In an effort to accelerate corporate action against climate change, the Science Based Targets initiative (SBTi) has unveiled a draft of its revised Corporate Net-Zero Standard for public consultation. This business sustainability initiative seeks to refine and enhance the framework that guides companies in setting science-based targets to achieve net-zero emissions. Continue reading as we unpack the new SBTi standard 2.0 and what it will mean for businesses.
Background on SBTi and the net-zero standard
Established in 2015, the SBTi is a collaboration among organisations, including CDP, the United Nations Global Compact, the World Resources Institute (WRI), and the World Wide Fund for Nature (WWF). It provides companies with methodologies and guidance to set greenhouse gas reduction targets aligned with climate science and the goals of the Paris Agreement. In October 2021, the SBTi introduced the Corporate Net-Zero Standard. This was the first science-based framework for companies to set net-zero targets.
Key features of the draft revision
The newly released draft aims to address challenges in target-setting and management, offering more tailored requirements based on company size and geography. It introduces a categorisation model distinguishing between Category A companies (large and medium-sized enterprises in higher-income regions) and Category B companies (small and medium-sized enterprises in lower-income regions). There are also varying levels of flexibility in the criteria application.
Additionally, the draft proposes updated guidelines on the use of carbon credits, emphasising that while activities like forest protection and pollution reduction are beneficial, they should not form the core of a company’s climate strategy. Companies are encouraged to focus on reducing their carbon footprints through changes in business models and supply chains. The SBTi has opened the draft for public consultation until June 1, 2025, inviting stakeholders to provide feedback. This collaborative approach aims to ensure that the standard is robust, practical, and widely applicable across various sectors and regions.
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Implications of the new SBTi standard for businesses
The draft revision of the SBTi net-zero standard signals a more nuanced, scalable approach to corporate decarbonisation. However, it is one that carries both opportunities and obligations for businesses navigating their climate journeys.
1. Greater clarity, but higher expectations
The revised standard introduces more tailored guidance based on business size and geographic context. This brings much-needed clarity but also raises the bar for what is expected. With this in mind, businesses now have a clearer, more equitable path to net zero. However, large firms, in particular, must double down on real, measurable emissions cuts – not just “net” pledges.
2. Shifting role of carbon offsets
The SBTi’s revised position on carbon credits is explicit: offsets must not be the cornerstone of a company’s net-zero strategy. Carbon credits for activities like afforestation or pollution reduction may still be pursued as additional action but not as a substitute for direct emissions reductions. Moreover, investors and regulators will increasingly look at how businesses are achieving their targets, not just that they have them in place. Therefore, companies heavily reliant on offsetting must reassess their pathways and invest in genuine decarbonisation across operations and supply chains.
3. Operational restructuring will be needed
To align with the new standard, many businesses will have to go beyond incremental changes and reconsider core aspects of how they operate. For example:
- Product and service redesign to reduce lifecycle emissions
- Supplier engagement programmes to tackle Scope 3 emissions
- Integration of climate strategy into capital expenditure and procurement policies
With the above considered, the revised standard pushes climate action deeper into the operational core. It’s no longer enough to “bolt-on” ESG; it must be embedded into business models.
4. A clearer path to global consistency
The updated standard better aligns with other leading frameworks, such as the ISSB’s IFRS S2 and the EU’s Corporate Sustainability Reporting Directive (CSRD). This convergence is good news for multinationals juggling overlapping requirements. The implication here is that companies that don’t commit will not be as well positioned to meet other disclosure mandates, reduce duplication, and streamline reporting across jurisdictions.
5. Credibility will be more closely watched
As stakeholder expectations rise, so too does the reputational risk of misaligned or overstated net-zero claims. The revised standard raises the stakes. In other words:
- Transparency will be non-negotiable: Stakeholders will demand evidence of progress, not just target announcements.
- Greenwashing backlash is real: Failure to meet the revised standard, especially by companies previously claiming alignment, could lead to scrutiny from media, investors, and regulators.
The bottom line is that credible, science-based targets have become a competitive advantage for companies. However, this will only be the case moving forward if those businesses are backed by transparent reporting and real results.
Conclusion
The draft release of SBTi’s Net-Zero Standard 2.0 marks a pivotal moment in the evolution of corporate climate action. As global scrutiny of climate commitments intensifies, this revision provides both a refined framework and a reality check. It acknowledges the diversity of global business contexts while reinforcing the urgency for credible, science-based decarbonisation.
For forward-thinking companies, this is an opportunity to lead through transformation. Businesses that align early with the revised standard will be better positioned to meet emerging global disclosure requirements, build stakeholder trust, and future-proof their operations in an increasingly climate-conscious economy.
