Net-zero pledges show signs of backtracking among top companies
Corporate climate commitments have entered a new phase. Most of the world's largest companies still carry net-zero targets, but a significant minority are quietly weakening them. The shift matters because these businesses control trillions in annual revenue and influence emissions across global supply chains. For UK firms tied into those supply chains or competing for contracts, the direction of corporate climate policy affects procurement requirements, tender criteria and strategic planning.
The latest evidence comes from the Net Zero Stocktake, published in November 2024. Researchers tracked nearly 2,000 of the world's largest publicly listed companies and found that 64% now hold net-zero targets. Those businesses represent roughly $40 trillion in annual revenue. On the surface, that looks stable. The previous year's figure was 70% of tracked revenue, so the change is marginal.
However, the headline numbers conceal something more troubling. Among the 50 largest companies in the database, researchers identified backtracking in 20 of the 43 firms that had previously set net-zero goals. The changes include narrowing the emissions covered, weakening interim milestones, shifting from binding commitments to vague aspirations, or abandoning targets entirely.
Financial institutions lead the retreat
The pattern is most visible in finance. Eleven of the 18 financial institutions in the tracked group showed evidence of backtracking. Banks, asset managers and insurers shape emissions beyond their own operations through lending, underwriting and investment decisions. When these organisations weaken climate commitments, the effects ripple through the economy.
Outside finance, the changes involve oil and gas companies, technology firms, a semiconductor manufacturer, a retailer and a pharmaceutical business. The researchers did not name individual companies, but examples reported elsewhere include Ralph Lauren dropping its 2040 net-zero target and Duke Energy abandoning a 2030 goal. Nike no longer publicly states a net-zero commitment.
The most common forms of backtracking fall into two categories. Companies either retain a target but weaken its scope or enforcement, or they withdraw the goal altogether. Together, these two patterns account for nearly nine out of ten negative changes recorded.
Not every revision signals retreat. Some companies may adjust targets because their original scope was unclear or their methodology unrealistic. New accounting standards can expose weaknesses in earlier pledges. A narrower but more credible target can sometimes represent progress if it removes unsubstantiated claims and aligns with measurable emissions reductions.
The difference lies in intent. Improving the integrity of a climate strategy is not the same as weakening a target to avoid accountability. A company that excludes major emissions sources or replaces a binding commitment with an aspiration is making a substantive retreat.
Disclosure improves while ambition softens
The stocktake found that disclosure has improved. Nearly 80% of companies with net-zero targets now publish implementation plans, up from 69% in 2023. Approximately 95% report progress information annually. Around one-fifth of the world's largest companies still have no emissions-mitigation target at all.
Better disclosure does not automatically mean better performance. An implementation plan proves nothing unless it covers the right emissions, sets ambitious interim targets, aligns capital expenditure with stated goals, limits offsets to residual emissions and undergoes independent verification. The quality of reporting varies widely.
NewClimate Institute has found that corporate pledges often fail to produce the business-model changes needed for major emissions reductions. Many strategies rely on carbon credits, unbundled renewable-energy certificates or "insetting" rather than direct reductions in a company's own operations. Consequently, 2030 targets frequently fall short on sector-specific transitions, including changes to energy systems, industrial processes, transport and supply chains.
For UK businesses, this creates uncertainty. If your largest customers or suppliers weaken their climate strategies, it may reduce pressure on your own emissions reporting. Alternatively, it could signal inconsistency in how different buyers assess your environmental performance. Public sector suppliers face a different risk. PPN 06/21 and similar procurement rules require carbon reporting regardless of what private-sector buyers do.
Technology sector emissions rise despite targets
The technology sector illustrates the gap between pledges and performance. Microsoft and Google both retain 2030 climate targets. Nevertheless, their reported annual emissions increased by 25% and 18%, respectively, according to the Trellis report. The increases stem from data-centre expansion and artificial-intelligence infrastructure.
Rising emissions do not automatically prove that a target has failed. Companies can pursue reductions through renewable energy procurement, efficiency improvements and other measures. However, growing emissions make the pathway harder and increase the importance of transparent interim reporting. If electricity demand rises faster than clean-energy deployment, absolute emissions targets become difficult to meet while maintaining rapid expansion.
