In the quickly evolving landscape of climate action, this decade represents a critical period for meaningful progress, as the window to keep warming within the 1.5°C limit is closing. Corporations around the globe are setting climate targets, but it has become clear that the methods and metrics behind these targets are not leading to real progress where it matters. This signals the urgent need for a rethink of target-setting frameworks. We must recognise the limitations of GHG inventories, which are often susceptible to creative accounting, and focus more on transparent, actionable commitments that hold companies accountable.

Our latest report explores the need and opportunity to revisit how companies set climate targets. Recognising net zero as a collective global goal, it is vital to ask: what role do we need companies to play towards this broader effort? We propose transition-specific alignment targets designed to guide companies towards meaningful progress and hold them accountable for key actions and transitions. The window of opportunity for the evolution of corporate climate targets is now, as the International Standards Organisation (ISO), the Science Based Targets initiative (SBTi) and the GHG Protocol are developing the next generation of corporate climate standards.

Detailed analyses of corporate net-zero pledges show that these commitments are not translating into real action where it matters.

Thousands of major companies – including over half of the Forbes 2000 companies¹  (Net Zero Tracker, 2025) – have made net-zero emission pledges over the past five years, partly thanks to the mobilisation efforts of the  Race to Zero campaign and the SBTi.  In three annual iterations of the Corporate Climate Responsibility Monitor between 2022 and 2024, we observed a gradual improvement in what these net-zero pledges really mean. While many pledges were vague a few years ago, more companies now substantiate their net-zero pledges by committing to reduce their emissions by at least 90% from a base year.

Good news? Not necessarily. Despite apparent improvements in companies’ GHG emission reduction targets, our analyses reveal a significant mismatch between targets and actions. Most critically, companies’ 2030 emission reduction targets often fail to translate into meaningful business model changes addressing the key transitions that global net zero goals depend on.  The real meaning of companies’ GHG emission reduction targets is often muddied by reliance on false accounting solutions such as carbon credits, standalone renewable energy certificates or “insetting”, among other methods that are used to adjust companies’ GHG accounting. This means that existing corporate target-setting frameworks based on GHG targets offer only a limited degree of transparency over companies' commitments to the key transitions needed in their sectors, and might not be driving meaningful climate action as intended.

The application of corporate GHG inventories for emission reduction targets faces various other limitations:  

• Common methods for approximately estimating scope 3 emission inventories in the absence of good data are not conducive to accurately accounting emission reductions. For example, the “spend method” calculates emissions based on how much a company spends on goods and services, applying generic economy-wide emissions factors. This approach cannot capture the impact of adopting lower-carbon procurement practices; only reductions in expenditure could lead to lower emissions through this method.²
• Companies’ scope 3 GHG emission inventories may not be comparable between years due to the dynamically changing nature of their business models and market shares; 
• …and GHG emission reduction targets alone may not be a fair approach to measure ambition of sector innovators and disrupters in the short and medium term, when these newcomers’ interim growth in production and related emissions may be beneficial for reducing the emissions of their sectors overall.      

Transition-specific alignment targets may complement GHG emission reduction targets to provide a more specific and accurate means to guide and measure the efforts and impacts of corporate climate strategies. 

To overcome these challenges, standard-setters may need to rethink how corporate target-setting frameworks are structured. The most meaningful contribution companies can make to the collective goal of net-zero emissions is to drive the necessary transitions of their sectors. Companies need to take responsibility for the key emission sources that are associated with their main business activities, to align sectoral emissions trajectories with the global net zero goal.  

Rather than solely relying on GHG emissions reduction targets, introducing transition-specific alignment targets and using both for setting and assessing corporate targets could lead to more meaningful climate action, according to our analysis. Transition-specific alignment targets are metrics that directly measure a company's progress on key climate change mitigation transitions, tailored to their specific sectors and business activities. For example, vehicle manufacturers may set targets for the percentage of annual sales from zero-emission vehicles, or the proportion of near-zero-emission steel procured. Fashion companies could adopt targets for electrification and use of renewable electricity for garment manufacturing processes in the supply chain.

