Net Zero Strategy: How to Build One That Holds Up
A net zero strategy is the plan that takes your organisation from today’s emissions to the point where what remains is balanced by permanent removals. It has five working parts: a measured baseline, science-based targets, a roadmap of dated actions, named owners, and regular public reporting. This guide covers each part, and the standards and transition plan guidance you can build on.
Key Takeaways
Net zero means cutting emissions to the minimum feasible level and balancing only what remains with permanent removals. A strategy is the plan that makes this happen.
Start with a verified emissions baseline across scopes 1, 2 and 3. Targets, roadmap and reporting all depend on it.
Reduce first. Science-based guidance expects deep cuts of 90-95% before 2050, with carbon removals covering only the final 5-10%.
A roadmap turns targets into short-, medium- and long-term actions, each with a budget, an owner and executive oversight.
Expect disclosure rules to reach you. Transition plan requirements are emerging in the UK, the EU and under ISSB standards.
What a net zero strategy is, and what it is not
The IPCC defines net zero as the point where human-caused greenhouse gas emissions are balanced by human-caused removals over a specified period, as the SBTi Foundations paper sets out. The World Bank explainer adds the part that matters for organisations: emissions must first be reduced to the absolute minimum feasible, and only the residual is balanced by an equivalent quantity of permanent removals.
That is the difference between a net zero strategy and a general pledge to “cut emissions”. The SBTi paper notes that science-based net-zero targets go beyond emission reduction targets by making a company take responsibility for the emissions it has yet to reduce, or cannot feasibly eliminate. MIT’s climate explainer puts it plainly: an organisation at net zero takes both kinds of action, reducing emissions and removing greenhouse gases, so that the positive and negative effects balance out.
In practice, a strategy answers four questions:
Where are our emissions today, and where do they come from?
How far, and how fast, must they fall?
What will we do, in what order, with what money?
Who is accountable, and how will we show progress?
You will also see this called a net zero roadmap or a climate transition plan. The terms overlap. The strategy sets direction and targets. The roadmap or transition plan is the detailed, time-bound version that people can execute and investors can read.
The building blocks of a business net zero strategy
Government and industry guidance converge on a similar list. The NSW Net Zero Business Guide, written for Australian businesses but built on generally applicable steps, names nine elements:
Element | What it asks of you |
|---|---|
Strategy | Identify climate-related risks and opportunities and write a high-level net zero policy |
Governance | Make executive leadership accountable |
People and capability | Upskill staff and align remuneration with net zero goals |
Data | Plan, calculate and verify an emissions inventory |
Targets | Set near-term and long-term reduction targets |
Action plan | Plan for scope 1, 2 and 3 emissions across long, mid and short horizons |
Finance | Identify financing options and budget for net zero |
Stakeholder engagement | Engage the value chain, industry, government and civil society |
Reporting | Disclose your commitment and progress |
Notice how much of this is organisational rather than technical. Governance, skills, budgets and engagement decide whether a strategy survives its first budget round. A beautiful emissions model with no owner tends to stall.
The Exponential Business Playbook frames the same work as four pillars of climate action that need to sit inside business strategy for 1.5°C alignment: cutting your own emissions and impact on nature, cutting value chain emissions and impact on nature, developing and scaling climate solutions, and contributing to the net zero ambition in society beyond your own business. Its point is that a transition plan belongs in the business plan, not in a separate sustainability document.
Step 1: Measure your emissions baseline
Nothing else in the strategy is credible until you know where you start. ISO IWA 42:2022 asks an organisation to determine the baseline from which progress is measured, the current state of its emissions based on its inventory, and how far that inventory aligns with the applicable science-based pathway.
A practical approach:
Set the boundary. Decide which legal entities, sites and activities are in scope, and keep the boundary consistent year to year.
Cover all three scopes. Scope 1 is direct emissions from your own sources, scope 2 is purchased energy, and scope 3 is everything else in your value chain. For many organisations scope 3 is the largest share, so leaving it out understates the task.
Choose a base year that is representative, and record how you will restate it if the business changes through acquisitions or disposals.
Verify the inventory. The NSW guide lists verification as part of the data element, and an independently checked figure carries weight with lenders, customers and regulators.
Record data quality. Estimates based on spend are fine to start. Mark them, then replace them with supplier-specific data over time.
This is where reporting software earns its place. Collecting utility, travel, procurement and supplier data in one system makes year-two measurement a refresh rather than a rebuild.
