The SBTi Net Zero Standard: Explained

The new SBTi Net Zero Standard is a “weapon against greenwashing and makes sure that all companies are heading in the same direction”. 

On October 28th, the Science-Based Targets initiative (SBTi) launched the first science-based framework for companies to set net zero targets – the Net Zero Standard. The Standard redefines what a credible net zero target looks like and clarifies the key role of decarbonisation in corporate net-zero strategies. 

We dug into the details of the new standard in our special briefing, which you can watch here. We’ve summarised some of the key definitions and changes to target setting below.

In summary, science-based corporate net zero targets will require:

• Emissions reductions in line with a global temperature increase of 1.5°C before 2050 across Scopes 1, 2 and 3
• Near-term targets and rapid action to reduce emissions over 5-10 years in line with 1.5°C 
• Long-term deep decarbonisation of ~90% across all Scopes before 2050
• A limited dependance on carbon removals to neutralize emissions that cannot yet be eliminated (5-10%)
• External verification of corporate net zero targets and annual progress reporting

Why is change needed?

Ultimately so companies can make claims that are credible

1. Lack of consistency has caused scepticism
2. Reduce risk of greenwashing
3. Provide a standardised approach to net zero
4. Confidence that your net zero strategy is consistent with limiting warming to 1.5C
5. Decarbonisation needs to be the priority
6. Recognises that there is a limit to the amount of carbon that can be removed

First things first: Definitions

What is net zero?

A company reaches SBTi Net Zero when it reduces emissions in line with a trajectory to keep global temperature increase to 1.5C. This consists of a Near-Term Science-Based Target and Long-Term Science-based Target. Once the Near and Long-Term targets have been achieved, the residual emissions must be balanced through carbon removals. 

Near-Term Science-Based Targets: previously ‘science-based targets’, a 5-10 year reduction target in line with 1.5°C or well-below 2°C.  Purpose is to promote near-term action for deep emission reductions to be achieved by 2030. 

Long-Term Science-Based Targets: a target that should be achieved by 2050 latest and aligned to 1.5°C for all Scopes.For companies on a universal pathway, this will consist of a 90% reduction. Purpose is to drive economy-wide alignment and long-term business planning to reach global 2050 Net Zero. 

Carbon Removals: once you have achieved your Long-Term SBT, you use Carbon Removals to neutralise residual emissions (those which cannot yet be eliminated), we estimate this to be about 10% of your baseline emissions.)

Digging into the detail: Near-term Science-Based Targets

• Changes to Near-term Criteria – from July 2022
  — Scope 1 and 2 targets aligned to 1.5°C
  — Scope 3 targets aligned to 1.5°C or Well-below 2 ° C
• All Near-term targets must be 5-10 years and should be updated every 5 years and progress reported annually.
• Universal pathway: Applicable to all companies, 4.2% linear reduction (aligned to 1.5°C), or 2.5% linear reduction (aligned to Well-below 2°C, only applicable for Scope 3 emissions).

These criteria will apply to all companies setting science-based targets, regardless of whether they aim to align with the Net Zero Standard, from July 2022.  However, where possible, we should align with this now. Near Term and Long Term baseline emissions should align – therefore, although not compulsory,  it will be best practice for all companies to set a Near Term SBT including 90% of their baseline emissions within the boundary. This will enable a company to seamlessly add a long term target

Digging into the detail: Long-term Science-Based Targets

• Scope 1, 2 and 3 aligned to 1.5°C
  (Well-below 2°C and 2°C pathways have been removed.)
• 95% of Scope 1 & 2 emissions and 90% of Scope 3 emissions must be included in your baseline. This has increased from 67% (2/3rds) for current SBTs. This is an absolute reduction target independent of the target year. Your company will require the same reduction whether you choose your Long-term SBT year as 2050 or any year previous.
• Universal pathway: Applicable to all companies, 90% overall reduction
• Companies with Forestry, Land and Agricultural (FLAG) emissions should set a separate SBT covering these land based emissions: Agricultural pathway (for land emissions only) requires an 80% absolute reduction. From January, FLAG Long-Term targets will be able to be set, however as new guidance is bring released in Summer 2022 on accounting for FLAG emissions, we recommend waiting for this guidance. For more information on sector specific methodologies and when they will be released view the Net Zero Standard document here.

Contact us

The SBTi Net Zero Standard provides an important tool to help corporates adopt the deep-decarbonisation route that not only tackles climate change but also reaps the commercial benefits of more resilient supply chains, better risk management, increased customer loyalty, and talent attraction.

Further resources

• Download | Net Zero: The Guide for Business 
• Download | The Guide to Science-Based Targets
• Carbon accounting and management with the Carbon Intelligence platform

If you have any questions about the new Net Zero Standard and would like to speak to a member of our team contact us [email protected]