Dive Brief:
- The Science Based Targets initiative, an organization that validates that corporate net-zero goals and plans align with leading climate science, issued a draft update to its Corporate Net-Zero Standard on Tuesday.
- SBTi is currently seeking input on the update, which would serve as “Version 2” of the organization’s corporate target-setting standards, and follows March 2024 revisions, termed “V1.2” of the framework. Version 2 focuses on companies going “from ambition to progress,” and will still require corporations hoping to get their goals validated to target limiting global temperature rise to 1.5 degrees Celsius.
- The draft makes substantial changes in scope and also introduces tailored requirements based on company size and location. However, corporations should expect to set targets based on V1.2 until 2027, according to an intended transition plan within the draft.
Dive Insight:
Companies representing nearly 40% of the global market cap reported having either SBTi-validated targets or a commitment to set them in 2023, and 449 corporations had set their targets in line with the Corporate Net-Zero Standard as of June 2024, SBTi announced last year. The first version of the organization’s net-zero standard was released in 2021.
The organization said in its draft that it maintains the 1.5 degrees Celsius target because of evidence showing that threshold was temporarily breached in 2024, and the potential for further temperature rise to “exacerbate risks of catastrophic impacts, such as more extreme weather events and irreversible tipping points.”
“As the window to stabilize global temperatures below 1.5°C narrows, and the effects of small temperature increases become clearer, the case for strengthening climate ambition becomes stronger,” SBTi said. “This ambition must also lead to meaningful action that lowers the accumulation of [greenhouse gases] in the atmosphere.”
The update is designed to “help more companies set ambitious science-based targets and to accelerate climate action,” SBTi Co-founder and Chief Technical Officer Alberto Carrillo Pineda said in an overview of the draft.
“The direction of change in the standard is clear: We want the standard to be as effective as possible in driving science-based decarbonization,” Carrillo Pineda said. “Some of the revisions in the standard aim to remove barriers and to make the standard more pragmatic and more accessible. At the same time, we recognize the importance of alignment with other frameworks across the wider ecosystem and to avoid duplication where possible”
Other updates in the consultation draft include the separation of scope 1 and scope 2 emissions target-setting; additional guidance and requirements on how to track and report progress against targets; and the utilization of carbon credits and other environmental attribute certificates as part of companies’ decarbonization plans.
Among the tiered requirements, “large- and medium-sized companies operating in higher income geographies” — or Category A companies — will also be required to set targets for addressing scope 3 emissions, which will remain optional for “small and medium-sized companies operating in lower-income geographies” — Category B companies. The draft generally provided greater flexibility for Category B companies by offering more optionality and longer timelines.
SBTi recommends that companies setting near and long-term targets in 2025 and 2026 to continue to follow V1.2 and the organization’s near-term criteria, and those targets will remain valid for the either five years or the end of 2030, whichever is earlier for the specific company.
SBTi endured staff backlash last spring, after initially showing a willingness to broaden how companies could use carbon credits to account for their scope 3 footprint. The organization later walked back the statement, and the draft update continues the standard’s opposition to corporations using carbon credits and other environmental attribute credits to offset emissions. A study the organization released last year found “clear risks” to such use of carbon credits.
“Our research and consultation to date suggest that investment in permanent carbon removals and related carbon credits can complement companies’ efforts to reduce their carbon footprint—but should never be a substitute for this,” SBTi said in a March 18 blog on the topic.
Instead, the draft standard provided guidance for using credits as direct or indirect mitigation of emitting activities in its supply chain, and provides for use of the credits to help “neutralize” “residual emissions” at the net-zero target year “after all possible abatement measures have been implemented,” the blog said.
SBTi is seeking public input on the draft standard until June 1. The organization said it intends to provide “a pathway” for companies who have their targets validated over the next two years to align their scope 3 targets with Version 2.
“Version 1.2 of this flagship standard continues to be a credible, well-established framework for companies worldwide to set science-based targets,” the executive summary said. “Companies that have not yet set targets are encouraged to do so now.”