Step 2: Set targets that are credible
The World Bank’s Task Force on Net Zero Goals and Carbon Pricing found that credible targets, and the strategies behind them, must be transparent, ambitious, aligned with social and economic development, and based on robust accounting so reductions are measured accurately and double counting is avoided.
ISO IWA 42:2022 turns that into specific requirements: separate targets for emission reductions and for removals, an estimate of anticipated residual emissions, progressive timelines with interim targets, and mechanisms to measure, monitor and evaluate progress.
For the level of ambition, two reference points are useful:
The SBTi Net-Zero Standard calls for rapid action to halve emissions before 2030 and deep long-term cuts of 90-95% before 2050.
The Exponential Business Playbook recommends a public board-level commitment to halve emissions across operations and the whole value chain by 2030 or earlier, and to reach net zero or absolute zero by 2040, preferably sooner, on a science-based pathway with interim targets.
These are not identical timelines, and you should say which one you are following. A near-term target (five to ten years) is the one that drives budgets. A 2050 date on its own tells nobody what to do this year.
Reduction first, removals last
The SBTi standard is clear about order. Cutting emissions across your operations and value chain is the main route. The final 5-10% of residual emissions is then neutralised with carbon removals, which can be technological, such as direct air capture with geological storage, or nature-based, such as reforestation.
In a strategy document, that means separating three lines: emissions you will eliminate, residual emissions you expect to remain, and the removals you will buy or build to balance them. The Climateworks Centre’s guide to credibility for corporate transition plans lists emissions reductions before carbon credits among its seven credibility criteria. Plans that lean on offsets to look finished are the ones readers learn to distrust.
Step 3: Turn targets into a roadmap
A target is a destination. The roadmap is the route. The Transition Plan Taskforce Implementation Guidance, developed in the UK, says a transition plan should translate long-term targets into concrete short-, medium- and long-term actions, financed and supported by governance, accountability and periodic reporting.
A workable roadmap usually has these features:
Levers sorted by time horizon. Quick operational wins (energy efficiency, procurement rules, travel policy) fund and build confidence for slower, capital-heavy changes (electrification, fleet replacement, product redesign).
Scope 3 engagement. The TPT guidance suggests assessing your strategic levers, including the abatement potential of working with suppliers and others along the value chain. Supplier data requests and joint reduction projects belong on the roadmap as real workstreams.
Costs and funding. Attach a budget to each action, and say whether it comes from operating budgets, capital plans or external finance.
Dependencies. Note what relies on outside conditions, such as grid decarbonisation, technology readiness or policy support, so a delay can be managed rather than hidden.
Sector context. The IFRS sector summary gives an overview of transition plan guidance across 30 financial and real economy sectors, including recognised decarbonisation levers, metrics and targets for each.
The Climateworks guide sets out seven criteria that investors and regulators can use to test a plan: ambitious and robust targets, a feasible action plan, reductions before credits, strategic and financial alignment, supportive policy and stakeholder engagement, strong governance, and continuous review and disclosure. Run your draft roadmap against that list before you publish it.
Step 4: Assign governance and ownership
The TPT guidance expects defined roles and responsibilities, including executive oversight for final sign-off, agreeing strategy and budgets, setting performance objectives and monitoring progress. The NSW guide asks for the same thing in plain terms: executive accountability, and remuneration aligned with net zero goals.
What this looks like in a mid-sized organisation:
A named executive sponsor, usually the CEO, CFO or COO, who owns the target.
A cross-functional working group covering finance, operations, procurement, facilities and HR.
Action owners for each line of the roadmap, with their objectives written into annual reviews.
A board or committee slot at least twice a year for progress and decisions.
Training is part of this. The NSW guide lists upskilling staff under people and capability, and a strategy that only the sustainability team understands will not reach procurement or product decisions.
Step 5: Measure progress and report
Reporting is how a strategy proves itself, and it is also where the regulatory pressure is building. Good practice is simple to describe:
Track the same metrics every year. Absolute emissions by scope, against your base year and your interim targets.
Separate the drivers. Show what changed because of real reductions and what changed because of growth, acquisitions or methodology updates.
Report on actions, not just totals. Which roadmap items were delivered, which slipped, and what you are doing about it.
Review and revise. Continuous review and disclosure is one of the Climateworks credibility criteria. Update targets and the roadmap when the evidence moves.
