Walking Back on Net Zero: Corporate Retreats and the Future of Climate Action

Introduction: The Broken Promise of Net Zero

For years, corporate net-zero commitments symbolized hope—a promise that the business world recognized the urgency of climate action. These pledges to eliminate or balance greenhouse gas emissions became the cornerstone of corporate sustainability strategies, aligning organizations with the goals of the Paris Agreement.

Yet as 2030 looms, the sheen of those promises is fading. Behind the glossy sustainability reports, cracks are forming. Major corporations, once heralded as champions of net-zero ambitions, are walking back their commitments, blaming everything from economic pressures to technological constraints. The implications of these retreats are profound, not just for the environment but for the global economy and public trust.

In this issue, we delve into the organizations abandoning their climate pledges, explore the structural challenges behind their reversals, and analyze the broader consequences for climate strategy, particularly in areas like Scope 3 emissions and regulatory accountability.

The Backslide: How Corporations Are Retreating

When Amazon announced its goal of delivering 50% of its shipments with net-zero carbon by 2030, it was celebrated as a visionary step forward. But earlier this year, the company quietly abandoned its “Shipment Zero” initiative, folding it into a broader commitment to achieve net-zero across operations by 2040. This shift, while framed as a consolidation of efforts, masks an inconvenient truth: Amazon’s emissions have increased by nearly 40% since setting its original target. Growth in e-commerce operations and logistics has outpaced its efforts to decarbonize, leaving critics questioning its sincerity.

Amazon is not alone. Shell, a company that once positioned itself as a leader in transitioning to renewable energy, recently scaled back its 2030 emissions target. Originally committed to reducing the carbon intensity of its energy products by 20%, the company has softened this goal to a vague 15-20%. Moreover, Shell abandoned its 2035 target of cutting carbon intensity by 45%. Its CEO cited the dual challenges of energy security and profitability, sparking debates about whether the oil giant ever intended to meet its ambitious goals.

Even consumer goods giant Unilever, often regarded as a sustainability leader, has scaled back several key initiatives. Its promise to reduce virgin plastic use by 50% by 2025 has been revised down to 30% by 2026. Similarly, its ambitious pledge to use 100% biodegradable ingredients in its products by 2030 has quietly been shelved.

These examples illustrate a worrying trend. Across sectors, companies are recalibrating their commitments, citing economic headwinds, technological challenges, and shifting regulatory landscapes. But at what cost?

The Systemic Challenges Behind the Walkbacks

The retreat from net-zero pledges is not just a failure of corporate willpower; it reflects deeper systemic issues.

Economic Pressures and Short-Termism

Inflation, rising energy costs, and supply chain disruptions have created an environment where sustainability often takes a backseat to short-term financial performance. Companies like BP and TotalEnergies have argued that fossil fuel investments are necessary to meet energy demand in an unstable market. But this logic exposes a broader issue: the failure to prioritize long-term resilience over immediate gains.

The Scope 3 Conundrum

A major stumbling block for many organizations is addressing Scope 3 emissions—those generated across their value chains. These emissions often account for 70-90% of a company’s total carbon footprint and are notoriously difficult to measure and manage. For example, Microsoft’s commitment to halving Scope 3 emissions by 2030 has been derailed by the rapid expansion of AI data centers, which consume vast amounts of energy and exacerbate carbon output.

Companies frequently cite a lack of control over their suppliers and downstream partners as a reason for limited progress. However, this argument does little to address the urgency of decarbonization. Without significant investments in supply chain engagement and innovation, Scope 3 emissions will remain a persistent blind spot in corporate climate strategies.

Regulatory Fragmentation

The absence of uniform global standards complicates corporate climate efforts. In the European Union, frameworks like the Corporate Sustainability Reporting Directive (CSRD) demand detailed, science-based disclosures. But in the United States, political opposition to ESG (Environmental, Social, and Governance) initiatives has created a fractured regulatory environment. Companies like JPMorgan and Vanguard have cited these discrepancies as reasons for withdrawing from climate coalitions.

The Implications: Why This Matters

The rollback of net-zero commitments has far-reaching consequences for climate action, public trust, and the global economy.

Environmental Consequences

When companies retreat from their pledges, the ripple effects are immediate and devastating. The IPCC has warned that delayed action will significantly increase the cost and difficulty of limiting global temperature rise to 1.5°C. By backtracking, organizations risk locking the world into higher emissions trajectories, making future mitigation efforts exponentially more expensive and less effective.

