A look at SBTi’s proposed new corporate net-zero standard
The proposals, which are open for feedback until later this month, include mandatory transition plans and stronger accountability mechanisms
There is a lot to digest in the latest draft of the Science Based Targets initiative’s corporate net-zero standard.
Mandatory transition plans, clearer distinctions between Scopes 1, 2 and 3, and the recognition of efforts to tackle ongoing emissions are all included in a second draft, which is out for consultation until later this month.
Stronger accountability mechanisms
According to Sophie Bruusgaard Jewett from consultancy Position Green, one of the most important changes to SBTi’s standard is a requirement for firms who miss their targets to “provide an explanation detailing the reasons for this and planned actions to address relevant internal and external barriers”.
Some of the companies Bruusgaard Jewett has worked with in the past have indicated that the lack of accountability mechanisms has been a prerequisite for setting climate targets.
“Sometimes, the thing that tipped them over the edge was asking me what will happen if they don’t reach their targets, and me having to be honest and saying ‘well, nothing, there are no science-based target police’,” she tells Real Economy Progress.
SBTi also wants to introduce mandatory transition plans for larger companies, to add further accountability.
Under the current proposal, the biggest firms would need to “substantiate” their targets with a transition plan within 12 months of having them validated.
This would be optional for smaller players.
Ongoing emissions framework
The draft also introduces a new framework on “ongoing emissions responsibility”.
Essentially, it’s the combination of two elements SBTi has previously kept separate: residual emissions (those still expected to remain after the ‘net-zero’ year) and ‘beyond value chain mitigation’ (BVCM) efforts.
“It’s a logical recognition that residual emissions are actually a subset of ongoing emissions”, says Tim Clair, a member of SBTi’s expert working group on ongoing emissions and BVCM.
Companies can opt for one of two categories under the proposed framework: ‘recognised’ or ‘leadership’.
The former, which would be mandatory for the biggest companies from 2035, involves taking responsibility for at least 1% of ongoing Scope 1, 2 and 3 emissions over the same timeframe as the target.
Leadership status requires firms to set a carbon price on all ongoing emissions and use that as the basis for calculating the cost of mitigating them.
Clair, who is also a director at offsetting specialist Climate Contributions, tells REP that, while the framework isn’t mandatory for most, companies will be required to publicly opt out, which carries some weight.
“They will have to say, ‘Oh, we’re not going to take any responsibility for our ongoing emissions’, and that’s going to be made publicly available,” he notes.
“So there’s some moral suasion that applies here in trying to move behaviour.”
In SBTI’s first draft of the standard, put out for consultation in March, it floated the idea of requiring carbon removal targets to strengthen companies’ commitment to dealing with their residual emissions, but this has been cut from the latest proposal.
Other changes
The scope-specific approach to target setting remains in place, on the other hand.
That means, as originally proposed, there will be a distinction between direct Scope 1 emissions and energy-related Scope 2 ones.
However, under the new draft, smaller companies will only have to set near-term targets – not long-term ones.
Larger companies will still be expected to set both.
It also ups assurance requirements for category A companies, requiring them to obtain limited assurance on the metrics used in target-setting.
The consultation is open for feedback until December 12th.