5 Mistakes Companies Make When Setting Net-Zero Goals
Here are 5 common mistakes that can derail net-zero commitments before they start.
With pressure mounting from consumers, investors, and regulators, corporate businesses can rush into setting climate-related targets and, in the process, fail to understand the complexities behind them. Without considering these complexities and establishing a solid technical foundation, companies risk setting unachievable goals, being misaligned with climate science, or being vulnerable to reputational and regulatory scrutiny. In this state, companies find it challenging to achieve their net-zero goals, which eventually undermines their credibility and at times leads to backpedaling on the shared targets. This article will explore five common mistakes organizations make when setting net-zero goals.
Not Defining “Net-Zero” Clearly
Without a consistent or clear definition, a net-zero target risks being vague, unmeasurable, and misinterpreted by stakeholders. Companies should clearly define which emissions scopes their net-zero goals include, specify the baseline and target years, and break those goals into short-term and long-term targets. They should also outline the methodological approach used for emissions accounting and removals, and disclose intensity-based emissions metrics that are material to the company (e.g., emissions per unit of production, or per full-time employee) to track emissions efficiency over time. A clearly defined net-zero goal helps align decisions, key performance indicators (KPIs), budgeting, and resource allocation. It can also facilitate comparison and benchmarking against peers. To set a credible and actionable net-zero target, companies can align with Science Based Target Initiatives (SBTi) Net-Zero Standard and the ISO 14068 guidelines on climate neutrality.
Setting Targets Without a Baseline
“You can’t manage what you don’t measure.” To set a measurable net-zero target, the first step is to develop a comprehensive understanding of your business’s current emissions footprint by conducting a greenhouse gas (GHG) inventory that includes a clearly defined scope and boundaries along with the GHG estimations of Scope 1, 2, and all the relevant Scope 3 emission categories. Once this is established, defining a “baseline year” serves as the reference point for all emission reductions; without this, measuring progress, aligning with frameworks, and quantifying targets are irrelevant. The lack of a baseline year undermines the credibility of the net-zero target and makes it difficult to report, as well as drive internal and external alignment on decarbonization. Establishing a baseline emissions footprint for comparing future emission reductions is mandatory—without it, there’s nothing to measure progress against.
“Without a consistent or clear definition, a net-zero target risks being vague, unmeasurable, and misinterpreted by stakeholders.”
Sathya Narayanan, Analyst, Climate Services
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Ignoring Scope 3 Emissions
Scope 3 emissions are the indirect emissions that occur across a company's value chain, including both upstream and downstream activities. They typically form the majority of a company’s total carbon footprint. Oftentimes companies tend to limit their focus only to Scope 1 and Scope 2 emissions, potentially ignoring the majority of the emissions in their value chain operations. According to SBTi, emissions in a company’s supply chain are on average 11 times higher than direct (Scope 1) emissions and reflect more than 70% of total emissions. Leading frameworks such as the SBTi, require companies to include Scope 3 emissions in their targets if the emissions account for more than 40% of the total emissions.
Companies should prioritize estimating and setting targets for Scope 3 emissions. They should assess the 15 Scope 3 categories to identify material ones for their business and set targets to reduce these over time in collaboration with their supply chain partners. If the primary data for Scope 3 calculations are unavailable, companies can get started with industry average data or spend-based data and refine it over time to activity-based or supplier-specific emissions calculations. Companies can engage with suppliers to set expectations and start collecting data for the relevant Scope 3 categories.
Failing to Build an Actionable Roadmap
As companies begin developing net-zero targets, they should also work to create a robust, pragmatic decarbonization roadmap. A clearly defined roadmap outlines the key actions needed to meet interim targets and ultimately achieve net-zero within a specified timeline. Companies should break the roadmap into phases or short-term targets that identify the key levers and technologies planned for near-term implementation.
This roadmap should be detailed and should guide capital allocation by defining the funding and resources required to meet relevant net-zero targets. It should also define signposts and key performance indicators (KPIs) to track progress over time. However, some companies rush to disclose net-zero targets without first developing an actionable roadmap. Without one, tracking progress or building confidence that the organization is on track to achieve its net-zero goal becomes extremely difficult.
Not Strategically Utilizing Offsets
Offsetting can play a crucial role in a company’s net-zero transition and should be strategically deployed to meet defined targets. Companies should prioritize internal decarbonization efforts and use marginal abatement cost curves to determine when it becomes financially viable to engage in carbon markets. A company should also understand that over-reliance on offsets can undermine the integrity of the net-zero target and increase reputational risk. Stakeholders increasingly expect companies to reduce their own carbon emissions and not rely only on offsetting. Offsetting should be seen as a tool that can complement a net-zero strategy but cannot be the primary tool used for the net-zero strategy. Also, frameworks such as the SBTi have a strict requirement for companies to drive emission reductions before utilizing offsets although a change is currently being designed to allow carbon removals in a much bigger way to offset Scope 3 emissions.
Conclusion
Setting a net-zero goal is an important step, but it’s only effective when backed by a solid strategy. Failing to clearly define net-zero, setting targets without a baseline, ignoring Scope 3 emissions, failing to create an actionable roadmap, or over-relying offsets can all undermine the credibility of a company’s net-zero commitment. Progress toward net-zero goals requires a clear breakdown into sub-goals and consistent execution over time. When companies take the time to build a strong foundation, they are better positioned to make steady progress, meet stakeholder expectations, and contribute meaningfully to climate goals.
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A credible net-zero target clearly defines the scope of emissions it covers, the baseline year, the target year, and the methodology used for calculating and tracking emissions and removals. It should be science-aligned (e.g., through SBTi’s Net-Zero Standard), include material Scope 3 emissions, and prioritize near-term emissions reductions over offsets. Transparency in disclosures and progress tracking is also key to building stakeholder trust.
Yes. It’s common to start with industry-average or spend-based data if primary data isn’t available. The important thing is to get started, disclose your methodology, and build a plan to improve data quality over time. You can also engage suppliers to begin collecting more accurate data for material categories. Progress in Scope 3 accounting is expected to be iterative.
Carbon neutrality typically refers to balancing emissions with offsets over a defined period, often without strict reduction requirements. Net-zero, especially under frameworks like SBTi, emphasizes deep emissions reductions first—often 90–95%—before neutralizing only residual emissions through high-quality removals. Net-zero is a more rigorous, science-based standard aligned with limiting global warming.
Offsets should be used only for residual emissions that cannot yet be eliminated. Your strategy should focus on operational reductions first. High-quality offsets—especially carbon removals—should be transparently disclosed, with details about their verification, vintage, and phase-out plan. Relying too heavily on offsets without a reduction-first strategy can pose regulatory and reputational risks.
An actionable roadmap breaks down your long-term goal into short- and medium-term milestones. It outlines specific levers for emissions reduction (e.g., renewable energy procurement, process efficiency, supplier engagement), assigns budget and ownership, and includes KPIs for tracking. The roadmap should evolve over time but must start with clear, immediate actions to ensure accountability and progress.
About the Author
Sathya Narayanan is a Climate Analyst on CarbonBetter’s Climate Services team, specializing in client delivery, sustainability research, and greenhouse gas (GHG) accounting. Sathya holds an MS in Sustainable Engineering from Arizona State University and a BTech in Civil Engineering from SASTRA University in India.
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