Scope 3: A Missed Opportunity

Failing to address Scope 3 emissions undermines the credibility of net-zero commitments. For industries like transportation, manufacturing, and retail, supply chain emissions represent the majority of their climate impact. Companies that abandon these efforts not only exacerbate global emissions but also miss out on opportunities for supply chain innovation, efficiency, and cost savings.

Economic Risks

Walking back on climate goals exposes organizations to financial risks, including divestment from sustainability-focused investors and reduced access to capital. Research suggests that companies failing to adapt to a low-carbon economy may face stranded assets and declining market competitiveness as consumer and investor preferences shift.

Reputational Damage and Greenwashing

Greenwashing accusations are becoming more prevalent, eroding public trust in corporate sustainability efforts. Delta Air Lines, for instance, faces legal challenges over misleading carbon neutrality claims. For companies like Amazon and Shell, the gap between ambitious promises and actual progress risks alienating stakeholders and damaging their brands.

The Challenges of Meeting SBTi’s Criteria

The Science Based Targets initiative (SBTi) has emerged as a critical framework for organizations aiming to align their emissions reduction goals with the Paris Agreement. While SBTi offers robust guidelines for science-based climate action, many companies face significant hurdles in meeting its stringent requirements. These challenges reflect both the technical complexity of the process and broader systemic issues.

Technical Complexity

Setting science-based targets requires a deep understanding of greenhouse gas (GHG) emissions across all scopes. Companies must possess expertise in scientific methodologies for calculating reductions and projecting long-term impacts. For many businesses, especially those without prior experience in carbon inventories or climate modeling, this level of technical proficiency can be a significant barrier.

Scope 3 Emissions: The Persistent Obstacle

Addressing Scope 3 emissions—those generated across the value chain—represents one of the largest challenges for organizations attempting to meet SBTi criteria. These emissions often constitute up to 90% of a company’s total carbon footprint.

A survey revealed that 54% of companies identified Scope 3 as the most significant barrier to setting net-zero targets. Specific challenges include:

• Influencing suppliers: 81% of respondents noted difficulties in encouraging upstream suppliers to adopt decarbonization strategies.

• Accessing reliable data: 59% cited insufficient primary data for tracking progress, relying instead on industry averages that may not reflect true emissions levels.

• Decarbonizing products: Many companies struggle to reduce emissions from purchased goods, services, and the use of sold products—areas often outside their direct control.

Future Uncertainties

Long-term decarbonization strategies often hinge on emerging technologies, but the unpredictable pace of innovation introduces significant uncertainty. In a study, 53% of companies cited doubts about the availability and efficacy of future technologies as a barrier to setting ambitious targets. This is particularly true for hard-to-decarbonize industries like cement, steel, and aviation, where breakthroughs in carbon capture or alternative materials are still in development.

Economic Factors

The initial costs of implementing emission reduction measures are daunting, particularly for small and medium-sized enterprises (SMEs). A staggering 61% of surveyed companies cited cost as a critical challenge, highlighting the need for financial support, subsidies, or incentives to enable meaningful action.

Data and Measurement Issues

Robust data is the backbone of effective emissions management, but many companies encounter significant hurdles in this area, including:

• Lack of supplier-specific emissions factors: Without precise data, companies often rely on averages that obscure individual supplier performance.

• Unreliable data: Variability in data quality across the supply chain undermines the accuracy of Scope 3 assessments.

• Limited upstream visibility: Even when suppliers decarbonize, companies may struggle to quantify these impacts accurately.

Balancing Growth and Emissions Reduction

For many businesses, the dual pursuit of growth and emissions reductions poses a unique challenge. Nearly 58% of respondents highlighted growth ambitions as a barrier to cutting absolute emissions by at least 90%, a requirement for net-zero alignment. Balancing operational expansion with sustainability commitments demands innovation, collaboration, and rethinking traditional business models.

Sector-Specific Challenges

Different industries face unique obstacles in aligning with SBTi standards.

• Agriculture and forestry: Land-use sectors struggle with complex emissions accounting, particularly for carbon sequestration and land restoration projects.

• Energy-intensive industries: Sectors like chemicals, buildings, aviation, and oil and gas await tailored guidance to address their specific decarbonization challenges.

