The SBTi’s new Net-Zero Standard is the world’s first certification that recognises companies’ science-based efforts towards achieving net zero. The certification is awarded to businesses if their decarbonisation strategies are scientifically proven to be in alignment with the Paris Agreement’s goal of keeping planetary warming to 1.5°C.
The Net-Zero Standard provides a unified science-based understanding of net zero and is aimed at giving business leaders clarity and confidence that their near- and long-term targets are aligned with climate science to ensure a habitable planet for all.
Development of the Net-Zero Standard followed consultation with an independent Expert Advisory Group, made up of experts from academia, civil society, science, and business. More than 80 companies took part in a road test of the Standard.
In order to be certified by the Net-Zero Standard companies must meet several key criteria.
What are the key requirements of the Net-Zero Standard?
- Focusing on a deep emission cut: Reducing business value-chain emissions is the most effective, scientifically sound way of limiting global temperature rise to 1.5 °C according to the SBTi Standard.
To ensure these emissions are taken into account, the Net-Zero Standard covers a company’s entire value chain emissions and leads most companies to deeply decarbonise at least 90% to reach net zero under the Standard
- Setting near and long-term targets: Companies adopting the Net-Zero Standard are required to set both near-term and long-term science-based targets. This means setting goals for making rapid emissions cuts, such as halving emissions by 2030. Followed by longer-term goals such as by 2050, producing close to zero emissions by and neutralising any residual emissions that are not possible to eliminate through methods such as carbon offsetting.
- Refraining from net zero claims until long-term targets are met: A company is only considered to have reached net zero when it has achieved its long-term science-based target. Until companies have achieved their long-term targets with emission reductions of at least 90% by 2050, followed by using carbon removals to neutralise any limited emissions that cannot yet be eliminated can they claim to be net zero.
- Going beyond the value chain: The SBTi recommends companies go further by making investments outside their science-based targets to help mitigate climate change elsewhere. They argue climate finance investments should be in addition to deep emission cuts, not instead of them. Companies should always commit to reducing their value chain emissions first before investing to mitigate emissions outside their value chains
These four requirements have been put in place by the SBTi to ensure targets cover all material sources of emissions across a company’s value chains. While the near-term target delivers short-term action in line with climate science, the long-term one aims to reach net zero within a timeframe by 2050 at the latest and will be subject to a robust and independent accountability framework.
Who is the Net-Zero Standard for?
The Net-Zero Standard is intended for corporates with more than 500 employees that wish to commit to setting net zero targets through the SBTi. The SBTi also offers another route for SMEs to set net zero targets by using the SME target-setting system.
However, the Standard does not cover net zero targets for financial institutions as the SBTi’s financial sector project has a separate net zero framework for financial institutions.
How to work with the Net-Zero Standard
Corporates have to first agree to follow the SBTi’s established target-setting process to commit to and set science-based targets.
Companies are then invited to commit to set net zero targets by signing the SBTi Commitment Letter. The initiative has been validating targets since January 2022 through the SBTi Target Validation booking system, or for SMEs, the streamlined SME target setting system.
All companies that are approved by the SBTi are then required to outline their progress to the public. The initial targets should be monitored and reviewed annually at a minimum to ensure continuous improvement. Assistance on how to report these targets can include providing the public with annual sustainability reports or sharing the progress on your company’s website.
Currently, there have been 4725 companies that have signed up for the SBTi Net-Zero standard with 2396 of those having their targets approved. SBTI’s last progress report revealed almost 80% of targets approved in 2021 were aligned with 1.5 °C and between 2015-2020, the majority of companies with 1.5 °C targets cut emissions twice as fast as required. The world has also now reached the 20% critical mass of science-based targets adoption among high-impact companies.
The Science-based targets are associated with a 12% emissions reduction across scope 1 and 2 emissions in 2020 and a longer-term reduction of 29% since 2015. SBTi companies have been delivering excess reductions at an accelerated rate compared to their peers.
What are the benefits of joining the SBTi?
The overarching benefit of being a part of the SBTi is having access to the latest science-based data that can allow a company to set emissions based on tangible evidence. However, it is becoming clear that there are more benefits to using science-based targets than just improving environmental circumstances.
Benefiting customers
One of these benefits is improved brand reputation. Investors, customers, and employees are beginning to recognise the importance of contributing to companies that are working to reduce their environmental impact.
As sustainability grows in popularity, companies partaking in initiatives like the SBTi will continue to become more valuable. Companies that strive to reduce carbon emissions using science can clearly demonstrate their crucial role in their commitment to the fight against climate change.
Investor confidence
Joining the Science Based Targets Initiative, SBTi, allows for new business opportunities, as investors are beginning to use sustainability and environmental efforts as a prerequisite to investing in any company. While satisfied customers are compulsory for consistent revenue, a business cannot grow without the help of investors – which adds financial value to companies that decide to apply to the SBTi.
Keeping up to date with the science
As 2050 draws nearer, the scientific community is gaining a clearer understanding of the measures that must be taken in order to mitigate the most severe effects of climate change, this can lead to decarbonisation requirements changing.
By joining the SBTi, a company can stay one step ahead and be sure that they are up-to-date with the latest science. Instead of rushing to adjust business practices to adhere to new environmental regulations.
Optimising for profitability
Those who join the Science-Based Targets Initiative may also notice that their company will save money in places they didn’t expect to – as tailoring business models to reduce emissions can usually increase process efficiency and seeking the use of renewable energy will ultimately reduce business costs.
