Companies will be divided into two categories:
According to the World Bank, large or medium-sized enterprises that primarily operate in high-income nations will be a part of this category. This group is subject to stricter disclosure and target-setting requirements.
Small and medium-sized enterprises that mostly operate in nations with low and middle incomes will be a part of Category B. More flexible options are available to accommodate resource constraints.
Businesses must now set different reduction targets for Scope 1 (direct) and Scope 2 (indirect from purchased energy) emissions. The modification allows organizations to recognize different decarbonization difficulties within individual categories.
Organizations must commit to sourcing low-carbon electricity by 2040 at the latest, emphasizing the transition to renewable energy sources.
Recognizing the complexities in managing Scope 3 emissions, the draft presents more flexible approaches. Businesses can set goals based on revenue generation and procurement strategies, concentrating on suppliers and high-carbon activities where they have significant influence.
The draft guideline eliminates the former requirement for companies to establish Scope 3 emissions targets by predetermined percentage limits. Instead, companies can concentrate on relevant categories that constitute at least 5% of their Scope 3 footprint.
The revised standard places a stronger emphasis on corporate accountability, requiring businesses to track and report their decarbonization progress. Companies must submit annual progress updates to ensure transparency.
Businesses were previously required to neutralize residual emissions only at the net-zero target year. The draft now calls for continuous action throughout the transition, increasing the share of emissions companies must neutralize with the removal of the 90% fixed boundary.
The draft proposes mandatory or recommended carbon removal targets, covering both interim and long-term commitments. Companies must use removals for at least some residual emissions, reducing reliance on emission reductions alone.
The SBTi’s proposed revisions to the Corporate Net-Zero Standard mark a significant step towards corporate climate action. The new framework aims to drive meaningful emissions reductions across industries. These updates reflect the growing need for accountability, transparency, and measurable progress in corporate sustainability efforts.
