Director, Columbia Center on Sustainable Investment & Columbia Climate School MS in Climate Finance
🌍 The way we are approaching, encouraging, and assessing #NetZero—through NDCs, corporate targets, and carbon accounting—is not just inherently insufficient, it is actively counterproductive. Net zero is an atmospheric imperative. Achieving it requires: • Decarbonizing the world’s energy, industrial, and food systems • Enhancing the absorptive capacity of the world’s carbon sinks Transforming these systems requires: • Clear roadmaps • Technological innovation • Adequate public and private finance • And coordinated action among public and private actors across sectors, borders, and value chains Our dominant frameworks—focused on individual country and corporate target-setting, measurement, and accounting—falsely assume that systemic, regional, and sectoral transitions can be delivered by the sum of individual targets and plans. This flawed logic disincentivizes the coordination needed. Rather than identifying an entity’s leverage to address systemic barriers to decarbonization, both countries and companies, which cannot decarbonize on their own, purchase offsets so they can methodologically “claim” to be net zero while continuing to emit, increasing rather than decreasing atmospheric GHGs. This has also led to a reliance on credits to fund nature-based and technological solutions that need substantially more and reliable financing. We’ve built an entire architecture around the wrong unit of ambition and analysis, and we are now fixing symptoms (to make the accounting more credible), not confronting the underlying structural misalignment. Accelerating climate action requires decisively shifting from individual targets to coordinated, transformative planning and implementation. This means: 🔁 Prioritizing and supporting Long-Term Low-Emission Development Strategies (LT-LEDS), which are inherently more ambitious and pragmatic than NDCs. 🛤 Supporting scenario planning and sectoral roadmaps, not just insisting on more ambitious NDCs and FF phase-outs. In many EMDEs, there aren’t clear technical roadmaps for how FF-based energy can be replaced reliably and financed affordably. 🤝 Facilitating coordination across regions, value chains, and stakeholders, not emphasizing individual action. 💸 ensuring adequate and affordable financing for the necessary transitions. (Note: private capital doesn’t move because of better carbon accounting, risk metrics, or pressure. It moves when transitions become financeable: - Enabled by clear roadmaps and aligned policy and regulations - Structured through investable market design by coordinating demand and supply - Supported by public finance and tailored risk mitigation) As we head into New York Climate Week, I hope we focus less on statements of ambition (NDCs and corporate targets) and more on rigorous, technically grounded transition pathways—and the collaborative, cross-sector engagement required to deliver them. The stakes are too high to keep solving the wrong problem.
Incisive and insightful. I would like to better understand how to transition from corporations as the unit of focus to collective action.
Fully agree. Such coordination is the idea behind the sectoral climate approach in The Netherlands, in which the government, corporate sector and societal organizations participate to hash out a path forward for each sector (at least, that’s the idea). See here for more info on that (in Dutch) - translated, the title reads “Speed up and Connect”. https://nationaalklimaatplatform.nl/home/
Maybe the real question is: how do we shift from chasing net zero badges to actually coordinating the transitions that make net zero possible?
Insightful. However, the issue is about market costs. It’s why we have these huge environmental and economic failures. So who is willing to loose short term profits? Investors? Their investments ie corproations? Customers, ie paying more for goods that internalize externalities? Taxpayers via Governments? The issue is estimating and prioritizing incentives to deliver the biggest Social ROI while minimizing market profit. Scenario analyses are key but no one uses the results without the incentives to do so. There are two key levers -consumers and taxpayers - that must be engaged. Investors are just going to be moving money from green to dirty and back again and again… Consumers can actually send a market signal through what they buy is more effective than the divesting rollercoaster. Secondly, we need govt regulation in the form - ideally - of an externality tax and enforced TMDLs, caps, on carbon and other environmental and social impacts of goods and services. And then we need govt subsidies targeted not to corporations but to those most negatively impacted by the new regulations. The money collected from the taxes can go towards these subsidies.
I think this captures it really well for me - we're disincentivizes the coordination needed. Rather than identifying an entity’s leverage to address systemic barriers to decarbonization, both countries and companies, which cannot decarbonize on their own, focus on their own claim/commitment/goal and go about it in a wildly inefficient and low-impact way. I 100% agree with the vision of your solution - but am unsure what role I and others in my ecosystem who are servicing the current playbook have. The way to turn the table is to offer a new pathway for engagement for the energy and ideas that are being pursued. Maybe create a map/architecture showing where current efforts fit would make this less threatening? LIke if you're x - here is how you plug in, If you're doing y - this is how it contributes. Just a thought for stakeholder management..
One of the clearest and most proactive posts I’ve ever seen on #netzero
My research into sustainable business model patterns aligned with planetary boundaries reached a similar conclusion. I'll soon release a whitepaper for the APres SBM which you might find useful. Isomorphism is high in industry and dare I say academia as well...
NDC framework is indeed broken because it overlooks the real cost of transition, leading to inefficient resource allocation. However, carbon credits can help direct capital toward the most optimal projects, maximizing social surplus.
It all boils down to geopolitics and national politics, and how economies are structured. A roadmap will not change that- I have seen some fantastic roadmaps go nowhere. For them to work, we need a political bargain, state capacity and political will to spend time to implement them. So, it’s key to start in the right order to solve the problem
Adjunct Professor of Financial Engineering, NYU Tandon School
5dNice writeup but, realistically, only government regulations and significant decrease of green technology costs will move the needle. I think the current (and future) energy demands (rising due to growing consumption of the AI and crypto industries) cannot be satisfied by current green technologies and increasing energy costs are untenable for political reasons.