Introduction

In the face of escalating climate risks, businesses worldwide are under increasing pressure to align their operations with global climate goals. As the urgency for meaningful climate action grows, the Science Based Targets initiative (SBTi) has emerged as a critical authority, providing companies with a structured pathway to set credible, science-aligned emissions reduction targets. Recently, the SBTi released a draft of its updated Corporate Net-Zero Standard, outlining significant revisions intended to strengthen corporate commitments and drive more transparent, effective climate action. Together with Alexander Schmidt, an expert in the field of policy and net-zero standards, our latest podcast episode explores the key proposed changes, their implications for businesses, and the challenges that lie ahead as companies strive to deliver on their net-zero ambitions.

TL;DR

• SBTi is raising the bar for corporate climate targets with a newly revised standard.

• Version 2.0 emphasizes separating Scope 1 and 2 emissions for clearer accountability.

• Companies must now publicly disclose transition plans—not just targets.

• Scope 3 emissions require better data and supplier collaboration.

• Beyond Value Chain Mitigation (BVCM) gains traction as a key climate lever.

• Early investment in carbon removals is no longer optional—it's essential.

The Role of SBTi in Climate Action

The SBTi serves as the de facto framework guiding businesses in setting science-based targets for emission reductions. Its primary goal is to keep global temperature rises below 1.5 degrees Celsius, with a commitment to achieving net-zero emissions by 2050. In March, the SBTi published a comprehensive 130-page document detailing proposed revisions to the corporate net-zero standard, which has sparked significant interest among thousands of companies committed to sustainability.

Key Changes in the Revised Standard

The proposed version 2.0 introduces several critical changes aimed at enhancing the effectiveness of corporate climate commitments:

1. Separation of Scope 1 and Scope 2 Targets

One of the notable changes is the separation of Scope 1 and Scope 2 targets. This allows companies to have a more granular view of their emissions and provides greater control over their reduction strategies. By distinguishing between these scopes, businesses can better manage their emissions and hold themselves accountable for their progress.

2. Public Commitment Requirements

Another significant update is the requirement for companies to publicly disclose their emissions targets and transition plans. This shift aims to create greater transparency and accountability in the corporate sector.

"It is easy (for companies) to set targets, and then it is hard to follow through if there is no transition plan behind them."
– Alexander Schmidt, expert advisor on climate policy of Normative

By mandating public commitments, the SBTi seeks to ensure that companies are not only setting ambitious goals but are also actively working towards achieving them.

3. New Metrics for Scope 3 Targets

The revised standard introduces new metrics for Scope 3 targets, including revenue alignment targets and incentives for improving data quality. This is vital for companies that often struggle with the complexity of their supply chain emissions. Enhanced data quality will enable businesses to make informed decisions and develop effective strategies for reducing their overall carbon footprint.

4. Beyond Value Chain Mitigation (BVCM)

BVCM refers to actions that take place outside a company's immediate value chain but can still contribute to climate change mitigation. The SBTi has recognised the importance of these activities and is encouraging companies to invest in climate finance. This could include funding projects that promote sustainable practices or support carbon removal technologies.

"We will need removals by 2050, and it's crucial that companies start investing in these technologies now."
– Simon Bager, co-founder and CIO of Klimate

Challenges Ahead

While the proposed revisions are a step in the right direction, challenges remain. Companies must navigate the complexities of Scope 3 emissions, which often account for a significant portion of their overall carbon footprint. The SBTi has acknowledged that many companies struggle to obtain primary data across their value chains, making it difficult to set accurate targets.

Furthermore, the requirement for companies to exert direct influence over their tier-one suppliers highlights the need for collaboration across the supply chain. Larger corporations, particularly those in sectors like technology and pharmaceuticals, have the potential to drive significant change by encouraging their suppliers to adopt net-zero targets.

Conclusion

The revisions to the SBTi standards represent a critical evolution in corporate climate action. By enhancing accountability through public commitments, separating emissions targets, and recognising the importance of BVCM, the SBTi is setting the stage for more effective climate strategies. However, as companies move forward, they must also address the challenges associated with Scope 3 emissions and ensure that their commitments translate into tangible actions. The journey towards net-zero is complex, but with the right frameworks and collaboration, it is achievable.

‍