The Net-Zero Standard by the SBTi

In October 2021, the SBTi launched the first-ever Net-Zero Standard for businesses. 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 2024, the Science Based Targets initiative (SBTi) updated its Corporate Net-Zero Standard, moving from version 1.1 to version 1.2 on March 13, 2024. This revision aims to strengthen criteria and recommendations to help companies align their greenhouse gas emission reduction targets with global climate goals.

Reaching Net-Zero: A Future Imperative

To achieve net-zero, or zero net emissions, it is crucial to drastically reduce greenhouse gas (GHG) emissions across your entire value chain, and beyond. Net-zero means that your GHG emissions are reduced to a level where they are fully offset by absorption mechanisms.

This article decodes the net-zero standard for you and guides you step-by-step toward its realization.

The Science Based Targets initiative (SBTi) explained:

The SBTi defines and promotes best practices for setting "science-based" greenhouse gas emission 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 consists of offsetting unavoidable emissions by capturing and permanently storing them, through natural solutions (e.g., reforestation) or technical solutions (carbon capture and storage technologies).

Emission capture, through permanent sequestration and storage, is a key element of mitigation beyond the value chain and neutralization.

Although reducing beyond the value chain is not the top priority for all companies, it is essential to limit warming to 1.5°C and build a sustainable future.

In 2024, the publication of “Beyond Value Chain Mitigation” guidance.

In February 2024, SBTi published new guidance on mitigation action beyond the value chain, encouraging companies to fund more external climate initiatives. New proposals have been made to better regulate the use of carbon credits, although the current rule limiting their use to residual emissions is maintained.

The report stresses that, while reducing internal emissions (scopes 1, 2 and 3) remains a priority, companies must also invest in external solutions, such as forest protection, renewable energies and carbon capture technologies.

The report identifies four 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.

Major revision of the Net-Zero Standard (scheduled for 2025)

SBTi is planning an overhaul of its standard, with a public consultation due to start in March 2025. This project could lead to major adjustments in the way companies set and achieve their Net-Zero objectives.

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.