Net Zero in Emerging Markets
Why one size doesn’t fit all
10 November 2025
Insights
Table of Contents
- Scaling Targets with Country Pathways
- Scope 3 & Beyond
- Opportunity for Investors
- How Anthesis Can Help
- Contact Us
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When it comes to implementing net zero targets, Emerging Markets and Developing Economies (EMDEs) face a unique challenge: how do we define a Paris-aligned target that reflects both ambition and fairness? The principle of ‘Common But Differentiated Responsibilities’ in the Paris Agreement recognises that developed economies should decarbonise faster, while EMDEs balance emissions reduction with economic growth. Yet, most current frameworks ignore this nuance.
Today, general partners (GPs) often default to the Science Based Targets initiative (SBTi) for defining Paris-aligned targets. However, SBTi does not incorporate the concept of “fair share” contributions – targets that account for historical emissions and capacity to act. This omission risks creating unrealistic and unfair expectations for EMDE-based companies and could even trigger capital outflows from these regions as investors chase easier wins elsewhere.
Why does fair share matter? Historically, developed economies have contributed the bulk of greenhouse gas emissions. Expecting EMDEs to decarbonise at the same pace ignores this reality and undermines equity. For portfolio companies, this means that applying the same reduction targets globally is neither practical nor justifiable.
Scaling targets with country pathways
To address this, we propose a methodology that scales SBTi-level reductions using well-accepted, country-level emissions pathways. We have based this proposal on data from the Network for Greening the Financial System, or NGFS. NGFS provides granular data on national emissions trajectories under a Net Zero 2050 scenario. By comparing these pathways for developed economies and EMDEs, we can calculate a ratio that adjusts SBTi targets to reflect fair share contributions.
For example, an NGFS net zero pathway shows Cameroon’s emissions increasing by 6.3% between 2025 and 2030. A company operating there should therefore aim to limit its emissions increase to this level, rather than pursue reductions that ignore local realities. This approach aligns with the Net Zero Investment Framework (NZIF) guidance and ensures targets are both credible and achievable.
In practical terms, nothing really changes at the GP level – general partners are still expected to ensure that portfolio companies are “managed in alignment with net zero.” The difference is that the bar for meeting this standard has been adjusted: the criteria are now more flexible for individual portfolio companies, taking into account the specific contexts and regions in which they operate.
Scope 3 & beyond: a nuanced approach
Scope 3 emissions remain a sticking point, especially in EMDEs where data availability is limited. Our recommendation is pragmatic: exempt small and medium-sized businesses from Scope 3 reduction targets for now, focusing instead on measurement as a first step. For large companies, targets should apply but be adjusted using the same fair share principles applied to Scope 1 and 2 emissions.
High-impact sectors, however, are a different story. Under NZIF, sectors such as transport, power generation, cement, steel, and agriculture, forestry and fisheries (AFF) are classified as “high impact” due to their significant greenhouse gas emissions and systemic influence on the transition (see NZIF high impact material and material sector mapping). For these industries, more ambitious Scope 1,2 and 3 targets may be necessary, and SBTi’s standard guidance, including sector-specific guidance, should serve as the baseline.
The bigger picture: opportunity for investors
Two-thirds of global energy-related emissions, and 95% of emissions growth, come from EMDEs. This is not just a challenge; it’s an opportunity. By tailoring targets to local realities, GPs can identify high-potential investment opportunities in areas such as renewable infrastructure, distributed energy, and efficiency improvements – areas where practical deployment and scale-up can deliver both climate impact and commercial returns. This approach can also help GPs deepen partnerships with portfolio companies. Crucially, adopting credible, context-sensitive approaches can also attract increased funding from LPs, who are seeking robust, Paris-aligned strategies that demonstrate both ambition and fairness.
Ultimately, investors who understand the importance of differentiated pathways can play a pivotal role in real-world decarbonisation. By educating clients and advocating for fair share-based targets, fund managers can justify larger mandates and tell a compelling impact story.
How Anthesis can help
Achieving net zero is a global effort, but it cannot be achieved with a one-size-fits-all approach. Incorporating fair share principles into target-setting is not only equitable and fair, but also essential for real-world impact.
Anthesis is proud to have supported the Science Based Target Initiative (SBTi) to develop dedicated guidance for the private equity industry. Written in partnership with an expert advisory group of over 30 private equity firms, the guidance helps private equity firms set and reach science-based targets across their operations and investments to work towards sustainable private equity.
We work with firms around the world, providing end-to-end SBT and net zero consulting support to fit unique contexts. At Anthesis, we view the process of setting Science Based Targets not merely as a checkbox, but as a transformative business journey.
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