Corporate net-zero targets hold firm while cities lag
The global shift towards decarbonisation has reached a new phase. Corporate climate commitments are holding steady despite political headwinds, but cities and regional governments are falling behind. For UK businesses operating in international supply chains or tendering for public contracts, this uneven progress creates both risks and opportunities.
According to the latest Net Zero Tracker assessment, published in November 2026, 47% of more than 4,000 major entities worldwide now have net-zero or comparable targets. This figure has remained unchanged from the previous year. More than 90% of the governments and companies tracked retained their existing commitments, showing little evidence of widespread abandonment. However, the rate of new target-setting has largely stalled.
The findings matter because they reveal where momentum is building and where it has stagnated. Consequently, businesses need to understand which parts of the global economy are accelerating decarbonisation and which are lagging. This knowledge shapes procurement decisions, investment strategies and compliance planning.
Corporate commitments show unexpected resilience
Among the world's largest companies, 64% now operate under a net-zero target. These firms collectively generate approximately $40 trillion in annual revenue. That represents 72% of the total revenue covered by the corporate sample. In 2020, only 18% of tracked entities had made such commitments.
The quality of corporate disclosures has improved in specific areas. Nearly 80% of companies with net-zero targets now publish implementation plans, up from 69% in 2025. About 95% report progress annually. This shift towards transparency matters for businesses evaluating suppliers or considering joint ventures.
Nevertheless, significant weaknesses remain. One-fifth of the world's largest companies still have no emissions-mitigation target whatsoever. Financial firms perform particularly poorly, with 27% lacking any mitigation target compared to 13% in other sectors. For UK businesses, this means financial partners may present greater climate-related risks than operational suppliers.
Scope 3 emissions coverage presents another major challenge. Only 48% of corporate targets fully address value-chain emissions such as purchased goods, product use and transportation. These indirect emissions often constitute the largest share of a company's carbon footprint. A target that excludes them can substantially understate the reductions actually required.
Some high-profile companies have stepped back from public commitments. Ralph Lauren withdrew its 2040 net-zero target. Nike stopped publicly stating a net-zero goal. Duke Energy removed its 2030 target. These withdrawals remain exceptions rather than indicators of a broader trend, but they demonstrate the political and economic pressures now facing corporate climate action.
Cities and regions struggle to set formal targets
Subnational governments represent what researchers describe as the "missing middle" of climate action. Only 28% of tracked cities and 29% of states and regions have adopted net-zero targets. This gap is particularly concerning because local and regional authorities control or influence transport networks, building standards, waste systems and land-use planning.
The divide between wealthier and lower-income economies is stark. In G7 countries, 68% of tracked cities have net-zero targets. That figure drops to 30% for G20 cities and just 5% for cities in low-income countries. This disparity affects UK businesses with international operations or supply chains extending beyond developed markets.
Despite low target adoption rates, the population covered by regional commitments has grown substantially. Approximately 2.21 billion people now live in states and regions with net-zero targets, up from 497 million in 2020. This expansion indicates that subnational action is spreading, even though coverage remains incomplete and geographically concentrated.
Cities and regions often lack the financial resources, technical capacity or political authority needed to establish and implement detailed targets. Many depend on national governments for funding and regulatory frameworks. As a result, their climate commitments may be less stable or comprehensive than those of large corporations or national governments.
What uneven progress means for UK businesses
The persistence of corporate net-zero targets matters for several commercial reasons. Firstly, UK suppliers to large multinationals may face increasing scrutiny of their own emissions. Companies serious about Scope 3 reductions will require detailed carbon data from their supply chains. Those unable to provide it risk losing contracts.
Secondly, public sector procurement in the UK already incorporates carbon reduction requirements through PPN 06/21 and related frameworks. As more cities and regions worldwide adopt similar standards, UK businesses operating internationally will need comparable capabilities across multiple markets. The current gaps in subnational target-setting suggest these requirements will emerge unevenly, creating complexity for firms operating across borders.
Thirdly, the quality of corporate commitments directly affects risk assessment. A customer or partner with a net-zero target that excludes Scope 3 emissions may appear committed to decarbonisation while making minimal changes to procurement practices. Conversely, a company with comprehensive emissions coverage and annual reporting presents a clearer picture of both commitment and capability.
Financial sector performance raises specific concerns. Banks, insurers and investors with weak or absent climate targets may struggle to meet emerging disclosure requirements or investor expectations. UK businesses relying on these institutions for capital or insurance should evaluate whether their financial partners face regulatory or reputational risks that could affect service continuity or cost.
The regional variations also create strategic opportunities. European companies continue to lead on target-setting, while Chinese firms are catching up. UK businesses with operations or partnerships in these regions may benefit from stronger local support for decarbonisation. Conversely, those operating in markets with weaker subnational commitments should anticipate less regulatory pressure but also less infrastructure support for emissions reduction.
Transport, buildings and energy infrastructure are particularly affected by subnational climate action. Cities control planning permissions, building codes and local transport networks. Regions often manage energy systems and land use. For UK manufacturers, logistics firms or property developers, the presence or absence of local climate targets can significantly affect operating conditions, costs and market access.