Transition-specific alignment targets, as a complement to GHG reduction commitments,  may offer a more targeted way to identify and incentivise real corporate climate leadership, by unambiguously putting the spotlight on the sector-specific transitions that are necessary for global net-zero goals. This could be done through standardised target-setting frameworks for different sectors, or it could be a more bespoke approach based on the most critical emission sources and related transitions that companies identify within their sectors that they operate in.

Our new report examines the feasibility of a transition-specific alignment target framework, finding significant promise for applicability across several major sectors. 

For automotive manufacturers, tech companies, fashion companies and food and agriculture companies, we find that it may often be feasible to cover a large majority of companies’ scope 3 emissions with a maximum of five indicators that measure progress against key transitions. We estimate that transition-specific alignment targets may also be a feasible approach to address scope 3 emissions for several other sectors.

But we also see challenges and limitations. Potential challenges like data availability and differences in emission sources between companies within a sector will make it difficult to set truly comparable alignment targets. Appropriate transition-specific alignment targets may not always be possible to identify and prescribe at the sector-level, especially for companies whose main business areas fall across multiple sectors. Such targets also depend on achieving consensus on the most appropriate indicators for specific transitions, as well as standardised definitions of the terms these indicators refer to, such as ‘renewable energy’ and ‘near-zero emission steel’.

The window of opportunity for the evolution of corporate climate targets is now 

Between 2024 and 2026, several standard setters are revising their frameworks for guiding corporate climate accounting and target setting. The revision processes of the GHG Protocol and the SBTi Corporate Net Zero Standard, along with the development of the ISO net-zero standard, offer a unique opportunity to rethink corporate climate targets.
The SBTi’s 2024 Discussion Paper on Scope 3 Target Setting set out a potentially promising framework for a major revision of the existing SBTi Corporate Net Zero Standard, which could be implemented through transition-specific alignment targets. The SBTi’s proposed framework would first require companies to identify and prioritise the most critical emission sources and related transitions within their sectors. For these prioritised emission sources and transitions, companies would need to commit to specific ‘alignment targets’ and ‘policies’ over the interim period, on the way to their longer-term net-zero targets. We expect to see further details on the operationalisation of transition-specific alignment targets in the revised Corporate Net Zero Standard, when a draft is published for public consultation in early 2025. 

The GHG Protocol is also currently under a major revision process, to be completed by late 2026. We hope that the GHG Protocol revision will lead to greater granularity in the categorisation of emission sources, to identify key emission sources and transitions. The currently poor granularity of GHG emissions data for procured products and services, Category 1 of Scope 3, makes it difficult to identify the key emission hotspots against which targets should be set. We also hope that the GHG Protocol will develop sector-specific reporting guidelines for certain sectors or business activities to ensure complete and consistent GHG emission inventories, recognising that the inconsistencies of current accounting approaches make it difficult to benchmark companies’ targets. 

The evolution of corporate climate targets is essential for ensuring that businesses contribute effectively to global climate efforts. While transition-specific alignment targets offer a promising path forward, this approach requires further discussion, analysis, and refinement. Our upcoming 2025 edition of the Corporate Climate Responsibility Monitor will serve as a testbed for these ideas, evaluating their practical application across 20 major companies. We encourage stakeholders from across the corporate climate accountability ecosystem to engage in this critical dialogue and to test the applicability of transition-specific alignment targets, to contribute to the evolution of corporate climate targets and corporate accountability.

References

[1] See Net Zero Tracker for latest figures: https://zerotracker.net/

[2] See Broekhoff and Gillenwater (2024). ‘Is Scope 3 Fit for Purpose: Alterenative GHG Accounting Frameworks for Inventories and Intervention Impacts’. GHG Management Institute. https://ghginstitute.org/2024/10/28/is-scope-3-fit-for-purpose-alternative-ghg-accounting-frameworks-for-inventories-and-intervention-impacts/#_ftnref3.