Corporate climate targets are more important and more complex than ever. Amid regulatory uncertainty and evolving standards, many companies are unsure where to focus next.
To bring clarity, our CEO, Dr. Daniel Klier, sat down with David Kennedy, CEO of the Science Based Targets initiative (SBTi), for a candid conversation on the future of corporate climate action and the upcoming Corporate Net-Zero Standard Version 2. With so many companies eagerly awaiting the next phase of SBTi guidance, we opened the floor to the audience. In this blog, we highlight the top 10 and share insights to help businesses navigate what’s ahead with confidence.
Daniel: Real transformation requires a mindset shift—not just from policymakers, but from companies and the sustainability community itself. Reporting and disclosure have built a foundation, but it's no longer enough. Sustainability must become a core business priority, not a siloed or reputational issue.
Leading companies are already doing this by framing climate action around three commercially grounded pillars:
By reframing climate action around these three pillars, companies naturally link sustainability to financial performance, making it a strategic business decision that resonates with boards, C-suites and investors, not just sustainability teams.
David: As Daniel said, this is about making a strong business case for climate action. Companies need to see climate strategy as central to managing transition risk and staying competitive in a fast-changing economy.
Despite shifting political narratives, the business case remains strong. Clear targets, internal alignment and robust transition plans are key to real progress. Good transition planning connects climate action to commercial strategy and gets the whole organisation moving in the same direction.
It's also vital to be transparent about external dependencies, like grid capacity for electrifying heat. This helps drive broader system change and sends clearer signals to policymakers.
While not everything is in a company's control, much can be done now. A commercially grounded, collaborative approach is the best way to drive meaningful change.
David: What the SBTi is seeing is clear: businesses are not slowing down their sustainability efforts. Target submissions are up 30% so far this year, on top of a record-breaking number of validations in 2024. Companies are increasingly acting on climate because they recognise the significant business risks posed by the climate crisis. From extreme weather to policy shifts and changing consumer expectations, businesses understand that near-term action is essential to mitigating both transition and physical risk and maintaining competitiveness in an increasingly carbon-constrained world.
Daniel:The current climate of tighter budgets and higher scrutiny certainly presents a challenge, but it also forces a much-needed shift in perspective. Companies that view climate action solely as a cost centre will struggle. Near-term climate action is no longer just about sustainability reporting; it's about future-proofing your business. Investments in energy efficiency deliver immediate cost savings. Securing renewable energy contracts hedges against volatile energy prices. Engaging your supply chain on decarbonisation builds resilience against future regulation and disruption.
So while the economic pressure is real, the business case for climate action as a core part of corporate strategy has never been stronger. It's about turning risk into a competitive advantage.
David: Supporting harder-to-abate sectors is a top priority for SBTi and our approach is evolving. We started with global CO₂ pathways, but it's clear different sectors face different realities—some can decarbonise faster than others.
We're now developing sector-specific pathways that reflect what is feasible and cost-effective, fully aligned with the Corporate Net-Zero Standard. For example, energy-intensive industries will use tailored pathways to set realistic yet ambitious targets.
For oil and gas, work on a dedicated standard has begun but is paused to prioritise the Corporate Net-Zero Standard update, which is our main focus for 2025. The oil and gas standard remains a firm commitment, as does guidance for other complex sectors like finance.
Sector-specific standards are critical to ensuring all industries, including the hardest to decarbonise, can contribute meaningfully to the global net zero transition.
David: SBTi is fully committed to ensuring its guidance aligns with evolving standards like ISO, the GHG Protocol, CSRD and ISSB. The goal is to complement, not compete with, other frameworks and avoid creating a fragmented system that slows climate action.
SBTi helps define what credible, 1.5°C-aligned targets look like in practice and provides the technical tools and validation companies need to meet those standards. We work closely with key organisations to ensure consistency. For example, SBTi target-setting methods align with the GHG Protocol and our guidance reflects ISSB principles. We also see ISO standards as a useful entry point, especially for smaller suppliers looking to start their net zero journey.
Interoperability isn't an afterthought—it's built into our approach to ensure companies can set credible, globally aligned targets without navigating conflicting rules.
David: One of the key challenges companies tell us they encounter is laying the right foundations early on.
Success starts by bringing together all relevant teams from the outset to build a solid greenhouse gas inventory and select a reliable base year, both critical for accurate tracking and meaningful target setting. Securing company-wide support and appointing an internal champion helps keep efforts coordinated and continual momentum after the validation process. Finally embracing transparency around data limitations not only builds trust with internal and external stakeholders but also fosters continuous improvement.
By taking a collaborative and open approach, companies can confidently set up their submission for target validation and implementation for success.
