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SBTi to revise Corporate Net-Zero Standard and relax certain emission reduction criteria. (Photo: iStock)
The Science Based Targets initiative (SBTi) released the draft revision of its "Corporate Net-Zero Standard" on March 18. The revision proposes changes to the recognition of Scope 3 emission reduction and suggests that separate targets be set for Scope 1 and Scope 2 emissions.
The draft also proposes allowing companies to use carbon removal credits to offset their residual emissions, which is expected to inject new momentum into the voluntary carbon market.
SBTi corporate standard revision draft delayed for over 6 months
The SBTi aims to limit global warming to 1.5°C, making it the first global framework for companies to set net-zero emission targets, with the first version published in 2021.
In April of last year, the initiative sparked heated debates internally and externally after it proposed allowing the use of carbon credits to offset Scope 3 emissions. This controversy led to the resignation of CEO Luiz Amaral, and the revised draft, which was originally scheduled for release in July of the same year, was delayed until now.
According to the draft, emission reduction requirements for companies will be categorized based on their size and the income level of the country in which they operate. Company size will follow EU standards, while national income levels will be based on World Bank classifications.
- Category A applies to medium and large companies operating in high-income countries. These companies will face stricter emission reduction goals and disclosure requirements. For example, large companies will be required to obtain verification of their targets within one year, reduced from the previous two-year timeline.
- Category B applies to medium and small companies operating in low-income countries. These companies will have more flexibility, such as being allowed for two years to obtain verification for their emission reduction targets.
Under the current framework, emissions from Scope 1 and Scope 2 are combined in calculations, but the draft proposes that they may be tracked separately in the future.
Additionally, for Scope 3 emissions, companies are required to reduce 90% of absolute Scope 3 emissions by 2050. The draft allows for customized goals based on categories and permits the use of net-zero procurement strategies, such as buying steel or cement from suppliers with ongoing emissions reductions, to count towards a company’s emission reductions.
Read More: New SBTi research highlights importance of carbon credit quality, expert says
Open door for carbon removal credits to offset emissions
As negative carbon technologies gain more attention, the SBTi also proposes including carbon removal as a method for companies to meet their emission reduction goals.
However, carbon removal can only be used to offset residual emissions that are difficult to reduce after all other mitigation measures have been exhausted. The draft outlines three regulatory approaches for carbon removal:
- Companies will be required to set both short-term and long-term carbon removal and reduction targets to reduce residual emissions by 2050, and these targets must be validated by SBTi.
- Companies can gain SBTi recognition by setting carbon removal targets.
- Companies will have the option to use carbon removal to reduce residual emissions or reduce emissions within their supply chain, or both.
The draft does not specify which carbon removal technologies can be used but states that acceptance will be based on the durability and emission intensity of the methods.
The revised "Corporate Net-Zero Standard" is expected to undergo further revisions after public consultation ends in June, followed by a second round of consultation and testing with selected companies. The SBTi's technical committee will review the trial results, with the final approval expected by the end of this year and the standard officially taking effect in 2026.
Source: SBTi, Wall Street Journal, edie, Trellis
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