmental Sustainability Report documented removal of 185,000 tons through contracted projects, with lessons learned including the importance of diversified technology portfolios and multi-year purchase commitments providing supplier bankability.

2. General Motors' Supplier Sustainability Program (2023-2025) GM launched a comprehensive supplier decarbonization program targeting 300+ direct suppliers representing 95% of procurement spend. The initiative included capacity-building workshops, shared measurement tools, and preferential sourcing for suppliers demonstrating emissions reduction progress. By 2024, participating suppliers had cumulatively reduced Scope 1 and 2 emissions by 18% from baseline, while GM achieved 50% renewable energy for U.S. operations. The program illustrated how OEMs can leverage procurement power while acknowledging that supplier transitions require multi-year timelines and support investment.

3. California Air Resources Board's Cap-and-Trade Integration (2024) California's cap-and-trade program, now linked with Quebec's market, covered facilities representing 80% of state greenhouse gas emissions. The 2024 program review established allowance prices averaging $38/ton—among the highest compliance carbon prices in North America. Corporate practitioners operating in California reported that the price signal, combined with declining free allocation, materially shifted capital planning toward electrification and efficiency. One facility manager observed, "When our carbon costs exceeded $15 million annually, decarbonization stopped being sustainability theater and became CFO-priority."

Action Checklist

• Conduct gap analysis comparing current emissions trajectory against science-based target pathway, identifying specific intervention points for 2025-2030
• Establish internal carbon pricing mechanism with real fund allocation, starting at minimum $50/ton and escalating annually
• Map scope 3 emissions hotspots to top 50 suppliers by spend, initiating primary data collection conversations before year-end
• Review permitting timelines for planned infrastructure projects, adjusting transition plan milestones to reflect realistic regulatory approval horizons
• Align executive compensation with climate KPIs representing minimum 15% of variable pay for C-suite and 10% for business unit leaders
• Join sector-specific coalitions (First Movers Coalition, RE100, or equivalent) to aggregate demand signals and share implementation learnings
• Develop board-level climate competency through targeted director education or advisory relationships with climate expertise
• Establish quarterly transition plan review cadence with cross-functional stakeholders including finance, operations, procurement, and legal
• Evaluate carbon removal portfolio strategy, budgeting for early-stage offtake agreements that support market development
• Engage policy advocacy aligned with transition plan needs, particularly on permitting reform and grid infrastructure investment

FAQ

Q: How should companies prioritize between scope 1, 2, and 3 emissions reductions given resource constraints? A: Practitioners consistently recommend a sequenced approach beginning with scope 2, where renewable energy procurement delivers rapid results with established pathways. Scope 1 follows, though industrial facilities may require multi-year capital investment cycles. Scope 3, while representing the largest emissions share, demands longer-term engagement given data quality challenges and supplier dependency. Companies should establish credible scope 1 and 2 trajectories before making aggressive scope 3 commitments they cannot substantiate. The SBTi's 2024 guidance requires scope 3 targets when it represents over 40% of total emissions, but allows flexibility in interim milestones.

Q: What distinguishes credible transition plans from greenwashing? A: Credibility markers include: specific capital allocation tied to stated targets, interim milestones with accountability mechanisms, sector-appropriate decarbonization levers rather than heavy offset reliance, governance structures with board oversight and compensation alignment, and transparent disclosure of assumptions and uncertainties. The TPT framework provides useful evaluation criteria. Practitioners noted that investor scrutiny increasingly focuses on "CapEx alignment"—whether capital spending actually flows toward transition—rather than target ambition alone.

Q: How can mid-sized companies lacking large sustainability teams develop effective transition plans? A: Successful mid-sized company approaches emphasize prioritization over comprehensiveness. Begin with scope 2 renewable energy procurement through simplified pathways such as utility green tariffs or aggregated PPAs. Leverage industry association resources for sector-specific guidance. Consider carbon accounting software platforms offering implementation support. Engage consultants for initial strategy development but build internal capacity for ongoing management. Focus transition plan disclosure on material emissions sources rather than attempting exhaustive accounting of immaterial categories.

Q: What role should carbon offsets play in corporate transition plans? A: Practitioner consensus has shifted toward the "mitigation hierarchy"—prioritizing emissions reductions, then removals, with avoidance offsets playing limited roles. High-quality removal credits (direct air capture, biochar, enhanced weathering) are increasingly acceptable for residual emissions after maximum feasible reductions. Avoidance credits for activities like avoided deforestation face growing scrutiny regarding additionality and permanence. The Oxford Principles and ICVCM Core Carbon Principles provide useful integrity frameworks. Companies should budget $50-200+/ton for quality removal credits rather than $5-15/ton for lower-quality avoidance credits.

Q: How do permitting delays affect transition plan credibility, and what can companies do? A: Permitting represents a material risk to transition plan execution that most companies initially underestimate. Strategies include: diversifying project portfolios geographically to avoid single-jurisdiction exposure, engaging in early stakeholder consultation to reduce opposition risk, supporting industry coalitions advocating permitting reform, incorporating realistic timeline buffers into interim milestones, and considering distributed energy approaches requiring less complex approvals than utility-scale projects. Transparency in disclosures about permitting-related execution risks enhances credibility rather than diminishing it.

Sources

• Net Zero Tracker. (2024). "Net Zero Stocktake 2024: Assessing the status and trends of net zero target setting." University of Oxford, Energy & Climate Intelligence Unit.
• Science Based Targets initiative. (2024). "SBTi Progress Report 2024." World Resources Institute, CDP, UN Global Compact.
• Lawrence Berkeley National Laboratory. (2024). "Queued Up: Characteristics of Power Plants Seeking Transmission Interconnection." U.S. Department of Energy.
• McKinsey & Company. (2024). "The Net-Zero Transition: What It Would Cost, What It Could Bring." McKinsey Global Institute.
• CDP. (2024). "Putting a Price on Carbon: The State of Internal Carbon Pricing." Carbon Disclosure Project.
• Transition Plan Taskforce. (2024). "TPT Disclosure Framework: Final Report." UK Government, HM Treasury.