Five essential points for UK business leaders
- Nearly two-thirds of the world's largest companies now have net-zero targets, and more than 90% have retained their existing commitments despite political and economic pressures.
- Only 48% of corporate targets fully cover Scope 3 value-chain emissions, meaning many commitments exclude the majority of a company's carbon footprint.
- Cities and regions significantly lag behind national governments and corporations, with only 28% of tracked cities having adopted net-zero targets.
- The population living under regional net-zero commitments has grown from 497 million in 2020 to approximately 2.21 billion today, indicating expansion despite incomplete coverage.
- Financial companies show weaker performance than other sectors, with 27% lacking any emissions-mitigation target compared to 13% elsewhere.
Moving from pledges to verifiable reductions
The focus is shifting from counting commitments to examining whether they produce measurable results. The Net Zero Tracker methodology evaluates not only whether an entity has a target, but also whether it includes interim milestones, an implementation plan, annual reporting, comprehensive emissions coverage and clear rules for offset use.
This distinction matters because a long-term target without near-term reductions simply postpones action. Similarly, a commitment that relies heavily on unspecified offsets may have limited value in reducing atmospheric greenhouse-gas concentrations. For businesses evaluating partners or competitors, understanding these quality differences is as important as knowing whether a target exists.
UK businesses should assess their own position within this landscape. Companies supplying large corporations with comprehensive targets should expect increasing pressure to provide detailed emissions data and reduction plans. Those operating in sectors with high Scope 3 emissions, such as manufacturing or logistics, will face particular scrutiny.
The stabilisation of new target-setting also suggests that competitive advantage will increasingly come from implementation quality rather than target ambition. Firms that can demonstrate verifiable progress, transparent reporting and comprehensive emissions coverage will differentiate themselves from those making aspirational commitments without supporting infrastructure.
For smaller businesses, the uneven progress of cities and regions creates planning challenges. A manufacturing site in a city with strong climate commitments may benefit from better public transport, renewable energy infrastructure and regulatory clarity. The same operation in a location without such commitments may face higher costs and less certainty about future requirements.
Training and capability development become critical in this environment. Understanding carbon accounting, Scope 3 measurement and target-setting methodologies is no longer optional for businesses operating in supply chains with net-zero commitments. These skills enable accurate reporting, credible reductions and competitive positioning.
Practical steps worth considering
UK businesses should start by understanding their exposure to climate commitments across their value chain. Map which customers, suppliers and partners have net-zero targets. Assess whether those targets cover Scope 3 emissions, which would include your products or services. Identify gaps in your current ability to provide the carbon data these partners will increasingly require.
Evaluate the quality of commitments, not just their existence. A customer with a comprehensive target and annual reporting presents different risks and opportunities compared to one with a distant goal and no interim milestones. This analysis should inform both business development priorities and risk management.
Consider geographic factors in strategic planning. Cities and regions control infrastructure that affects operating costs and market access. Understanding where subnational climate action is strongest can inform location decisions for new facilities, distribution centres or offices. It can also highlight markets where early action may create competitive advantage.
Review financial relationships through a climate lens. Banks, insurers and investors face increasing disclosure requirements and regulatory scrutiny. Those without credible climate commitments may face higher costs or operational constraints that could affect their clients. Diversifying financial partnerships may reduce exposure to these risks.
Develop internal capabilities for carbon measurement and reporting. The shift towards implementation quality means businesses will need robust data systems, clear reduction plans and transparent reporting. Building these capabilities now positions firms to respond to customer requirements, regulatory changes and tender specifications.
Finally, recognise that stability in target-setting does not mean stability in requirements. As focus shifts to implementation, businesses will face increasing pressure to demonstrate actual reductions rather than future intentions. Supply chain surveys will become more detailed. Procurement criteria will become more specific. Competitive advantage will come from capability, not aspiration.
Where to find authoritative guidance
The Net Zero Tracker provides detailed data on commitments across countries, regions, cities and companies. It tracks not only the existence of targets but also their quality, coverage and supporting infrastructure. The tracker is maintained by a consortium including Oxford Net Zero, the Energy and Climate Intelligence Unit, the Data-Driven EnviroLab and the NewClimate Institute.
For UK businesses, the government's Net Zero Strategy sets out the policy framework affecting domestic operations. It covers sectoral pathways, regulatory timelines and support mechanisms. Understanding this framework helps businesses align their own planning with expected policy development.
The Procurement Policy Notes published by the Cabinet Office detail carbon reduction requirements for public sector contracts. These documents explain how suppliers should calculate and report emissions, what reduction targets are expected and how bids will be evaluated. They represent mandatory requirements for businesses tendering for government work.
Sector-specific guidance is available from industry bodies such as the Institute of Environmental Management and Assessment, which provides technical standards and professional development for environmental practitioners. IEMA resources cover carbon accounting methodologies, reporting frameworks and assurance processes.
Businesses should also monitor developments in the Climate Change Act 2008 and related regulations. This legislation establishes the UK's carbon budgets and sectoral targets. Amendments and implementing regulations affect compliance obligations across different industries and business sizes.