The Science Based Targets initiative (SBTi) has released a new corporate net-zero standard for consultation. This update introduces major changes aimed at addressing the urgency of climate action, integrating evolving climate science insights, and incorporating pragmatic best practices. These updates put more emphasis on ensuring that companies stay on track with their climate commitments.
What is the SBTi, and why does it matter?
The SBTi is the gold standard for corporate climate targets, providing a rigorous methodology and tools for aligning business emissions reduction goals with the latest climate science. Its role is crucial in ensuring that corporate action contributes effectively to the global objective of limiting global warming to 1.5°C.
For companies, SBTi validation of their ambition enhances credibility of their climate strategy, mitigates climate-related financial risks, and meets growing stakeholder expectations. Investors, regulators, business partners and customers demand robust, science-based climate transition plans. With over 10,000 companies already committed to SBTi, aligning with this framework is becoming a strategic competitive advantage rather than an optional commitment.
What are the suggested amendments?
Change in the scope of the SBTi framework
Committing and setting net-zero targets is no longer enough. The new framework is more comprehensive and now additionally covers more guidelines to determine the base-year performance, to address current emissions, to assess progress against the target and to substantiate claims on progress made towards their achievement. Moreover, following their target validation, companies will have to submit their climate transition plans.
Suggestions for differentiated but proportionate requirements
The revised standard introduces differentiated requirements based on company size and geography, ensuring a more proportionate approach to emissions reduction efforts.
For instance, the new standard makes Scope 3 (indirect emissions generated across a company’s value chain) targets mandatory for all large companies and for medium-sized companies in high-income countries, regardless of the scale of these emissions’ contribution to total emissions. Indeed, scope 3 emissions often represent the largest share of a business’s carbon footprint. This means that large organizations must actively address decarbonization beyond their direct operations.
Additionally, large companies will now have only one year (instead of two) to set their targets for validation. By reducing the time between commitment and validation, the SBTi is ensuring that these companies move from intention to action more quickly. This adjustment signals a shift towards greater accountability, reinforcing that net-zero is not just a long-term aspiration but an immediate priority requiring structured and verifiable progress.
Further action on indirect emissions
The new standards seek to strengthen how companies set targets on the emission linked to electricity they purchase. Currently, companies can report lower emissions by purchasing guarantees of origin or renewable energy certificates, even if the actual electricity they use comes from fossil-fuel-based grids. The updated framework ensures that companies take a more credible and impactful approach.
Companies must now set:
- A location-based target: linked to the carbon intensity of the local grid;
- And either a market-based target, taking into consideration the purchase of renewable electricity contractually or a zero-carbon electricity target, ensuring direct procurement of low-carbon electricity (including for instance nuclear).
Relying solely on certificates like Guarantees of Origin will no longer be sufficient—companies must actively source zero-carbon electricity or contribute to zero-carbon electricity in other grids and should seek to achieve the highest possible standards of energy efficiency in their operations.
Acknowledging the challenges of managing Scope 3 emissions, the SBTi introduces increased flexibility. While companies will still be required to calculate their entire scope 3 emissions, the updated standard emphasizes prioritizing high-emission activities, requiring companies to focus on the most emissions-intensive parts of their value chains. Companies can now set targets not only for absolute emissions reduction but also for green procurement. Strengthening supplier engagement is a key element of this document, urging businesses to push their tier 1 suppliers, and particularly those linked with emissions-intensive activities, to adopt net-zero targets or align their products and services to that goal.
Companies are also encouraged to monitor revenue generated from net-zero-aligned products and services. This change goes beyond traditional emissions reduction targets, emphasizing the role of business model transformation in achieving net-zero.
While these expanded strategies are important, direct mitigation remains a priority, ensuring companies implement efficiency measures and source from lower-emitting suppliers, commodities, or products.
Restriction on carbon credits for Scope 3 offsetting
The role of carbon credits in corporate net-zero strategies has been a contentious issue. In 2024, the SBTi proposed expanding the use of Environmental Attribute Certificates (EACs), including carbon credits, to help companies address Scope 3 emissions. This suggestion led to backlash, with concerns that it might weaken corporate climate commitments by allowing companies to rely too heavily on offsets instead of reducing their own emissions.
To acknowledge companies taking responsibility for their current emissions, the revised standard introduces new criteria. It recognizes voluntary efforts such as purchasing high-quality carbon credits, directly financing emission reduction projects, and supporting conservation initiatives.
However, the revised standard is clear on this point: companies cannot use carbon credits to meet emissions reduction targets. Instead, they must prioritize direct emissions cuts within their operations and supply chains.
A key change in the updated framework is how companies address their residual emissions, meaning the emissions that remain after all feasible reduction efforts. Previously, companies could only neutralize these emissions from the year they achieved their net-zero target. Now, the new standard suggests a more gradual approach, allowing companies to begin addressing residual emissions earlier, provided they commit to using permanent carbon removal solutions over time.
To meet this requirement, companies must set specific carbon removal targets, with potentially different strategies for direct emissions (stemming from own operations) and indirect emissions (those from their supply chain). The revised standard outlines different options to address these removals. It also introduces more flexibility by encouraging collaboration with value chain partners to collectively invest in these removal projects.
Strengthening monitoring and verification
Companies must now provide verifiable evidence of progress. Such an assessment will happen at the end of each near-term target cycle (i.e. 5 years). These changes enhance transparency and accountability, reducing the risk of greenwashing.
Key monitoring updates include standardized tracking and reporting guidelines with predefined formulas to assess progress. It also requires stronger evidence requirements for net-zero claims, which must be backed by measurable, traceable and verifiable emissions reductions.
Moreover, a stronger emphasis is placed on data quality and traceability improvement. Large companies and medium companies in high-income countries will be required to seek third-party assurance to validate emission reductions.
What’s next?
The SBTi’s public consultation runs until June 2025, and the final standard is expected to be adopted by late 2026. This means that the requirements are not yet fixed and may still change substantially. However, companies should understand what is at stake and start preparing now, by strengthening their sustainability strategies.
Our opinion
The updated framework brings corporate action in closer alignment with climate science, ensuring that companies contribute meaningfully to limiting global warming. The proposed changes mark a decisive shift towards pragmatism and action, making climate commitments more than just pledges. By setting stricter and more ambitious requirements to companies, the new standard tackles one of the biggest challenges in corporate climate action: greenwashing and insufficient action.
While these updates place greater demands on larger companies, they also provide much-needed clarity, fairness, and accountability. Stricter rules establish a level playing field, ensuring that companies that genuinely reduce their emissions are not at a competitive disadvantage. Nevertheless, the standard also provides more leeway for SMEs, enabling companies of all sizes to contribute to climate action.
Though the transition towards a net-zero world may be challenging, the standard opens opportunities for collaboration, innovation, supply chain transformation, and competitive differentiation. Companies that take early action will likely gain stronger investor support, regulatory compliance advantages, and an enhanced brand reputation.
For businesses, these changes represent both a challenge and an opportunity. Those that act decisively will solidify their position in a low-carbon economy, while those that delay risk increasing regulatory and market pressures. With a heightened focus on implementation and measurable progress, vague climate pledges and unspecific reporting will no longer suffice. Companies must now take concrete steps to turn ambition into action.