The Corporate Net-Zero Standard by the SBTi

In October 2021, the SBTi launched the Corporate Net-Zero Standard, the first-ever framework in line with climate science. This bold initiative provides companies with a credible, science-based roadmap to achieve the Paris Agreement's ambitious goals: limiting global warming to 1.5°C by 2050.

In March 2025, the Science Based Targets initiative (SBTi) launched a Draft Corporate Net-Zero Standard V2.0. This revised draft is currently under ongoing public consultation. Till then the companies should refer to the Corporate Net-Zero Standard to version 1.2.

This article breaks down the net-zero standard and offers a step-by-step guide toward its realization.

Understanding Net-Zero: A Clear Path Through the SBTi Corporate Standard

Different definitions of ‘climate targets’ come in varying requirements in terms of sources, speed and depth of emissions reduction. This lack of common definition fuels confusion and increases the risk of greenwashing accusations. The SBTi’s Corporate Net-Zero Standard provides much-needed clarity for businesses and builds trust with a robust, science-based understanding of the net-zero.

The Science Based Targets initiative (SBTi) explained:

The SBTi is a corporate climate action organisation that defines and promotes best practices for setting "science-based" GHG reduction targets. These targets are aligned with the latest climate science data and contribute to preventing the worst consequences of climate change while preparing companies for growth that respects the Paris Climate Agreement.

The SBTi is an influential partnership between the Carbon Disclosure Project (CDP), the United Nations Global Compact, the World Resources Institute (WRI), and the World Wide Fund for Nature (WWF). Together, they define and promote best practices for setting ambitious GHG emission reduction targets aligned with the latest scientific data. These targets, in line with the Paris Agreement, help companies prevent the worst consequences of climate change while ensuring sustainable growth.

What are the 3 Pillars of the Net-Zero Standard?

1. Emission reduction within your value chain:

The SBTi defines reductions, or "abatements," as actions taken by companies to prevent, reduce, or eliminate sources of GHG emissions. Reducing emissions is a societal responsibility and a top priority in addressing the climate crisis and staying on track for 1.5°C.

Your reduction plan unfolds in two phases:

• Short-Term Targets (5-10 years): Align your emission reductions with the Paris Agreement's trajectory to limit warming to 1.5°C. Ambitious short-term targets are essential to bend the emissions curve by 2030.
• Long-Term Targets (by 2050): Aim for maximum reduction of all emissions, in line with the Paris Agreement, to reach a residual level.

How can businesses act?

• Conduct your carbon footprint assessment, adopt proven reduction measures, implement comprehensive decarbonization strategies, and integrate them into the core of your organization.
  
  
• Invest in research and development of clean technologies and sustainable transportation solutions.
  
  
• Prioritize renewable energy (renewable electricity) and use transparent accounting to reflect the emissions of electricity consumed.
  
  
• Communicate transparently about the reduction measures adopted and the expected results throughout your value chain.
  
  
• Reduce all significant sources of emissions (scopes 1, 2, and 3) and publish detailed information on your scope 3 emissions.

2. Reduction (or Mitigation) beyond your value chain:

Beyond value chain mitigation is the next step for companies to reach net-zero carbon emissions and go beyond their near-term and long-term science-based targets. 

Pioneering companies can go beyond their targets and extend their climate action outside their value chain. Initiatives such as preventing deforestation, investing in emission reduction or climate contribution projects are all levers to activate.

Mitigation measures beyond one's value chain are actions or investments that include GHG avoidance and sequestration activities. For example, the purchase of carbon credits (forestry and land use such as REDD+, conservation projects, energy efficiency, renewable energies, etc.) is mentioned.

These mitigation actions, which may include the purchase of carbon credits (forest projects, renewable energies, etc.), support external activities that avoid, reduce, or remove GHG emissions.

These are therefore activities outside the company's value chain that avoid or reduce greenhouse gas emissions or eliminate and store them permanently.

3. Neutralization of residual emissions (within or beyond the value chain):

Neutralization is the final step to achieve net-zero. It involves offsetting unavoidable emissions by capturing and permanently storing them through natural solutions ( eg. reforestation) or technical methods (carbon capture and storage). This permanent sequestration is a key part of Beyond Value Chain Mitigation (BVCM) and essential for neutralization.

SBTi’s new guidance on BVCM urges companies to increase funding for external climate initiatives. While maintaining the current rule that limits carbon credit use to residual emissions, the guidance calls for better regulation and highlights that internal emissions reductions (scopes 1, 2, and 3) remain the priority. However, companies must also invest in external solutions such as forest protection, renewable energy, and carbon capture technologies.

The fundamental principles to guide companies in implementing BVCM:

1. Maximise mitigation results: invest in actions with a high environmental impact.
2. Prioritize financing needs: support projects lacking resources, particularly in developing countries.
3. Create co-benefits: contribute to the Sustainable Development Goals (SDGs), such as biodiversity and climate resilience.
4. Ensure climate justice: ensure that funding benefits the most vulnerable populations.

Upcoming changes: Draft Corporate Net-Zero Standard V2:

The Draft Corporate Net-Zero Standard V2.0, currently under public consultation focuses on advancing corporate climate action. The new Corporate Net-Zero Standard aims to be both pragmatic and progressive, refining climate accountability for businesses. Key proposed changes include the separation of Scope 1 and 2 to enhance the credibility of Scope 2 accounting, and significant revisions to Scope 3 targets, including a new “Alignment Target Setting” option. Additionally, the draft sets stronger expectations for Beyond Value Chain Mitigation (BVCM) and encourages the use of carbon credits to support climate action. Overall, the new draft seeks to better align corporate efforts with real-world emissions reductions.

About ClimateSeed

ClimateSeed is a company committed to climate action, helping organizations take action both within their value chain and beyond.

Supported by AXA Investment Managers' impact fund, it is the trusted partner of organizations wishing to contribute to global carbon neutrality. ClimateSeed offers two services:

• Measurement and reduction of carbon footprint: Thanks to the GEMS digital platform and the expertise of its consultants, ClimateSeed facilitates data collection, collaboration and automated calculations according to recognized standards (GHG Protocol, Carbon Footprint®, ISO 14064). This makes it possible to develop reduction strategies in line with science-based targets (SBTi).
  
  
• Contribution to carbon sequestration and avoidance projects: ClimateSeed supports participation in projects generating carbon credits, guaranteeing traceability, transparency, and risk mitigation, in line with the Sustainable Development Goals (SDGs) created by the UN.

Since 2018, ClimateSeed has supported more than 200 organizations in their decarbonization and continues its international development to maximize its impact.

Do not hesitate to contact us to explore how ClimateSeed can help you implement specific strategies for your company.