Firms are increasingly pledging to achieve net zero emissions which is a major corporate commitment to manage future carbon emissions. While net zero pledges might serve as a corporate legitimation strategy and provide economic value, they may also attract stakeholder scrutiny and provoke legitimacy challenges. Given the double-edged nature of net zero pledges, I examine why firms pledge to achieve net zero emissions. Using the S&P 1500 firms’ hand collected net zero pledges, I find that firms pledge to achieve net zero emissions in response to shifting institutional expectations stemming from net zero-emission related policy initiatives. I further find that net zero pledges lead to a greater exposure of decoupling incidents as revealed by stakeholders. Finally, I find that net zero emission-related policy environment enhances exposure of decoupling incidents, specifically for firms with net zero pledges. While firms commit to achieving net zero emission to enhance legitimacy, the results suggest that such commitment increases the exposure of decoupling practices due to stakeholder scrutiny. The market impact analysis shows that investors positively value net zero emission pledges in the long-term and such pledges reduce firm exposure to market risk. The results provide insights into why firms respond to institutional expectations despite potential reputational concerns. This study informs policy on corporate strategic disclosures and carbon management.