‘It will make more sense to non-sustainability people’: Why ISO wants to change net-zero targets

Experts explain what’s behind the planned new standard, which would require companies to base their targets on a carbon budget

There’s a lot crammed into the International Organisation for Standardisation’s (ISO) proposed Net-Zero Standard, which opened for feedback this week. 

It outlines how it believes companies around the world should approach each step of developing and running their net-zero strategies: from measurement and target-setting through to transition plans and reporting. 

Most parts of the standard are based on well-known practices already socialised by initiatives like SBTi and the GHG Protocol, but one element may be less familiar. 

ISO wants companies to develop their climate targets using a carbon budget.  

“Essentially, the concept is based on the way that international targets are set,” explains Andrew Griffiths, the director of policy at consultancy Planet Mark, and one of the experts appointed to help create the standard. 

He’s referring to the Intergovernmental Panel on Climate Change’s approach, which involves periodically calculating how much of the overall global carbon budget has been used up, and what therefore remains if the world is to stay below 1.5 degrees. 

“It treats [carbon] the same way as a financial budget, in a sense,” Griffiths says. 

“It says what’s available to ‘spend’ between now and 2050, but doesn’t dictate how it should be spent.”

It’s not easy to translate international carbon budgets into entity-level versions, though, says Holger Hoffmann Riem, another advisor to the ISO process. 

“That’s a struggle, because there’s no UN-backed body that defines national budgets,” he points out. “So the starting point for companies is missing.” 

As a result, frameworks like SBTi have generally shied away from the approach – allowing companies to use carbon budgets if they want to, but not mandating it.

And that means it’s currently a rare practice, even among the leaders.  

“But it also means that companies that begin decarbonising late are allowed higher cumulative emissions than companies that did it early,” says Hoffmann Riem.  

“The years before a company’s base year – in which a company may not have been decarbonising at all – don’t necessarily influence the reduction pathway that a company needs to achieve.”

“What we’ve tried to do with the ISO standard is create something that doesn’t incentivise firms to delay action like that.” 

This week’s proposal suggests that, in order to qualify for the ISO net-zero standard, an entity would have to set its target using a carbon budget as its starting point. 

It provides a set of multipliers to help firms calculate their own carbon budget, based on their sector and country (those in high-income markets will have tighter budgets than peers in emerging and developing ones, for example).

If a business generates its emissions across multiple jurisdictions, it should account for that accordingly: so an entity with 80% of its emissions in India and 20% in the UK should use the multiplier for India for 80% of its carbon budget, and the UK version for the remaining 20%. 

While some first-movers are likely to appreciate the approach, because it rewards their early efforts, and those in less developed markets will benefit from the geographical considerations, it will make targets harder for latecomers in developed markets.  

But Griffiths says that all companies stand to benefit from the proposed rules. 

“Targets calculated this way will make much more sense to non-sustainability people,” he argues.  

“Because they’re framed as a budget that needs to be allocated, rather than an arbitrary target the company needs to achieve.” 

National standard setters are collecting feedback over the summer, and the final ISO standard is expected early next year.