United for Net Zero Public Private Collaboration to Accelerate Industry Decarbonization 2025

Key barriers to net zero with main associated challenges FIGURE 5 Lack of skills and knowledge, scarce staffing and expertise to create and deliver a net-zero transition plan: e.g. 77% of supply chain leaders do not feel knowledgeable or experienced enough to drive net-zero initiatives Lack of policies or government-sponsored incentives to support suppliers’ net-zero transformation Lack of understanding of the alignment between business growth and Scope 3 decarbonization Large and diverse supplier portfolio, often fragmented across geographies and evolving in various economies with specific regulatory constraints Reluctancy for businesses to invest in early-stage technologies as a first mover without government support Limited commercial viability and unfavourable risk-return profile compared to incumbent technologies – e.g. only 4% of proposed low-carbon hydrogen projects currently reach the final investment decision (FID) stage due to costs and lack of demand Long permitting processes for renewables and low-carbon infrastructure projects – e.g. average development lead times are currently around 7 and 12 years globally for CO2 and hydrogen storage Uncertainty about low-carbon products, sufficient market demand and additional cost cover, especially in the most price-sensitive markets and countriesLack of harmonization of carbon calculation standards at product, company and sector levels, varying across sectors and regions; lack of granularity and accuracy Lack of primary emissions data from suppliers; use of secondary data High effort and cost linked to reporting and disclosure – e.g. Corporate Sustainability Reporting Directive (CSRD) implementation estimated by $500,000 for the first year Economic, technical, legal and regulatory barriers in verification and sharing of product-level carbon footprint across the value chain Developing economies and SMEs facing notable challenges in collecting, reporting and verifying installation-level dataInsufficient confidence about meeting growth objectives while also meeting net-zero targets High costs or unclear return on investment of low carbon projects, indicating that net zero must go together with a continued commitment to protect the bottom line Lack of tax reliefs and capital allowances to support investment in decarbonization solutions Need for more demonstrations of the financial benefits of sustainability initiatives (cost savings from energy efficiency, enhanced brand reputation, increased supply chain resilience, etc.) Struggle to capture and articulate the long-term value of transitioning to net zero while providing short-term shareholder returns Green business growth Investing in climate technologies, infrastructure and market creationCalculation Calculating carbon emissions accuratelyBuy-in Making the business case for net zero Mitigation Supporting value chain decarbonizationMain challenges 1 2 3 4 Sources: Consultations with Industry Net Zero Accelerator initiative’s community members; Carbon Trust Net Zero Intelligence Unit. (2024). Breaking business barriers to Net Zero; The SustainAbility Institute. (2022). Costs and Benefits of Climate-Related Disclosure Activities by Corporate Issuers and Institutional Investors; Capgemini Research Institute. (2024). A world in balance 2024; World Economic Forum. (2024). Bold Measures to Close the Climate Action Gap: A Call for Systemic Change by Governments and Corporations; Organisation for Economic Co-operation and Development (OECD). (2024). Towards more accurate, timely, and granular product-level carbon intensity metrics; Industry Net Zero Accelerator team survey consolidating data from seven large industry events attended by senior supply chain leaders between November 2023 and November 2024, with a total of 669 respondents. –Insufficient confidence about meeting growth objectives while also meeting net-zero targets –High costs or unclear return on investment of low carbon projects, indicating that net zero must go together with a continued commitment to protect the bottom line –Lack of tax reliefs and capital allowances to support investment in decarbonization solutions –Need for more demonstrations of the financial benefits of sustainability initiatives (cost savings from energy efficiency, enhanced brand reputation, increased supply chain resilience, etc.) –Struggle to capture and articulate the long- term value of transitioning to net zero while providing short-term shareholder returns –Lack of harmonization of carbon calculation standards at product, company and sector levels, varying across sectors and regions; lack of granularity and accuracy –Lack of primary emissions data from suppliers; use of secondary data –High effort and cost linked to reporting and disclosure – e.g. Corporate Sustainability Reporting Directive (CSRD) implementation estimated by $500,000 for the first year –Economic, technical, legal and regulatory barriers in verification and sharing of product- level carbon footprint across the value chain –Developing economies and SMEs facing notable challenges in collecting, reporting and verifying installation-level data –Lack of skills and knowledge, scarce staffing and expertise to create and deliver a net- zero transition plan: e.g. 69% of supply chain leaders do not feel knowledgeable or experienced enough to drive net-zero initiatives –Lack of policies or government-sponsored incentives to support suppliers’ net-zero transformation –Lack of understanding of the alignment between business growth and Scope 3 decarbonization –Large and diverse supplier portfolio, often fragmented across geographies and evolving in various economies with specific regulatory constraints –Reluctancy for businesses to invest in early- stage technologies as a first mover without government support –Limited commercial viability and unfavourable risk-return profile compared to incumbent technologies – e.g. only 4% of proposed low- carbon hydrogen projects currently reach the final investment decision (FID) stage due to costs and lack of demand –Long permitting processes for renewables and low-carbon infrastructure projects – e.g. average development lead times are currently around 7 and 12 years globally for CO2 and hydrogen storage –Uncertainty about low-carbon products, sufficient market demand and additional cost cover, especially in the most price-sensitive markets and countries United for Net Zero: Public-Private Collaboration to Accelerate Industry Decarbonization 11