The Science Based Targets Initiative (SBTi) is consulting on version 2 of its net-zero corporate standard, introducing new requirements that will significantly impact the carbon market. The revised standard emphasizes true decarbonization by requiring companies to reduce emissions across all areas before turning to carbon credits for neutrality. Carbon credits remain a complementary tool rather than a replacement for direct emission reductions.

What does this mean for businesses?

SBTi tightens regulations on residual emissions, marking a key shift in the carbon credit industry.

• Companies must set clear carbon removal goals: using interim milestones to ensure a credible path to zero
• Stronger focus on carbon removal: using the “like for like” principle, whereby removals must match the permanence of CO₂ emitted, and a “gradual shift” approach, which requires companies to move to more permanent carbon removals over time
• Removal should complement, not replace, direct reduction measures: The goal is to eliminate residual emissions by the target year with net zero
• Three options for dealing with residual emissions: set separate carbon removal targets, receive recognition for removal efforts, and combine additional reductions with removals
• Take responsibility for ongoing emissions during their transition through Beyond-Value-Chain Mitigation (BVCM): to provide recognition to companies that engage in high-integrity carbon credit purchases, finance emissions mitigation projects, or invest in carbon conservation in natural ecosystems beyond their direct operations.

Why is this important for the industry?

• Strengthens the voluntary carbon market: setting clear guidelines for incorporating carbon credits into net-zero strategies
• Strengthens demand for high integrity credit: SBTi increases the credibility of carbon offsets
• Contributes to long-term climate impact: ensuring that purchased credits meet strict quality and sustainability criteria

Why is this important for businesses?

• Stimulates climate leadership: provides recognition for addressing persistent emissions while allowing flexibility in reduction strategies
• It creates opportunities for organizations: by enabling the demonstration of improved climate action in meeting net-zero commitments

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