- Science-Based Targets initiative (SBTi) maintains strict limits on carbon offsetting, focusing primarily on direct emission cuts.
- New rules aim to simplify Scope 3 emissions reductions, particularly benefiting smaller companies and emerging markets.
- Proposal emphasizes accountability and clearer tracking of corporate decarbonization progress.
The Science-Based Targets initiative (SBTi) has released a draft of its updated Corporate Net-Zero Standard, reaffirming a cautious stance on carbon credits while introducing practical measures for faster corporate decarbonization.
Despite previous calls to relax offset restrictions, the SBTi stands firm, allowing carbon credits primarily for residual emissions—those remaining after rigorous decarbonization efforts.
Critics previously argued this stance was hindering vital climate finance flows. However, the new proposal explicitly encourages investments in carbon credits beyond a company’s direct supply chain to support broader climate objectives.
Supporters argue carbon credits fund essential climate solutions like reforestation, but critics warn of measurement difficulties, citing inaccuracies and questionable environmental impacts.
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Key proposed changes include flexible approaches for managing complex Scope 3 emissions, a major pain point for businesses. Companies could set targets based on green procurement strategies or focus efforts specifically on high-emission activities.
“The draft standard proposes increased flexibility through options to set targets for green procurement and revenue generation, instead of setting an emissions reduction target,” states the SBTi.
The new framework also introduces simplified guidelines, particularly benefiting medium-sized enterprises and those in emerging economies, easing their entry into net-zero commitments.
“Simplified requirements for medium-sized companies in developing markets and SMEs provide a springboard for universal voluntary corporate climate action,” according to the draft.
To improve accountability, the proposal mandates regular assessment and clear communication of progress against set targets, ensuring transparent and trackable decarbonization outcomes.
SBTi highlights that nearly half of the organizations listed on G7 stock markets will have validated targets by the end of 2024, underscoring significant global momentum despite recent political and legal pressures causing some businesses, particularly in the U.S., to reconsider their climate strategies.
The consultation period now invites feedback from stakeholders to finalize the standard, ensuring it remains both rigorous and practical.
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