Shape the Future of Net-Zero: SBTi Opens Public Consultation

Low-Carbon Transition and New SBTi Draft Standard Proposal Seeks Business Input

Companies' transition to low-carbon energy by 2040 has been called for, in a move following mounting pressure on companies to provide world climate action goals. In a bid to advance more corporate sustainability efforts, the Science Based Targets initiative (SBTi) has unveiled a new draft of its Corporate Net-Zero Standard. The revised framework, now open for public consultation, incorporates the latest climate science, evolving regulations, and feedback from companies globally, to make it easier for businesses to set and achieve their net-zero targets.

The SBTi’s updated standard places a key emphasis on addressing the most significant challenges that companies face when pursuing net-zero emissions. One of the largest barriers to most businesses, especially large corporations with extensive supply chains, is quantifying Scope 3 emissions – supply chain emissions. These have proved notoriously difficult to reduce as they are indirect. In an effort to make up for this, the new draft provides corporations with more leeway by enabling them to meet targets through green procurement and profitable activities instead of reducing direct emissions alone. This change naturally forces companies to act in front of their most polluting sectors, and this pressure will probably drive the competition in the decarbonisation race stronger. Direct emissions, like in the SBTi draft, are classified under two scopes: Scope 1 and Scope 2. Such scope-classified direct emission is intended to enable businesses to become familiar with and address the individual challenges facing the mission of decarbonisation under each of the scopes.

In addition, another proposal also requires corporations to transition to low-carbon energy by 2040, this time extending to investors in Beyond Value Chain Mitigation (BVCM) as well. This step provides support to climate action beyond the business of the company. Intermediary carbon removal targets have also been set with the aim of consulting businesses on how to deal with the complex problem of carbon sequestration. Transparency and accountability are the essence of the new draft standard, where companies must monitor and report publicly their track record in meeting their set objectives. This is aimed at supporting continuous improvement and demonstrate companies' commitment towards decarbonisation. Considering the challenges for small and medium-sized businesses (SMEs) and emerging market companies, the SBTi has relaxed some of the demands to facilitate these actors to engage more at ease.

The public consultation of the new draft standard is between March 18 and June 1, and the stakeholders are able to respond with their comments either by filling out the SBTi Consultation Guide or by undergoing a webinar. The comments are important in making the draft easy to comprehend but stringent so it is feasible but yet powerful, satisfying the needs of small, medium, and large companies and completing world action on climate action.

The fresh Corporate Net-Zero Standard is viewed as a major milestone to assist companies in reducing their emissions aligned with worldwide climate targets, offering an opportunity for companies to create long-term sustainability and usher transformation within their industries.