The Science Based Targets initiative (SBTi) has taken another bold step toward corporate decarbonization with its latest draft of the Corporate Net-Zero Standard V2. This revision seeks to remove longstanding barriers to effective emissions reduction while ensuring that businesses worldwide can set and achieve their sustainability goals with greater clarity and flexibility.
This development is not just an update—it represents a transformation in how companies can align their operations with a net-zero future. The changes proposed are significant, addressing some of the toughest challenges businesses face in reducing emissions.
Breaking Down Barriers to Scope 3 Action
One of the biggest hurdles in corporate climate action has been Scope 3 emissions—indirect emissions generated across the value chain. These emissions often account for the majority of a company’s carbon footprint but are notoriously difficult to track and reduce due to their complex and fragmented nature.
To address this, the draft standard introduces:
- A more pragmatic approach that allows companies to set targets focused on green procurement and revenue generation rather than traditional reduction commitments.
- A prioritization of high-impact suppliers and emission-intensive sectors, ensuring that efforts are concentrated where they matter most.
This shift means that companies can exercise real influence over their supply chains rather than being burdened by a reporting system that lacks the flexibility to adapt to sector-specific challenges.
Refining the Approach to Scope 1 and 2 Emissions
Unlike previous versions, the revised standard separates Scope 1 and Scope 2 targets. This allows businesses to recognize the distinct challenges in decarbonizing direct emissions (from owned or controlled sources) versus purchased electricity.
Key changes include:
- A requirement for companies to transition to low-carbon electricity by 2040, accelerating the adoption of renewable energy.
- More sector-specific guidance to tailor reduction strategies based on industry-specific realities.
By refining these categories, SBTi makes it easier for companies to prioritize their decarbonization roadmaps without unnecessary complexity.
Scaling Carbon Removals and Mobilizing Climate Finance
Another fundamental shift in the draft standard is the recognition of Beyond Value Chain Mitigation (BVCM). Previously, carbon removals and climate finance were considered secondary to direct emission reductions. Now, the updated standard offers a structured pathway for companies to:
- Formally invest in projects that go beyond their own footprint, such as reforestation, carbon capture, and community-based sustainability initiatives.
- Establish interim carbon removal targets, ensuring that businesses can demonstrate progress while longer-term solutions are developed.
This approach not only enhances corporate accountability but also expands the role of businesses in global climate action, making it possible to contribute meaningfully beyond their immediate operations.
A Clearer Path for SMEs and Emerging Markets
Recognizing the disparity in resources and capabilities between large corporations and small-to-medium enterprises (SMEs), the new draft simplifies requirements for medium-sized companies and businesses in emerging economies.
The proposed changes include:
- Streamlined reporting mechanisms that ease the burden of compliance.
- Flexible frameworks that account for market-specific realities while ensuring alignment with global net-zero ambitions.
By making sustainability more accessible and actionable, SBTi ensures that the transition to net zero is not limited to corporate giants but is instead an inclusive movement.
Enhancing Accountability and Recognition
A major component of the revised standard is the emphasis on tracking and communicating progress. Companies will now be required to:
- Regularly report against targets, improving transparency and trust.
- Participate in new validation and recognition models, which will highlight those leading the way in decarbonization.
This increased focus on accountability ensures that sustainability commitments do not remain aspirational but translate into measurable action.
Conclusion: A Shift in the Net-Zero Narrative
The draft Corporate Net-Zero Standard V2 is more than just an update—it is a strategic recalibration that acknowledges the evolving needs of businesses in a changing climate landscape.
With greater flexibility in Scope 3 management, sector-specific Scope 1 and 2 targets, enhanced recognition of carbon removals, and support for SMEs, this standard reshapes corporate climate responsibility.
Companies now have an opportunity to not only set ambitious net-zero targets but also implement them with a level of practicality and precision that was previously challenging. The public consultation period allows for crucial input, ensuring that this new framework is both rigorous and realistic.
This is not just about compliance—it is about making net zero achievable, scalable, and impactful for all.