The issue affects UK businesses in two ways. First, if major technology companies struggle to reconcile growth with emissions targets, they may adjust procurement requirements or investment criteria. Second, rising data-centre demand can drive additional fossil-fuel generation, affecting grid decarbonisation and the carbon intensity of electricity consumed by all businesses.
Why companies are changing course
Several factors explain the shift. One is political pressure. Some governments have stepped back from climate policy, reducing the regulatory certainty companies need to justify long-term investments. PepsiCo downgraded its goals in 2023 and cited insufficient policy support as one reason.
Another factor is operational difficulty. Supply-chain emissions are hard to measure and harder to control. A manufacturer may set an ambitious Scope 3 target only to discover that suppliers lack the capacity or willingness to report emissions data. In that context, narrowing the target can feel more realistic than abandoning it.
Economic conditions also play a role. Higher interest rates increase the cost of capital for low-carbon infrastructure. Energy-price volatility makes long-term planning harder. Boardrooms face competing demands on capital, and climate investments must justify themselves against other priorities.
Finally, there is reputational risk. Companies that set ambitious targets attract scrutiny. If progress falls short, they face accusations of greenwashing. Some firms conclude that a lower-profile approach carries less risk than a high-profile commitment they may not meet.
Measuring progress requires more than pledge counts
Headline counts of net-zero pledges tell only part of the story. The number of commitments may remain stable while their scope, enforcement mechanisms or expected emissions reductions decline. What matters is whether strategies deliver measurable, near-term emissions reductions.
Several indicators reveal whether a target is credible. Does it cover Scope 1, Scope 2 and material Scope 3 emissions? Are interim milestones ambitious enough to keep the 2030 target within reach? Is capital expenditure consistent with the stated goal? Are offsets limited to residual emissions that cannot be eliminated? Does the company report absolute emissions alongside intensity metrics?
For UK businesses, the implications depend on your position in the supply chain. If you supply major corporates, their climate strategies shape your own reporting obligations. If you compete for public-sector contracts, your carbon reporting must meet government standards regardless of what private buyers do. If you operate in sectors with high Scope 3 emissions, such as food, textiles or construction, your customers' targets directly affect your business model.
The Net Zero Tracker, managed by an independent research consortium, describes itself as a review of both the quantity and quality of net-zero targets across major entities. That distinction is becoming more important as investors, regulators and civil-society organisations scrutinise whether corporate commitments represent genuine transformation or primarily reputational positioning.
Key findings from the stocktake
- Approximately 64% of the world's largest publicly listed companies now hold net-zero targets, representing about $40 trillion in annual revenue.
- Among the 50 largest companies tracked, 20 of the 43 firms with net-zero goals showed evidence of backtracking.
- Financial institutions account for the highest concentration of backtracking, with 11 of 18 tracked financial companies weakening or abandoning commitments.
- Nearly 80% of companies with net-zero targets now publish implementation plans, up from 69% the previous year.
- Around one-fifth of the world's largest companies still have no emissions-mitigation target.
- The most common forms of backtracking involve weakening an existing target or withdrawing it entirely.
- Technology companies face rising emissions from data-centre expansion despite retaining 2030 climate targets.
Commercial consequences for UK suppliers and contractors
The shift in corporate climate commitments creates both risks and opportunities. On the risk side, inconsistency in buyer requirements makes long-term planning harder. A supplier that invests in emissions measurement and reduction to meet one customer's expectations may find that another customer has quietly lowered its standards.
Public-sector suppliers face different pressures. Government procurement rules, including PPN 06/21, require carbon reporting and reduction plans regardless of private-sector trends. Businesses that rely on public contracts cannot afford to weaken their climate strategies simply because some large corporates have done so.
There is also a competitive angle. If your competitors reduce their climate ambitions, it may create an opportunity to differentiate. Buyers increasingly ask for evidence of credible climate action, and businesses that can demonstrate robust emissions reporting and reduction plans may gain an advantage in tenders.