Internal Resistance

Convincing all levels of an organization to prioritize SBTi-aligned targets is not always straightforward. Resistance can stem from concerns over costs, perceived complexity, or a lack of understanding about the long-term benefits of science-based targets. Leadership buy-in is critical, but it often requires a cultural shift within the organization.

Methodological Issues

Some companies struggle with the perceived ambiguity of SBTi requirements. In fact, 60% of surveyed organizations expressed concerns about the lack of sector-specific guidance and the difficulty of interpreting existing methodologies. This highlights the need for clearer, more adaptable frameworks tailored to diverse industries and business models.

The Path to Overcoming These Challenges

While the hurdles to meeting SBTi criteria are significant, they are not insurmountable. Collaborative efforts from stakeholders across the climate ecosystem—governments, industry bodies, and civil society—are essential to:

1. Improve Data Accuracy: Investing in advanced tracking and reporting tools, such as blockchain for supply chain transparency, can help overcome data-related barriers.

2. Provide Financial Support: Governments and multilateral organizations can offer grants, low-interest loans, and tax incentives to offset decarbonization costs.

3. Streamline Guidance: Tailored methodologies for specific sectors will reduce ambiguity and improve adoption rates.

4. Foster Supplier Collaboration: Building industry-wide coalitions to engage suppliers in decarbonization efforts can amplify impact across entire value chains.

By addressing these challenges head-on, companies can move closer to meeting their climate commitments and aligning with SBTi’s rigorous standards, ensuring a more sustainable future for all.

The Bright Spots: Companies Staying the Course

Not all organizations are retreating from their commitments. Some have doubled down on their climate goals, demonstrating that ambition and action can coexist.

Schneider Electric remains a shining example. The company achieved carbon neutrality across its operations by 2025 and continues to lead with innovative technologies that help its clients save millions of tonnes of CO2 annually. Similarly, NEC Corporation has maintained its net-zero targets for 2040, leveraging ICT solutions to decarbonize its operations and support global clients in reducing their emissions.

Microsoft, despite its struggles with Scope 3 emissions, has pledged to remove its historical carbon footprint by 2050 and continues to invest heavily in renewable energy. Meanwhile, Vestas Wind Systems remains steadfast in its commitment to renewable energy innovation, driving significant reductions in greenhouse gas emissions across its operations.

List of Companies Walking Back Commitments

1. Amazon

2. Shell

3. Unilever

4. BP

5. Microsoft

6. Google

7. Air New Zealand

8. TotalEnergies

9. JPMorgan

10. Vanguard

11. Delta Air Lines

12. Marks & Spencer

13. Diageo

List of Companies Remaining Committed

1. Schneider Electric

2. NEC Corporation

3. Vestas Wind Systems

4. Signify

5. Microsoft (partial success)

6. Brambles

7. Sanofi

8. Illumina

9. Moncler

10. Telefónica

The Path Forward: Holding Companies Accountable

If net-zero commitments are to remain credible, we must move beyond voluntary pledges to enforceable actions.

Mandatory Standards

Governments and regulatory bodies must impose stricter reporting and reduction requirements. The European Union’s CSRD offers a blueprint for how mandatory standards can drive transparency and accountability.

Incentivizing Progress

Financial penalties for non-compliance should be coupled with incentives for achieving ambitious targets. Tax breaks, subsidies, and green financing options can help offset the costs of decarbonization.

Scope 3 Innovation

Companies must prioritize investments in technology and partnerships that address Scope 3 emissions. Collaborative approaches, such as shared supplier programs and industry-wide benchmarks, can accelerate progress in hard-to-decarbonize sectors.

Restoring Public Trust

To rebuild credibility, organizations need to embrace transparent, independently verified disclosures. Greenwashing must be replaced with meaningful, measurable action that aligns with scientific imperatives.

Conclusion: The Cost of Walking Away

The retreat from net-zero commitments is a sobering reminder of the gap between ambition and action. While the challenges are significant, they are not insurmountable. Companies that walk back their pledges risk being left behind as markets, investors, and consumers increasingly demand accountability and climate leadership.

The stakes couldn’t be higher. The path to net zero is not just a moral obligation; it is an economic and environmental necessity. Let us hold ourselves—and each other—accountable for building a sustainable future.