SBTi’s overhauled net zero rules spark debate as carbon market players welcome changes

The Science Based Targets initiative (SBTi), the global standard setter for corporate net-zero targets used by more than 11,000 companies, has released a much anticipated update to its framework that has divided opinion across investors, corporates, and climate advocates.

The revised standard places greater emphasis on implementation, transition planning, and disclosure of progress alongside its traditional role of validating science-based targets.

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The new rules offer companies greater flexibility on meeting net zero targets with companies who have failed to meet interim targets being given the opportunity to claim they had made “best efforts” to meet their targets.

The new standards also open the door for the use of environmental attribution certificates to offset Scope 3 emissions in the hard to abate sector.

For Sylvera, a ratings agency for carbon credits, this marks a welcome turnaround. While SBTi standards previously represented a headwind, the new rules could help bolster the market, the group said.

“For the first time, SBTi proposed formal recognition tiers for companies that use eligible carbon credits as a component of their net-zero strategies — both in the near term and as a mandatory requirement from 2035 onwards.”

The overhaul comes on the back of lobbying from big tech companies, as reported by the Financial Times last month with firms including Meta and Amazon being able to “match” their fossil fuel usage in data centres with clean energy investments.

However, Rikke Berg Jacobsen, head of ESG at Danish pension fund AkademikerPension said she was “concerned and disappointed” by the revised framework.

“The new standard allows companies to use Energy Attribute Certificates (EACs) and carbon credits to meet their climate targets. In practice, this means companies can continue their fossil fuel activities and buy their way out, with credits that often cover forests, which can be cut down again within a few years. The planet does not become greener because of that” she warned.

SBTi responded to these concerns, emphasising that credits cannot be used to meet science-based targets and that market instruments may only be used according to the implementation hierarchy that focuses on direct emissions reductions in the first instance.

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