How to Develop a Net-Zero Strategy

Why Net-Zero Matters

The science is clear: to limit global warming to 1.5°C, global emissions must reach net-zero by 2050. This requires every sector and every large organization to develop credible decarbonization pathways. Net-zero commitments have surged — over 8,000 companies worldwide have made some form of net-zero pledge — but most lack the detail and rigor to be credible.

The SBTi Corporate Net-Zero Standard provides the most rigorous framework for corporate net-zero, requiring 90%+ emission reductions across the full value chain before any neutralization of residual emissions. This is the standard investors, regulators, and civil society increasingly use to judge credibility.

Step 1: Establish Your Baseline

A credible net-zero strategy requires a complete GHG inventory:

• Scope 1: All direct emissions from owned/controlled sources
• Scope 2: All indirect emissions from purchased energy
• Scope 3: All material value chain emissions across 15 categories

The SBTi requires covering at least 95% of Scope 1 and 2 emissions and 90% of Scope 3 emissions in your long-term target boundary. See our carbon footprint guide for methodology.

Identify your emission hotspots — the sources, processes, and value chain segments that drive the majority of your footprint. For most companies, Scope 3 dominates (typically 70-90% of total emissions).

Step 2: Set Near-Term and Long-Term Targets

SBTi's framework requires two horizons:

Near-term targets (5-10 years, e.g., 2030):

• Scope 1+2: 42% absolute reduction (1.5°C-aligned pathway)
• Scope 3: Reduction covering at least 67% of Scope 3 emissions. Can be absolute or intensity-based.

Long-term net-zero target (by 2050):

• Scope 1+2+3: Reduce by at least 90% from base year
• Remaining ≤10% residual emissions: Neutralize with permanent carbon dioxide removal

These targets define the destination. The strategy is how you get there.

Step 3: Map Decarbonization Pathways

For each emission hotspot, identify the pathway to deep reduction:

Direct operations (Scope 1):

• Electrification of heating, vehicles, and processes (heat pumps, EVs, electric furnaces)
• Fuel switching where electrification isn't feasible (green hydrogen, sustainable biofuels)
• Process innovation to eliminate process emissions
• Fugitive emission reduction through equipment upgrades and LDAR programs

Energy (Scope 2):

• On-site renewable generation (solar PV, small wind)
• Long-term Power Purchase Agreements (PPAs) for new renewable capacity
• RE100 commitment for 100% renewable electricity
• Energy efficiency to reduce total demand (typically 20-40% potential)

Value chain (Scope 3):

• Supplier decarbonization programs — engage top suppliers to set their own SBTs
• Sustainable procurement — embed carbon criteria in supplier selection
• Product redesign — reduce material intensity, extend lifetime, improve recyclability
• Logistics optimization — modal shift, route optimization, fleet electrification
• Circular economy — reduce virgin material inputs, design for reuse and recycling
• Customer engagement — enable lower-carbon product use

Step 4: Build a Marginal Abatement Cost Curve

Rank your decarbonization levers by cost-effectiveness:

• Negative cost (saves money): energy efficiency, waste reduction, logistics optimization
• Low cost (under $50/tCO2e): renewable electricity procurement, LED retrofits, fleet electrification
• Medium cost ($50–200/tCO2e): building electrification, process changes, supplier programs
• High cost (over $200/tCO2e): green hydrogen, carbon capture, hard-to-abate process transformation

Prioritize negative and low-cost measures first to fund more expensive ones over time. Model the total investment required and the timeline for each lever.

Step 5: Address Residual Emissions

Even with aggressive decarbonization, some emissions will remain — typically process emissions, agricultural emissions, and hard-to-abate Scope 3 categories. The SBTi allows up to 10% of base year emissions as residual.

For these, develop a neutralization strategy using permanent carbon dioxide removal:

• Direct Air Carbon Capture and Storage (DACCS): Removes CO2 directly from the atmosphere and stores it permanently
• Bioenergy with Carbon Capture and Storage (BECCS): Biomass energy with geological storage
• Enhanced weathering: Accelerated mineralization of CO2
• Biochar: Carbon-rich charcoal applied to soils

Start planning and contracting for removal capacity now — demand is growing and supply is limited.

Step 6: Develop an Implementation Roadmap

Turn the strategy into an operational plan:

• Year 1-3: Quick wins (energy efficiency, renewable procurement), baseline improvement, governance setup
• Year 3-5: Major capital investments (electrification, on-site renewables), supplier engagement at scale
• Year 5-10: Technology transitions (green hydrogen pilots, process changes), deep supply chain decarbonization
• Year 10-20: Full fleet electrification, hard-to-abate sector solutions, residual emission removal procurement

For each phase:

• Specific projects with budgets and owners
• Capital expenditure and operating cost projections
• Expected emission reductions by year
• Key assumptions and risks

Step 7: Embed Governance and Accountability

A strategy without governance is a wish list:

• Board oversight: Net-zero strategy review at least annually
• Executive incentives: Link executive compensation to near-term emission reduction milestones
• Internal carbon pricing: Shadow price ($50–200/tCO2e) to shift capital allocation decisions
• Annual progress tracking: Recalculate inventory, report progress, adjust strategy
• Transition planning: Integrate decarbonization into capital planning, M&A evaluation, and business strategy

Step 8: Communicate Transparently

Disclose your strategy and progress through:

• Sustainability/annual report with TCFD-aligned transition plan
• CDP questionnaire
• CSRD/ESRS E1 disclosure (if in scope)
• Investor presentations and earnings calls
• Employee engagement programs

Be transparent about what you've achieved, what's on track, and what's challenging. Credibility comes from honesty, not perfection.

How Council Fire Can Help

Council Fire builds net-zero strategies that are scientifically grounded, financially modeled, and operationally implementable. We help organizations move beyond pledges to credible action plans with clear governance and accountability. Contact us to develop your net-zero strategy.