New Draft Corporate Net-Zero Standard Released by SBTi

The Science Based Targets initiative (SBTi) has opened up a second public comment period for its Corporate Net-Zero Standard Version 2.0 draft, following feedback from companies and market stakeholders earlier this year. This updated draft incorporates critical input to provide more straightforward, science-based guidance for corporations seeking to achieve net-zero by 2050 through scientifically vetted and applicable methods.

The draft introduces a new voluntary transition pathway that allows corporations to use carbon credits to support effective mitigation and climate resilient efforts for their ongoing emissions. Serving as an opportunity to demonstrate how carbon credits can complement rather than replace direct emissions reductions, the Ongoing Emissions Responsibility (OER) Framework outlines two recognition tiers for Category A companies (large corporations or based in high income countries) to voluntary address their ongoing emissions with flexibility for Category B companies (small corporations in low-income countries).

Recognized Status (Tier 1): Awarded to companies that mitigate at least 1% of their Scope 1–3 emissions. Companies can either choose:

a). Ex-post mitigation: Support activities that supply mitigation outcomes (i.e. carbon credits) equal to at least 1% of their ongoing emissions

b). Carbon pricing: Apply a carbon price to at least 1% (minimum $20 per ton) of ongoing emissions and use the financial budget to support eligible climate action

Leadership Status (Tier 2): Granted to companies that mitigate 100% of their Scope 1–3 emissions. Companies will:

a). Apply a carbon price to 100% of ongoing emissions (at least $80 per ton) and use that budget to mitigate at least 40% of emissions through verifiable mitigation outcomes (carbon credits)

The Climate Trust applauds the inclusion of both avoidance and removal carbon credits as it allows for immediate climate action needed to produce climate impact from deployable and investable projects.

Post 2035, Category A companies would be required to take on a minimum level of responsibility for their ongoing emissions, working toward complete neutralization by the net-zero target year. Each company will need to neutralize 100% of their residual emissions or they may have their counterparts neutralize the indirect value chain emissions.

The standard specifies that neutralization should happen through continued mitigation outcomes and the use of long-lived removals. At the net-zero target year, both Category A and Category B companies must neutralize 100% of all Scope 1–3 emissions.

This new direction from the SBTi highlights a positive signal, providing greater direction for corporates and stakeholders in real time. With the added role that carbon credits play in achieving these goals by the new OER framework, corporates can rely on carbon credits to address ongoing emissions. While several details remain to be finalized, we are optimistic that input from stakeholders across sectors will help move the process forward. The public consultation period will run open until December 8, 2025, with the final version of the standard expected to be published in early 2026 and adoption in 2028.