Fueling ambition with action

At the same time, political shifts in key countries have led to rollbacks or delays in climate policy implementation, creating a “stop-start” or “rollercoaster” dynamic that undermines long-term investor confidence and slows the momentum of the energy transition. For instance, the United States’ second withdrawal from the Paris Agreement in early 2025 has sent shockwaves through global climate diplomacy and raised uncertainty around federal-level decarbonization commitments. Several European countries, including Germany and the UK, have recently signalled intentions to reconsider or delay previous commitments to phase out fossil fuel subsidies and advance key climate goals, citing economic and political pressures.

These reversals, often driven by more conservative or short-term agendas, have introduced uncertainty for investors, particularly in the clean energy and infrastructure sectors, where planning horizons are long. While the overall direction remains positive, these setbacks have highlighted the need for long-term climate targets to be underpinned by broad political consensus and institutional stability to ensure credibility and effectiveness.

Trends and outlook

Looking ahead, AFRY expects that long-term targets will continue to proliferate and become more granular. Countries are increasingly moving beyond generic “net-zero by 2050” announcements to define clearer sectoral targets, implementation roadmaps, and near-term milestones. For example, the UK and Germany have introduced legally binding carbon budgets, while India and Indonesia are advancing detailed transition roadmaps. The EU has reinforced its position with a proposed amendment to the EU Climate Law, setting a new 2040 target to reduce net greenhouse gas emissions by 90% compared to 1990 levels, sending an important signal of policy certainty to investors and industry at a time of heightened global uncertainty. Integration of climate goals into fiscal frameworks is also gaining momentum: France, for
instance, aligns public spending with its National Low-Carbon Strategy (SNBC) and multi-annual energy plan (PPE), with oversight from the High Council on Climate. At the corporate level, climate target-setting is becoming more rigorous and transparent, supported by frameworks such as the Science Based Targets initiative (SBTi) and regulatory requirements like the EU Corporate Sustainability Reporting Directive (CSRD). These trends suggest a shift from voluntary pledges to enforceable commitments, monitored through standardised disclosures.

Nonetheless, the credibility of long-term targets will increasingly be judged by the presence of near-term actions. Stakeholders, including civil society, investors, and industry, are calling for tangible and enforceable targets, backed by detailed policy instruments, cross-sector alignment, and robust accountability mechanisms. In an increasingly volatile policy landscape, countries and regions that maintain clear, consistent long-term signals, underpinned by broad political consensus, will strengthen their competitive advantage and attract the capital needed to drive the transition. Moreover, international cooperation will be key to ensure that countries with fewer resources are supported in developing and achieving ambitious long-term climate goals.

Governments and other policymakers

Governments must prioritise embedding net-zero targets into binding legislation to provide long-term policy certainty. These targets should be complemented by sector-specific transition plans and regularly reviewed interim milestones. Ensuring consistency across policies, from taxation to infrastructure, will be critical to avoid mixed signals that undermine credibility. Governments should also strengthen independent oversight and transparency by establishing monitoring institutions that track progress and recommend corrective action. Furthermore, developed countries have a responsibility to support low- and middle-income countries in formulating and achieving their own long-term goals, through financial and technical assistance.

Companies and industrial players

For companies and industrial players, long-term climate targets should form the backbone of corporate strategy. This involves setting science-based targets aligned with national and international goals, and integrating them into business planning, capital expenditure, and supply chain management. Companies play a crucial role in turning national climate ambitions into tangible action, by driving innovation, improving operations, and scaling low-carbon technologies. These efforts not only support the transition but also unlock long-term profitability and enhance investor appeal. By engaging with policymakers, they can help shape stable, ambitious legislation, while transparent communication of their progress builds credibility with customers, investors, and regulators.

Investors

Even amid short-term corrections, investors are increasingly expected to align capital allocation with long-term climate goals. This includes prioritising investments in companies that demonstrate credible decarbonization plans and measurable emissions reductions. Investors can also play an active role in engaging with both governments and corporates to encourage greater climate ambition and policy clarity. Incorporating long-term climate targets into financial risk assessments, scenario modelling, and stewardship strategies is becoming standard practice. Ultimately, investor support will be essential for driving large-scale reallocation of capital toward a net-zero-aligned economy.

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