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Why companies should care about the SBTi’s new science-based net zero standard
03 November 2021

Why companies should care about the SBTi’s new science-based net zero standard

5 minute read
Net zero
Denis Jorisch Associate Director, Practice Lead Corporate Climate Target

More companies are making commitments to achieve net zero emissions targets - but without a clear idea of what it means in practice. The new new science-based net zero standard will keep companies on target.

This was the headline finding from South Pole's recent net zero report – The Push and Pull of Net Zero: Drivers of Climate Action. Nearly half of all polled organizations (45%) have set net zero goals, but only 13% have both a net zero target and a science-based target (SBT). What does this mean?

South Pole's study shows that only 13% of polled companies with net zero targets have also set science-based targets to reduce emissions.

South Pole's study shows that only 13% of polled companies with net zero targets have also set science-based targets to reduce emissions.

One way to interpret this is that companies are jumping on the bandwagon of setting net zero targets, but they are possibly not understanding that they also need to work out the steps to get there - in line with science. The last part is the clincher: if you don't set science-based milestones that show exactly how you will reduce company emissions, year by year, then you might not seem very serious about your goal and be setting yourself up to accusations of greenwashing.

It is clear that much more needs to be done to improve the accountability, credibility, and ambition of climate action by companies.

This is why we were thrilled to join the launch of the corporate net zero standard by the Science-Based Targets initiative (SBTi) last week which provided clearer requirements of what a company needs to do to achieve net zero. The launch comes at a critical point, when a growing number of companies are eager to show off their climate credentials and commit to bold climate targets, and are thirsty for more clarity on how to work towards these goals.

So what does the SBTi net zero standard mean for companies in practice?

Most companies have had no way of knowing if their net zero targets align with science – until now. SBTi's new corporate net zero standard focuses on six dimensions that are critical if we want to limit global warming to 1.5°C by the end of the century:


One of the most important elements of the new standard is to standardize corporate net zero targets: to create shared definitions and clear requirements for what a company must do to reach net zero. It is no longer possible or credible to announce a net zero commitment that is ambiguous or self-defined. Most importantly, the new standard clearly states that net zero claims should only be made once a company achieves its long-term SBT – in other words, once a business has fully decarbonized its operations and value chain, and removed their residual emissions with certified carbon removal credits.


Science tells us that, right now, we only have a 50% chance of keeping global warming below 1.5°C by the end of the century 1. The new corporate net zero standard embeds this urgency for deep decarbonisation within its guidance: it raises the ambition by demanding that businesses set near-term SBTs alongside the overall long-term SBTs, both of which must be aligned with a 1.5°C pathway. Near-term SBTs require companies to set 5–10 year emission reduction targets in line with 1.5°C pathways, all while working towards their overall long-term science-based target to reduce emissions in line with science by no later than 2050. The SBTi defines this overall net zero state as one where emissions have been abated by an average of 90% compared with the base year, with any residual emissions being neutralised through certified carbon removals credits.


The new standard demands that companies take action within their own operations and value chains. However, given the urgency of the climate crisis, it also encourages businesses to invest in reductions and avoidance beyond their value chains. Even under optimistic projections, there is still an enormous gap between where we are heading towards by 2030, and where we need to be to ensure a habitable planet. Companies should, therefore, also undertake 'beyond value chain mitigation.' This can be done by financing projects and activities that further avoid and remove emissions outside of their value chain.

Compensating for emissions by purchasing carbon credits has three clear advantages: it allows a company to take climate action immediately, it funnels necessary funds to a project that is reducing emissions today, usually in a developing country where financing is hard to find, and it also puts a price on a company's emissions. How? By buying carbon offsets, a CFO immediately sees the cost of the company's current emissions, which can be used to encourage teams to reduce emissions across the value-chain and to factor emissions – and, importantly, the expected price hike in future carbon credits – into their long-term investment decisions.


Companies with net zero targets must set plans to reduce their own emissions in the long-term across all their direct and indirect emissions (scopes 1, 2 and 3) by on average 90% 2). This will increase the accountability of corporate targets by pushing companies to set robust, near-term climate action plans that deliver science-based targets, and by having more transparent / clearer milestones against which to measure annual emission reduction performance.


The new net zero standard demands that companies publicly disclose their targets, reduction plans, and the actual progress to meeting targets. On top of this, they must separately disclose how they are financing mitigation actions beyond their value chain, clearly communicating how this contributes to global reductions efforts and is not counted towards their corporate reduction targets. This transparent disclosure is essential to hold companies accountable for making progress towards their net zero targets.


For the first time, there is an independent standard that validates - and soon verifies - companies' net zero strategies and actions according to best practice. The era of self claiming net zero commitments without independent and third party validation and verification is over.

The way forward

Not only does the corporate net zero standard by the SBTi clear the mist of what a credible corporate net zero target entails, it also raises the ambition of what a transformative net zero target looks like. Let's face it, without deep decarbonization within the next ten years there will be no net zero emissions. Both the SBTi standard and climate science are telling us that the time to act is now!

1 - C.1.3.

2SBTi will be providing further guidance for various sectors on how to best engage with scope 3. More information on that here:

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