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A Big Step Forward for SBTi
SBTi has released the second draft of their Corporate Net-Zero Standard V2 for public consultation. We’ve previously called out SBTi when we believed they were not doing enough to meet the moment. Today, we’re thrilled to give them credit for a draft that, if adopted, will drive more of the immediate climate action we need.
Rather than attempt a comprehensive overview of what SBTi is recommending, we want to call out three notable improvements:
- Giving credit to companies that take responsibility for ongoing emissions: SBTi has long supported companies that engaged in beyond value chain mitigation to mitigate the ongoing emissions, including with carbon credits. As we wrote previously, however, SBTi did not “give participating companies any credit . . . for doing so,” and thereby failed to recognize that companies are incentivized in part by “recognition. . . from their customers, investors, employees, and other constituents.” Under the new draft that would change. Companies now would receive one of two tiers of recognition from SBTi when they take steps to mitigate their emissions now:
- ‘Recognized’ Status: Companies that take responsibility for at least 1% of their ongoing Scopes 1-3 emissions with actions like purchasing high-integrity carbon credits.
- ‘Leadership’ Status: Companies that take responsibility for 100% of their ongoing Scopes 1-3 emissions and use tools like high-integrity carbon credits to mitigate at least 40% of their ongoing emissions over their near-term target timeframe.
- Transparency about who is not engaging: The new draft also sets as a default that companies following its Net-Zero Standard should take action to mitigate their ongoing emissions. In fact, any companies choosing not to mitigate their ongoing emissions would have to publicly disclose that they are electing not to do so–and share their reason with SBTi. While mitigation of residual emissions would therefore not be mandatory until 2035, there is a heavy thumb on the scale in favor of engagement.
- Recognizing the importance of carbon avoidance credits in the near-term: Consistent with other guidance like the Oxford Principles for Net Zero Aligned Carbon Offsetting, for the first time, SBTi’s draft Standard clearly recognizes that high-integrity avoided emissions carbon credits have an important role to play on corporates’ journey to achieve net zero. Because we remain far from global net zero, reducing emissions from sources like super pollutants and deforestation are critical to global climate goals.
There are currently more than 10,000 companies engaged with SBTi’s Net Zero Standard in some way. If all of those companies begin to mitigate a significant portion of their ongoing emissions with high-integrity carbon credits and other climate action, it would represent a step-change in global corporate engagement.
Next Steps
While the draft isn't final, these revisions offer great encouragement about the framework's direction. It's a strong start toward greater recognition for companies taking responsibility for their ongoing emissions as they also make progress on their decarbonization targets.
The final Corporate Net-Zero Standard version 2.0 is expected in 2026. Companies will be encouraged to adopt the framework after publication and required to comply starting January 1, 2028.
SBTi is accepting feedback until December 8, 2025. We encourage companies to engage in this consultation process and are looking forward to reviewing the final draft.
If you have any questions about the newest revision, or are interested in learning more about how CNaught can help you use carbon credits to meet your company's goals, reach out to us here.
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