Daniel: Working with clients all over the globe, we've seen three common challenges:
David: As I mentioned before, our guidance is clear: value chain decarbonisation must remain the priority. For scope 3, this means shifting towards low-carbon products and supply chains. The use of high-integrity carbon credits can play an important role in financing activities that help conserve carbon in natural ecosystems, delivering benefits for nature and people. However, it does not replace the need to decarbonise products and supply chains.
As part of its ongoing revision of the Corporate Net-Zero Standard (Version 2), the SBTi is also exploring how companies may be recognised for helping scale-up carbon sequestration through natural and technological means and also for supporting mitigation activities outside of their value chains.
In both cases, as a complementary tactic to value-chain decarbonisation. Two expert working groups are continuing to shape this important aspect of the standard.
David: Rapid, near-term emissions reductions must remain the top priority for companies. But achieving net zero also requires long-term planning for how to responsibly address residual emissions. The SBTi recognises that scaling removals capacity is necessary to meet this need.
As part of the ongoing revision of the Corporate Net-Zero Standard, we're exploring options to incentivise and recognise companies that take action to scale-up removals, along with decarbonising their value chain throughout the net-zero journey.
Daniel: For committed companies, the conversation naturally turns to the long-term vision and how to handle the most stubborn, hardest-to-abate emissions. An effective 3-to-5-year strategy often involves a balanced, two-pronged approach: it's not about choosing one path over the other, but rather about integrating both.
Here's how our team recommends approaching the next phase of planning:
Continue to deepen decarbonisation efforts: The priority should always be to reduce emissions within your own value chain as much as possible. This means continuing to focus on energy efficiency, renewable power and innovative collaboration with suppliers to shrink your scope 3 footprint. This commitment to direct reduction is the foundation of a credible and robust climate strategy – and a path to more cost-efficient, resilient operations overall.
Develop a thoughtful approach to address ongoing and residual emissions: A forward-thinking strategy involves preparing to address residual emissions through building a portfolio of carbon removal initiatives and taking responsibility for your company's emissions on the way to net zero.
One way to do this is by investing in high-quality carbon credits that go towards, for example, accelerating sectoral decarbonisation efforts, the development of key climate technologies, or regenerating ecosystems that are critical for your suppliers. This isn't a substitute for internal reductions, but rather a complementary and responsible way to support the resilience of your value chain and finance vital climate solutions around the world.
David: We're not in the business of shaming. As outlined in the draft of the Corporate Net-Zero Standard V2, our goal is to support companies that are making genuine efforts—even if they fall short of their targets—while also recognising those that meet or outperform their targets. We cannot let the perfect be the enemy of the good here and will continue to engage with all companies who are addressing difficult challenges and making meaningful progress towards net-zero.
David: Even as the updated Corporate Net-Zero Standard is being finalised, companies can and should act now to advance their climate goals.
The bottom line: companies don't need to wait—the path to net zero is already clear enough to start.
David: Success for the updated Corporate Net Zero Standard goes beyond adoption rates – it's about measurable, system-wide impact by the end of this decisive decade.
In five to ten years, we need to see real progress: power sectors largely decarbonised in major economies, widespread electrification of transport and heating and scaling of technologies like green hydrogen, CCS and electric heavy-duty vehicles. In land use and agriculture, success means transforming farming practices, ending deforestation and reducing food system emissions.
SBTi's role is to turn this vision into science-based, credible targets that companies can deliver on. That means two things: companies meeting their targets with real-world impact and significant growth in global participation, from 10,000 today to 20,000 or more.
Ultimately, success means companies not only committing to targets but contributing to decarbonisation at the pace and scale science demands.
Daniel: David outlined the “what" of success – the sectoral and system-wide changes needed by the 2030s. But equally important is the “how." It's not just about setting targets – it's about creating a culture and economy that rewards climate leadership.
Right now, companies that lead often face more scrutiny than recognition. That must change. In 5 to 10 years, we hope to see climate leaders become the top performers in the market and the most attractive organisations for investors, employees and partners.
True success means both technical progress and a shift in how leadership is valued, where ambition boosts competitiveness, brand and talent attraction.
The updated Corporate Net-Zero Standard will bring the structure and clarity companies need, but there's no reason to delay meaningful action. Now is the time to align internally, build commercially grounded transition plans and act on areas already within reach, from energy efficiency to renewable electricity and low-carbon procurement.
Setting a target is only the beginning. The next chapter is about delivering real impact. Companies that move forward with focus and commitment in 2025 won't just be ready for new standards, they'll be ready to compete, adapt and lead.
Schedule a call with our experts today to discuss how your organisation can build a credible climate transition plan and align with the latest SBTi Net Zero Standard.
We'll help you identify gaps, integrate strategy across your business, and prepare for regulatory expectations.
