Net Zero

Net zero means achieving a balance between the greenhouse gases emitted and those removed from the atmosphere, such that net GHG emissions equal zero. Under the Science Based Targets initiative (SBTi) Corporate Net Zero Standard (2021), achieving net zero requires: (1) reducing absolute Scope 1, 2, and 3 GHG emissions by at least 90% from a base year (or 95% in some sectors) by no later than 2050; and (2) neutralising any residual (remaining <5–10%) emissions through permanent carbon removal (not offsets). The Paris Agreement’s 1.5°C pathway aligns with global net zero GHG emissions by mid-century. Net zero differs from carbon neutral: carbon neutral allows offsetting all current emissions; net zero requires near-total elimination.

SBTi Corporate Net Zero Standard (2021); Paris Agreement, Article 4; IPCC Sixth Assessment Report (2021–2022); ISO 14068-1:2023 (distinguishes carbon neutral from net zero).

Net zero commitments are increasingly required by investors, customers, and regulators. GFANZ member institutions require portfolio companies to have credible net-zero targets. EU financial regulations (SFDR, EU Taxonomy) channel capital towards net-zero-aligned investments. Companies setting net-zero targets should: set SBTi-validated targets for Scope 1, 2, and 3; publish interim milestones; disclose a detailed transition plan in line with IFRS S2 and ESRS E1; and avoid greenwashing claims through verified methodology.