In recent years, companies worldwide have made ambitious net-zero commitments, pledging to align their emissions reductions with the Paris Agreement’s goal of limiting global temperature rise to 1.5°C. The private sector’s role in tackling climate change is undeniable, but are these voluntary commitments translating into real progress? The Carbon Disclosure Project’s (CDP) recently released 2025 Corporate Health Check suggests otherwise. Despite advances in emissions tracking and disclosure, corporate action remains insufficient to drive meaningful decarbonisation at the scale needed. Without stronger policy intervention, the gap between net-zero pledges and actual emissions reductions is unlikely to close.
We Have the Data, So Why Aren’t We Doing More?
One of the most striking takeaways from the CDP Corporate Health Check 2025 report is that business representing 67% of global market capitalisation are already tracking their emissions in a centralised database – the CDP. This means that both companies and policymakers have access to extensive emissions data, yet voluntary action remains fragmented and insufficient. If the capacity to measure emissions exists at this scale, why haven’t we seen stronger enforcement mechanisms to ensure reductions actually happen?
While transparency and disclosure are essential first steps, the data alone is not enough to drive change. The CDP report highlights that only a fraction of companies with net-zero commitments have credible transition plans in place, and many lack short-term targets aligned with long-term goals. This misalignment suggests that voluntary reporting mechanisms are not compelling enough to turn pledges into action.
Voluntary Commitments Are Falling Short
The fundamental issue with voluntary commitments is that they lack enforceability. While many companies have set long-term net-zero targets, the CDP report finds that few have implemented clear interim targets, robust governance structures, or detailed roadmaps for emissions reductions. This means that many of these commitments risk being insufficient to limit global temperature rise.
Several key findings from the CDP report underscore this challenge:
- Only a minority of companies have aligned their short-term actions with their long-term net-zero targets.
- There is a significant gap in emissions reductions across Scope 3 (value chain emissions), where companies often have less direct control.
- Many companies lack financial strategies to fund their transition plans, making it unlikely that they will meet their commitments.
Voluntary action can drive progress in pockets of the economy, but it is not delivering the systemic transformation needed to stay within Paris-aligned pathways. Without regulatory enforcement, companies that are serious about decarbonisation face competitive disadvantages against those that are not.
The Need for Corporate Policy – And Its Challenges
Given the shortcomings of voluntary corporate action, policy intervention will be essential. Governments must move beyond voluntary disclosure frameworks and introduce mandatory emissions reduction policies. In a lot of ways, they have already begun to do this, including with subsidies for low-emissions technologies, carbon pricing, and binding economy-wide targets.
However, to meet global climate targets, particularly those outlined in the Paris Agreement, it’s becoming increasingly evident that mandatory corporate targets will need to play a role. Historically, reliance on voluntary disclosures and market-based mechanisms, such as carbon pricing and cap-and-trade systems, has not yielded the necessary reductions in greenhouse gas emissions.
While the data and infrastructure required to implement binding corporate targets may sound daunting, the CDP Corporate Health Check 2025 report highlights that businesses representing 67% of global market capitalisation are already tracking their emissions in the CDP database. Additionally, policies like the Carbon Border Adjustment Mechanism (CBAM) require precise emissions measurements, further demonstrating our capacity for such mandates.
Despite this readiness, mandatory emissions targets for private companies remain scarce. Switzerland stands out as a notable exception, having enshrined its net-zero target into law. The Federal Act on Climate Protection Objectives, Innovation, and Strengthening Energy Security mandates that all businesses achieve net-zero emissions by 2050, with the central Federal Administration aiming for 2040. However, these targets are set for the future, and the immediate enforcement mechanisms are still under development.
As it stands, binding corporate emissions targets in policy are effectively a pipedream. Several factors contribute to the reluctance in adopting mandatory corporate emissions mandates:
- Corporate Lobbying and Political Influence: Many large corporations, especially those in carbon-intensive industries, exert significant political influence and actively lobby against strict climate regulations. Policymakers often face pressure from business groups arguing that mandatory transition policies would harm economic growth, competitiveness, and job creation.
- Competitiveness and Carbon Leakage Risks: Businesses argue that strict climate policies in one country or region could make them less competitive globally if other jurisdictions do not have similar regulations. Companies may threaten to relocate operations to countries with weaker climate policies, leading to “carbon leakage,” where emissions simply shift rather than decrease. Evidently, this also hurts the economy of the enforcing jurisdiction.
- Economic and Social Disruptions: Transitioning entire industries to low-carbon operations requires large-scale investment, which companies may be unwilling or unable to make without financial incentives. Governments fear that strict transition mandates could lead to layoffs, price increases, or reduced economic output in key sectors. Without clear strategies to support workers and industries through the transition, mandatory policies face resistance from both businesses and labour groups.
- Policy Uncertainty and Short-Term Political Cycles: Climate policy often suffers from short-term political decision-making, with governments hesitant to introduce strong regulations that may not yield benefits within an election cycle. Businesses argue that frequent shifts in government policy create uncertainty, making it harder to plan long-term transitions. Countries with strong fossil fuel interests often delay or weaken corporate transition mandates to protect existing industries.
Overcoming these challenges requires strong political will, international coordination, and policies that balance economic competitiveness with climate ambition. While voluntary corporate action has driven some progress, it is not enough to meet Paris-aligned climate targets. Governments must move beyond voluntary disclosures and incentives to enforce mandatory corporate transition plans with clear timelines, financial support, and regulatory oversight.
The Path Forward: Regulation as a Catalyst for Change
While corporate climate commitments are a step in the right direction, they are not enough to meet global decarbonisation targets. Governments must introduce stronger, enforceable policies that push companies beyond voluntary action. This will require overcoming political and economic challenges, but the alternative – continued reliance on voluntary commitments – is not a viable solution.
The data is clear: we already track a significant share of global corporate emissions. What’s missing is the political will to turn this data into binding, enforceable climate policies. The success of the Paris Agreement depends not just on corporate goodwill but on strong, well-designed regulations that hold companies accountable for their role in achieving a net-zero future.
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