SBTi Releases Draft of Updated Net-Zero Standard

The Science Based Targets Initiative (SBTi) recently released a draft of its Corporate Net-Zero Standard Version 2. The revised standards aim to further push the dial toward corporate decarbonization.

The original guidelines were introduced in 2021, and they have already guided more than 1,500 companies in setting climate goals. In just a few short years, we've seen substantial enough changes in the sustainability landscape to merit the revisions. If adopted,this revised framework would become the new benchmark for science-based net-zero targets.

Why the Update—and What's New?

SBTi first announced plans to revise the standard in 2023, triggering a controversy around the possible role of carbon credits. Carbon credits have remained controversial due to multiple issues surrounding regulations, potential fraud, and their actual decarbonization value.

Related: SBTi Update on Internal Documents Show Carbon Credits Are Ineffective

With the updated draft officially out for consultation, we're getting a clearer picture of what's on the table.

Here are some of the key proposed changes:

Clearer Rules on Scope 1 and 2 Emissions

• The new draft proposes separating Scope 1 and Scope 2 emissions instead of aggregating them. The distinction could improve both clarity and accountability.
• It also sets a bold expectation: companies should transition to zero-carbon electricity by 2040.
• The shift from "renewable" to "zero-carbon" electricity expands the framework to include nuclear power. The update acknowledges nuclear's potential role in decarbonizing electricity grids.

Simplified Requirements for SMEs and Developing Regions

• The draft offers streamlined pathways for medium-sized companies in developing countries and small-to-medium enterprises (SMEs).
• The added provisions make the standard more accessible to various organizations.

More Flexibility to Account for Scope 3 Emissions

• Scope 3 emissions—those outside a company's direct control—are often the hardest to measure and reduce.
• The SBTi's revision introduces greater flexibility by allowing companies to set both emission reduction objectives as well as non-emissions-based targets. Examples include those tied to green procurement or sustainable revenue generation.

Carbon Credits and Offsets Remain Limited but with More Clarity

While the SBTi still limits the use of carbon offsets, the draft offers new recognition for companies engaged in Beyond-Value Chain Mitigation (BVCM).

BVCM refers to climate actions a company takes outside of its own operations and value chain to help reduce global greenhouse gas emissions.

Examples of BVCM include:

• Purchasing high-quality carbon credits (i.e. credits that have verifiable, reputable accounting to actual carbon conservation activities)
• Investing in carbon removal technologies like direct air capture or other biogenic CO2 removal
• Supporting forest conservation outside of sourcing regions
• Funding climate resilience projects in vulnerable communities

BVCM does not replace the need for companies to cut their operational emissions. Under the Science Based Targets initiative (SBTi), companies must still decarbonize Scope 1, 2, and 3 emissions. BVCM is a complementary activity that improves outcomes beyond scope emissions.

Why is BVCM Important if It's Voluntary?

The new draft of the SBTi Net-Zero Standard (v2) proposes greater recognition for companies engaging in BVCM. While still voluntary, it's a powerful way to achieve several climate objectives:

• Take responsibility for residual emissions
• Accelerate global climate progress
• Show leadership beyond compliance

Although not compulsory, adopting BVCM initiatives has some advantages. Companies could be recognized for investing in solutions to mitigate emissions alongside their science-based decarbonization pathways.

The specifics of which emissions and mitigation actions qualify are still in progress. Subscribe to the ResourceWise blog to stay updated on any new changes, additions, or clarifications to this initiative.

Carbon Removal: Proactive Options for Residual Emissions

The draft also updates guidance on carbon dioxide removal (CDR). Companies are now encouraged to proactively integrate CDR before their net-zero target year (rather than after).

New options would allow companies to better refine their decarbonization strategies:

• Set near- and long-term removal targets alongside traditional abatement goals.
• Achieve recognition for aligning both removal and reduction targets.
• Use a flexible mix of additional reductions, removals, or both without requiring a separate removal target.

Current SBTi Draft Open for Public Consultation

The draft standard is open for feedback now through June 1, 2025. After that, the SBTi will revise the document before finalizing and releasing the approved version.

These proposed updates aim to balance ambition with practicality, pushing for more decisive climate action while offering more flexibility and clarity for companies at various stages of the journey.

To learn more about the changes and revisions, you can read the full draft and share your feedback on the SBTi site.

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