Net Zero by 2050:Feasibility, Scenarios, & Business Strategy
The world is off track to reach net zero emissions by 2050. Under current policies, we are headed for roughly 2.5–3°C of global warming by 2100 – far above the Paris Agreement’s 1.5°C goal.
Feasibility of Net Zero by 2050
Global greenhouse gas emissions and atmospheric CO₂ both hit record highs in 2022, with no clear peak in sight. Multiple factors explain this shortfall. Geopolitical conflicts are slowing climate action and cooperation, while the global economy remains heavily dependent on fossil fuels (still ~80% of energy today ).
Additionally, there are glaring policy contradictions – for example, governments plan to produce 110% more fossil fuels by 2030 than a 1.5°C pathway would allow. Over 150 countries have announced net-zero pledges, yet not one major fossil-fuel producer is actually planning production cuts in line with 1.5°C limits.
Many critical clean technologies are not scaling fast enough: nearly half the CO₂ reductions envisioned by 2050 in net-zero scenarios rely on technologies still at prototype or demonstration stage. These realities make a rapid decline in emissions extremely challenging.
Questioning Paris-Aligned Climate Scenarios
Given this outlook, over-relying on optimistic “Paris-aligned” scenarios (such as a 1.5°C world) is dangerous. As it stands, achieving the 1.5°C limit is increasingly unlikely. A company that bases its strategy solely on an orderly net-zero transition could be blindsided if the world instead follows a higher-emissions path.
Plans premised on swift global decarbonisation might underestimate the risks of a slower transition – from more severe physical climate impacts to abrupt, disorderly policy shifts. Businesses must prepare for multiple pathways. In practice, that means using best-case scenarios as one reference point, while also stress-testing plans under worse outcomes (e.g. a “3°C” hot-house scenario).
Indeed, financial watchdogs are adopting this approach – the Task Force on Climate-related Financial Disclosures (TCFD) – now integrated with ISSB (International Sustainability Standards Board) for example, advises firms to test their resilience against both orderly and disorderly climate outcomes. This ensures the business stays agile whether climate action accelerates or stalls.
Business Strategy for a High-Emissions Future
To navigate a future where fossil fuels remain dominant longer and the transition is bumpy, companies need a resilient, risk-adjusted strategy. Key components include:
Hedge energy costs: Shield operations from energy price spikes and supply shocks. Boost efficiency and invest in alternative energy to reduce reliance on volatile fossil fuels. Recent turmoil shows that without substitutes, fuel shortages drive extreme price swings – a major threat to margins. Locking in stable power sources (e.g. long-term renewable energy contracts) and fuel-efficient processes can buffer against this volatility.
Build carbon-price resilience: Anticipate stronger carbon pricing ahead. Design the business to withstand higher carbon costs by cutting emissions and innovating low-carbon products now. For instance, Europe’s carbon price hit €100 per tonne in 2023 – a sign of things to come. Firms that internalise a carbon cost today will be better positioned if carbon taxes or cap-and-trade rules tighten suddenly.
Protect supply chains: Prepare for disruptions from climate impacts or policy shocks. Diversify suppliers and build inventory buffers for critical inputs in case extreme weather, geopolitical events, or energy shortages strike. We’re already seeing how floods, droughts, and grid failures can break supply lines and drive up costs. For example, the 2021 Texas deep freeze knocked out petrochemical plants, and China’s 2022 drought forced widespread factory shutdowns – underscoring these vulnerabilities. Investing in climate adaptation measures – protecting facilities, securing backup power and materials – will pay off when future crises hit.
Plan for disorderly change: Expect the unexpected in policy and markets. A delayed transition could lead to abrupt measures – for example, bans on high-carbon activities or rapid technology shifts that render old business models obsolete. Avoid big bets that could become stranded assets. Instead, maintain flexibility and contingency plans. Monitor policy signals closely and be ready to pivot if new regulations or technologies suddenly upend your industry – agility is key to surviving a chaotic transition.
A Realist, Risk-Based Climate Strategy
Corporate climate strategy should be grounded in realism, not wishful thinking. Acknowledge that the road to net zero may be long and turbulent, and plan accordingly. This means pursuing long-term sustainability goals (decarbonising operations, developing green products) while simultaneously bolstering near-term resilience (ensuring business continuity amid extreme weather, price spikes, or policy shifts).
In short, hope for the best but plan for the worst. By taking this pragmatic, risk-based stance, a company can safeguard its economic survival in the near term while positioning itself to prosper in an eventual low-carbon economy – whatever climate future unfolds.