SBTi unveils proposals to update corporate net-zero standard 

The Science Based Targets initiative (SBTi) has released a draft revision of its Corporate Net-Zero Standard, aiming to increase real-world decarbonisation and improve alignment with global frameworks. The draft introduces flexibility for Scope 3 targets, removing the strict 90% reduction by 2050 requirement, and proposes a tiered system based on company size and geography. The update also requires separate Scope 1 and 2 targets, mandates zero-carbon electricity by 2040, and expands the role of carbon removals for residual emissions. The SBTi has also proposed a recommendation or requirement for companies aligning with the Standard to disclose their transition plans. A public consultation runs until 1 June. (edie) 

Why does this matter? The SBTi launched the first version of the Standard in 2021 to help guide companies to set science-based targets aligned to limit global warming to 1.5C. Over 1,500 companies have since had their targets independently validated. However, adoption challenges prompted a revision, which had been due last July but was delayed after a proposal to allow carbon credits to offset Scope 3 emissions sparked controversy, leading CEO Luiz Amaral to resign citing personal reasons.  

The SBTI subsequently backtracked on the use of carbon credits and, as with Version 1.2, the draft Standard does not permit purchasing those that fall outside their value chains to meet their emission reduction targets. While permanent carbon removals can complement – though not replace – reductions, the draft strengthens support for beyond value chain mitigation (BVCM), formally recognising companies that invest in high-quality credits, which promotes additional decarbonisation efforts and mobilisation of climate finance. Such actions will not count toward target progress. 

As Scope 3 emissions are complex to manage, the draft shifts away from percentage-based targets, instead requiring companies to focus on high-impact, high-influence areas such as tier 1 suppliers. It encourages alignment-based metrics, including procurement from net-zero suppliers and revenue from net-zero products and services. To address data and traceability gaps, it permits activity-level interventions and the use of indirect tools like book-and-claim certificates.   

Rio Tinto was among the mining majors that responded to the SBTi’s Scope 3 target-setting discussion paper, which was a step towards revising the Standard. It called for recognising investments that reduce emissions across operations or the value chain. The company added that decarbonisation in hard-to-abate sectors will be non-linear, with faster reductions likely as policies evolve and technologies mature. It also noted that efforts to reduce Scope 3 emissions through vertical integration may temporarily raise Scope 1 and 2 emissions, highlighting the need for more nuanced benchmarking.  

The SBTi also proposed separate targets for Scope 1 (direct) and 2 (energy-related) emissions, replacing the combined approach. Companies missing near-term Scope 1 goals should strengthen future targets to conserve the carbon budget. Securing 100% zero-carbon electricity by 2040 will become mandatory, with full energy needs encouraged to be met by zero-carbon sources by 2050. The draft also discourages unbundled certificates, favouring credible options such as power purchase agreements or on-site generation. 

Version 1.0 of the SBTi Standard required companies to neutralise residual emissions at the net-zero year and beyond. The revision builds on this by encouraging earlier responsibility for residual emissions during the transition. It presents three options – mandatory removal targets with interim milestones, optional recognition for such targets, or flexible approaches allowing companies to use reductions, removals, or both. 

Additionally, the draft introduces tiered emission reduction requirements based on company size and the income level of the country where they operate. Category A includes medium and large companies in high-income countries and is subject to more stringent reduction and disclosure requirements. For instance, large companies must obtain target verification within one year, rather than two. Category B covers small and medium-sized companies in low- and middle-income countries, offering greater flexibility, including a two-year window for target verification.