The SBTi (Science Based Targets initiative) has published a draft document containing proposed updates to the Corporate Net-Zero Standard. The standard, which has been in place since 2021, has seen more than 1,500 businesses apply to have their targets verified. It incorporates ambitious near-term emissions reductions targets alongside a target of reducing emissions by at least 90% by 2050.
However, there have been issues with its adoption. Last year more than 200 companies, including Microsoft, X, Diageo and P&G saw their short-term or net zero climate commitments removed from the SBTi (Science Based Targets initiative) verification process, due to failure in meeting submission deadlines.
Of those companies who failed to meet the SBTi’s deadlines a third (32.3%) stated that this was because the Net-Zero Standard had not been published. A quarter (24.2%) raised concerns over their ability to meet the targets, and just over a fifth (21%) said that tackling Scope 3 emissions was currently "too big a challenge"[i].
When all businesses aligned with the Corporate Net-Zero Standard were surveyed, the biggest barrier to setting net zero goals was found to be Scope 3 emissions, with 54% stating that it is too much of a challenge. This was followed by uncertainties about future technologies (53% of respondents), and a lack of certainty that the target can be achieved (35%).
When asked how the SBTi can better support businesses in setting climate goals in future, addressing critical barriers in updated Net-Zero standards, and better engagement, were the top two choices accounting for a combined 46% of responses from businesses.
In response, the SBTi has sought to address some of these challenges and has published an initial draft outlining changes to the Standard. The full document can be accessed here.
In a press release the SBTi states that with the draft it aims to accelerate decarbonisation by:
· Tackling barriers to scope 3, or value chain, action – the most commonly cited challenge by businesses.
· Maintaining focus on emissions reduction while exploring incentives to support scaling of climate finance and carbon removals.
· Making it easier for companies in emerging economies to set targets.
· Incentivising ambition and action through new model to validate and recognize progress against targets[ii].
Perhaps the most considerable change being proposed relates to Scope 3 reporting, where the SBTi is targeting increased flexibility with options to set targets for green procurement and revenue generation, instead of setting an emissions reduction target. The initiative says that by focusing on direct suppliers and/or those in emissions-intensive sectors, the proposal seeks to focus action in the most emission-intensive activities and those where companies have the highest influence.
In addition, the draft standard also proposes splitting out Scope 1 and Scope 2 emissions to reflect the unique challenges around decarbonising each of these categories, as well as simplified requirements for medium-sized companies in developing markets and SMEs.
A public consultation will now run until the 1st June 2025 to discuss the proposals. In the meantime, the SBTi will also create expert working groups to inform the draft’s evolution, as well as running pilot testing.
Lauren has extensive experience as an analyst and market researcher in the digital technology and travel sectors. She has a background in researching and forecasting emerging technologies, with a particular passion for the Videogames and eSports industries. She joined the Critical Information Group as Head of Reports and Market Research at GRC World Forums, and leads the content and data research team at the Zero Carbon Academy. “What drew me to the academy is the opportunity to add content and commentary around sustainability across a wealth of industries and sectors.”