Be consistent in claims. ISO IWA 42:2022 covers reporting and claims, so describe what you have achieved in the terms the standard uses.
If you want an example of what a published plan looks like in practice, see our coverage of Allianz’s first net-zero transition plan, and our look at how net zero goals play out in a heavy-emitting sector.
Standards and rules to know about
Several frameworks now shape what a net zero strategy should contain, and they point in the same direction.
ISO IWA 42:2022. The Net Zero Guidelines give a common global approach to reaching net zero by no later than 2050. They cover guiding principles, levels and boundaries, targets, mitigation planning, counterbalancing residual emissions, measurement and monitoring, wider impact and just transition, and reporting and claims. They are intended to harmonise approaches across voluntary initiatives.
UK. The Transition Plan Taskforce guidance is the UK reference for plan content. According to Anthesis Group’s summary in the UNDP ESG handbook, the FCA proposed that listed companies, asset owners and asset managers publish a climate transition plan from FY 2023-24. Check the FCA and government pages for the rules that apply to your category today, since requirements have continued to develop.
EU. The same handbook explains that the Corporate Sustainability Reporting Directive entered into force in January 2022, with ESRS E1 detailing what a transition plan disclosure should include. Its stated scope covers listed companies, large companies meeting two of three tests (more than 250 employees, net turnover above EUR 40 million, or total assets above EUR 20 million), and non-EU companies with an EU subsidiary and net turnover above EUR 150 million. EU reporting rules have been under review, so confirm current thresholds and timing on the official pages.
ISSB and the US. The handbook also notes that the draft ISSB standard and proposed US SEC requirements include transition plan disclosure. For a business selling into several markets, a plan built to the ISO and TPT structure is a sound base to adapt.
If you operate across Europe and Africa, as many of our readers do, build one core plan on a single baseline and adapt the disclosure layer for each jurisdiction. Writing separate plans per country multiplies work and invites inconsistencies.
Common mistakes to avoid
Targets without a baseline. A date and a percentage mean little until the starting point is measured and verified.
Ignoring scope 3. For many organisations most emissions sit in the value chain, and supplier engagement needs a start date and an owner.
Offsets standing in for cuts. Sequence reductions first, then removals for the residual.
No money attached. An action with no budget line is a hope. The NSW guide includes finance as its own element for this reason.
A strategy that lives only in the sustainability team. Governance and incentives are what turn it into business as usual.
One-off reporting. Publish progress every year against the same metrics so people can see the direction of travel.
Where Exereco fits
We publish sustainability news and analysis focused on Europe and Africa, and we also offer ESG reporting software, advisory and compliance support, training courses and networking events. If you are drafting a net zero strategy or transition plan and want help with the data, the reporting or the skills inside your team, our business sustainability services bring these together in one place.
For more reading on how organisations are acting, see our pieces on driving towards net zero and on net-zero banking commitments, or browse our ESG coverage and our work on SDG 13: Climate Action.
FAQ
What is the difference between a net zero strategy and a net zero roadmap?
The strategy sets your ambition, targets, scope and governance. The roadmap, often called a transition plan, breaks those targets into short-, medium- and long-term actions with budgets and owners. The Transition Plan Taskforce guidance describes the plan as the way strategic objectives become concrete, financed actions.
What should a net zero strategy for business include?
At a minimum: a verified emissions baseline, near-term and long-term targets, an action plan covering scopes 1, 2 and 3, a budget, executive accountability, stakeholder engagement and regular reporting. The NSW Net Zero Business Guide lists these as nine elements, and ISO IWA 42:2022 adds requirements on residual emissions and interim targets.
Can carbon offsets get us to net zero?
Not on their own. The SBTi Net-Zero Standard treats deep emission cuts of 90-95% before 2050 as the main route, with removals neutralising only the final 5-10%. Climateworks also lists reductions before carbon credits as a credibility criterion for transition plans.
How often should we review our net zero plan?
At least once a year, alongside your emissions reporting, and whenever your business, technology or regulation changes materially. Continuous review and disclosure is one of the seven credibility criteria in the Climateworks guide. Interim targets give you natural checkpoints.
Do we need a net zero strategy if we are a small business?
The steps are the same, but the effort scales down. Start with a simple baseline and a few clear actions on energy, travel and purchasing, then add supplier engagement as you grow. Customers and larger partners increasingly ask for this information, so having a plan ready helps.
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