For manufacturers and distributors, supply-chain emissions present the biggest challenge. Scope 3 targets require collaboration with suppliers and customers. If major buyers weaken their commitments, the pressure on your own emissions may ease. However, regulatory requirements continue to tighten. The UK's energy-reporting regulations, the Streamlined Energy and Carbon Reporting framework, and the forthcoming transition plan requirements all place direct obligations on businesses regardless of customer demands.
Financial-sector backtracking may affect access to capital. Banks and investors use climate criteria to assess risk and allocate funding. If financial institutions weaken their net-zero commitments, it could reduce pressure on high-emitting sectors to transition. Alternatively, it could make climate-related financing less predictable, complicating plans for businesses that want to invest in low-carbon infrastructure.
What credible implementation looks like
A credible net-zero strategy rests on several foundations. First, it must cover the emissions that matter. For most businesses, that means Scope 1 and Scope 2 emissions at a minimum. For sectors with significant supply-chain or product-use emissions, Scope 3 coverage is essential.
Second, interim targets must be ambitious enough to keep long-term goals within reach. A 2050 net-zero target with weak 2030 milestones is not credible. The next seven years will determine whether businesses can deliver the reductions needed to meet long-term pledges.
Third, capital allocation must align with stated goals. If a company commits to net zero but continues to invest primarily in high-carbon assets, the strategy lacks substance. Investors and regulators increasingly scrutinise whether capital expenditure supports climate commitments.
Fourth, offsets should be limited to residual emissions that cannot be eliminated. Using carbon credits to compensate for avoidable emissions undermines the integrity of a net-zero strategy. Offsets have a role, but only after direct reductions have been maximised.
Finally, progress must be independently verified and reported in absolute terms. Intensity metrics can obscure rising emissions if a business is growing rapidly. Absolute emissions reporting provides a clearer picture of whether a company is moving in the right direction.
For UK businesses working towards net zero, these principles apply regardless of what large corporates do. Our net-zero program for carbon reporting compliance helps businesses measure emissions accurately, set credible targets and report progress transparently. The focus is on building strategies that meet regulatory requirements and withstand scrutiny from buyers, investors and regulators.
Indicators to watch in the coming year
Several developments will clarify whether corporate climate commitments are strengthening or weakening. One is whether companies preserve ambitious 2030 milestones. The next few years are critical for staying on track, and businesses that push back their near-term targets are unlikely to meet long-term goals.
Another indicator is whether companies report absolute emissions reductions. Intensity metrics can improve while total emissions rise, particularly if a business is growing. Absolute reductions provide clearer evidence of progress.
Capital allocation will also reveal intent. If a company commits to net zero but continues to direct most investment towards high-carbon activities, the commitment lacks credibility. Investors and regulators are paying closer attention to whether capital expenditure aligns with stated climate goals.
Transparency around target changes matters too. Companies that revise their commitments should explain why in detail. A narrower target can be more credible than a broad one if the reasoning is sound. However, unexplained changes raise questions about whether the revision reflects improved methodology or reduced ambition.
Policy developments will shape the environment in which businesses operate. Government incentives, infrastructure investment and regulatory consistency all affect whether companies can meet their targets. Businesses that cite insufficient policy support as a reason for weakening commitments may have a point, but they also risk using it as an excuse to avoid difficult decisions.
Where to find further guidance
The Net Zero Tracker provides detailed data on corporate, city and national climate commitments. It is managed by an independent research consortium and offers transparency on both the quantity and quality of net-zero targets. You can access the database and reports at the Net Zero Tracker website.
For UK-specific regulatory requirements, the government's guidance on Streamlined Energy and Carbon Reporting explains what businesses must disclose. The Procurement Policy Note 06/21 sets out carbon-reporting requirements for public-sector suppliers. Both documents are available on gov.uk.
The Department for Energy Security and Net Zero publishes guidance on carbon accounting and transition planning. Its resources include methodological frameworks and sector-specific advice. You can find these at the department's homepage.
For businesses that need support with carbon measurement, target setting or compliance, our team works with UK SMEs to build credible climate strategies that meet regulatory requirements and buyer expectations. More information is available through our ESG compliance and carbon reporting services.