Reaching net zero by 2050 is one of humanity’s most ambitious and urgent challenges. The concept is simple: every tonne of carbon dioxide emitted must be offset by an equal amount removed. But turning this vision into reality is far more complex. With over 250 years of carbon-intensive economic momentum behind us, the world has just 25 years to transition to a net-zero economy.
The path to net zero requires unprecedented global coordination, investment, and innovation. However, despite broad agreement on its importance, progress remains sluggish. The authors of this report, both leaders in climate strategy and finance, identify six major obstacles slowing the transition—and offer solutions to accelerate decarbonization.
1. Progress Over Perfection
Innovation requires flexibility. Early renewable energy markets thrived because companies were encouraged to participate, even if their methods weren’t perfect. Today, however, rigid net-zero standards discourage businesses from taking action. In 2023, the Science Based Targets Initiative (SBTi) delisted 240 companies—representing over $4 trillion in market value—because they failed to meet strict criteria. Instead of penalizing imperfect efforts, regulatory bodies should prioritize iterative progress and adaptation.
2. Prioritizing Direct Over Indirect Emissions
Corporate emissions are classified into three categories:
- Scope 1: Direct emissions from a company’s own operations.
- Scope 2: Emissions from purchased electricity, heating, and cooling.
- Scope 3: Indirect emissions from supply chains and product use.
Currently, Scope 3 dominates corporate carbon reporting, but it is also the hardest to track and reduce. Focusing first on Scope 1 and 2 emissions—where companies have direct control—would create faster and more measurable progress toward net zero.
3. Demand Over Delivery
Markets respond to demand. The rapid expansion of renewable energy was driven by corporate buyers investing in clean power. However, current carbon accounting rules don’t offer similar incentives for emissions reductions outside of electricity. Expanding these frameworks to reward all forms of carbon reduction—whether through fuel switching, carbon capture, or material innovations—would unlock greater investment and deployment.
4. Flexibility in Emissions Reduction vs. Removal
Both reducing emissions and removing carbon from the atmosphere are necessary. However, existing guidelines, such as SBTi’s requirement that companies reduce emissions by 90% before relying on removals, are overly rigid. Instead of imposing fixed ratios, industries should be allowed to balance reduction and removal strategies based on feasibility, cost, and technological advancements.
5. Encouraging Adoption Over Additionality
The concept of “additionality” requires that carbon credits or removals only count if they fund projects that wouldn’t have happened otherwise. While this principle works for offsetting, applying it too rigidly to carbon removal markets stifles growth. Instead, carbon removal should follow the model of renewable energy markets—allowing early investments to scale up technologies, even if they are not initially “additional” by strict definitions.
6. Collaboration Over Competition
Many net-zero solutions are expensive, making it difficult for individual companies to invest at scale. Collective purchasing agreements, like those seen in renewable energy markets, could accelerate investment in emerging technologies like green steel and sustainable aviation fuel. However, antitrust concerns often prevent companies from pooling resources. Governments should provide clear guidelines to allow sustainability-focused collaboration while maintaining fair market competition.
The biggest risk isn’t that companies will make mistakes on the path to net zero—it’s that they will be discouraged from acting at all. Instead of rigid mandates, regulators should provide incentives and flexibility, encouraging businesses to move forward with bold, innovative approaches.
Achieving net zero will not happen overnight, nor will it be a linear process. The key is to prioritize rapid progress over perfection, allowing market forces to drive continuous improvement. By embracing flexibility, collaboration, and real-world practicality, we can accelerate the transition to a decarbonized global economy.
