Closing the Climate Gap: How the SBTi Revision Impacts Corporate Net-Zero Plans
At the beginning of this year, the Science Based Targets initiative (SBTi) released a draft revision of its Corporate Net-Zero Standard for public consultation. This crucial update aims to bridge the gap between climate ambition and real-world impact by tightening expectations around climate target-setting, emissions reduction, and transparency.
The revision arrives at a critical moment. While over 90% of global GDP is now covered by national net-zero pledges, the UN’s Emissions Gap Report has warned that we’re still headed toward a 2.7°C temperature rise the world over. For businesses, this highlights the urgent need for credible, science-aligned net-zero strategies.
A More Inclusive and Contextual Framework
A key change in the revised standard is the introduction of a differentiated framework based on company size and geography. Large corporations in high-income countries (Category A) must meet all standard criteria, while smaller businesses in lower-income regions (Category B) have more flexibility.
This move acknowledges the varying capacities of businesses worldwide. For Category A companies, the message is unmistakable: the time for flexibility is over. Full compliance with SBTi criteria is now expected. In contrast, Category B companies benefit from a more inclusive approach that considers their operational constraints.
Regardless of the category, organizations are encouraged to understand not only what the standard demands, but also why these actions matter. Aligning with the standard isn’t just about ticking boxes; it’s about building resilient climate transition plans rooted in business realities.
Read More: Climate Technology: The Path to Net Zero and Sustainability
Implications for Existing and Future Targets
Businesses currently setting near-term targets can still follow the existing Corporate Net-Zero Standard (Version 1.2) and Near-Term Criteria (Version 5.2) until the end of 2026. Targets set under these versions will remain valid for five years or until the end of 2030, depending on whichever comes first.
However, from 2027 onward, all companies must adopt the forthcoming Version 2.0 for both near- and long-term target-setting. SBTi plans to support businesses through this transition, especially those with targets validated during the 2025–2026 period.
Reinforced Focus on Scope 3 Emissions
Scope 3 emissions, i.e., those arising from value chains, remain a cornerstone of the revised standard. While near-term scope 3 targets are mandatory for Category A companies, long-term requirements are still under review.
Importantly, the updated standard shifts from a percentage-based boundary to a more focused strategy. Companies must now prioritize significant scope 3 categories (those making up 5% or more of emissions) and emissions-intensive activities. The objective of this targeted approach is to direct action where it will have the greatest climate impact.
Also Read: Understanding Carbon Accounting: A Practical Guide for 2024
Act Now, Adapt Later
Although final guidance is still evolving, delaying action until 2027 could put companies at a disadvantage. Businesses that begin aligning with science-based targets today will have a stronger foundation to meet future requirements. By investing early in strong and reliable data systems, emissions reduction strategies, and stakeholder engagement, organizations can stay ahead of the curve, and help close the credibility gap in corporate climate action.
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