For years, net zero has been the benchmark of corporate climate action, but the cracks in that approach are now becoming too big to ignore.

Net zero has become a loophole-riddled framework that lets many companies delay meaningful change by buying carbon offsets to neutralize their emissions output instead of prioritizing genuine emissions reduction. And with greenwashing cases surging globally, carbon offsets are also leaving organizations wide open to litigation risk.

As the planet barrels past climate tipping points and heat records topple like dominoes, the need for real corporate climate leadership has never been so urgent. 2024 was the first time the average global temperature exceeded 1.5 degrees Celsius of warming – a threshold climate scientists have long warned could mark the beginning of irreversible, accumulating climate impacts. Yet in that same year, fossil fuel emissions actually increased by 0.8 percent. Clearly, something isn’t working.

Now, a new benchmark is emerging: real zero. Unlike net zero, real zero uses science-based decarbonization to cut emissions to as close to zero as possible without relying on offsets or carbon capture and storage to hide continuing or increasing company emissions.

Real zero is a more impactful, trustworthy and scientifically grounded approach – and it’s already being championed by companies you might not expect.

Real leaders in real zero

In our independent ‘Real Zero Leadership’ report, Climate Integrity – in partnership with the Institute for Sustainable Futures at the University of Technology Sydney – has identified three companies as standout global leaders: IKEA, Fortescue and Lendlease.

Despite these companies having a global footprint and operating in traditionally harder-to-abate sectors – mining, construction and furniture production – they are setting and implementing ambitious targets to not only reduce fossil fuel emissions but eliminate them entirely.

The message is clear: Real zero is not only possible, it’s the only way forward. And it’s good business.

In the past decade, greenwashing has been on the rise. The corporate climate space has too many commitments without credibility, misleading claims and an overreliance on carbon offsets, leaving consumers confused and having little actual impact on decarbonization.

By embracing real zero, IKEA, Fortescue and Lendlease are proving to be innovative, decisive and transparent leaders – and they’re doing it profitably.

IKEA is embedding climate into its core business strategy

Swedish furniture giant IKEA’s commitment to climate action and sustainability runs through every vein of its business, from product design to logistics. Since the 2016 financial year, IKEA has achieved an 89 percent reduction in its operational climate footprint while growing revenue by 68 percent, proving that rapid decarbonization and commercial success can go hand in hand.

In just one example of climate action, Australia’s Marsden Park Distribution Centre recently had a solar and battery system installed, meaning 70 percent of the site’s energy needs are now covered using clean, self-generated power.

Fortescue is phasing out fossil fuels in heavy industry

You might not expect one of the world’s largest iron ore producers to be leading the real zero charge, but the Australian mining company has committed to eliminating Scope 1 and Scope 2 emissions (that’s their direct, operational emissions) by 2030 – without offsets.

To do so, the company is investing US$2.6 billion to transition its Pilbara mining operation to run on 100 percent renewable energy, develop green hydrogen and ammonia technologies and eliminate fossil fuels from its processes entirely.

The plan sets a precedent for the mining sector, which is often considered too hard or expensive to decarbonize, but in the words of Fortescue CEO Dino Otranto, “Heavy industry can cut fossil fuels – not someday, but right now.”

Lendlease is decarbonizing the built environment

The construction industry is one of the world’s largest emissions sources, but Lendlease is showing how radical decarbonization in the built environment is possible. The company is on a ‘Mission Zero’ plan, with a target of ‘Absolute Zero Carbon’ by 2040 across Scope 1, 2 and 3 emissions. That includes eliminating fossil fuels from constructions, materials and tenant operations without relying on offsets.

Lendlease’s ‘whole-of-business’ targets ensure climate action isn’t just the responsibility of one person or department – it’s everyone’s job. They’ve even begun sourcing low-carbon building materials, like aluminum manufactured using hydropower, for their Sydney projects, cutting embodied carbon by up to 40 percent.

Why real zero matters

‘Net zero’ was never intended as a company-level strategy. It is a global system-level scientific concept that is included in the ‘Fifth Assessment Report’ of the Intergovernmental Panel on Climate Change.

Its subsequent widespread adoption by countries, cities and companies has seen limited adherence to science has led to meaningless net zero pledges and an over-reliance on carbon removals – delaying real emissions reductions, all under a ‘green’ facade.

Corporate carbon offsetting has been widely discredited. In Australia, research shows up to 75 percent of national carbon credits don’t result in real or additional emission reductions. Too often, they are being used when genuine decarbonization is possible.

That’s exactly what a real zero commitment means. It prioritizes eliminating emissions through operational changes, clean energy and supply chain transformation. Offsets or removals (through measures like reforestation or direct carbon capture) become a last resort for the fraction of emissions that absolutely cannot be eliminated.

Creating the blueprint for real zero

IKEA, Fortescue and Lendlease are moving quickly to forge a new, necessary path and inviting other companies to join them. These three decarbonization leaders are now exploring a cross-sector collaboration to further innovate and accelerate decarbonization across Australian industry.

They are showing what’s possible when ambition is matched with clear strategy and strong investment. And their success sends a strong message to other global companies: Do not get left behind.

For CEOs and boards looking to position themselves in the energy transition, the answer can no longer be the well-rehearsed ‘net zero by 2050’. The new benchmark is real zero – completely phasing out fossil fuels as quickly and effectively as possible. And the race has already started.

Opinions expressed by The CEO Magazine contributors are their own.