Background to the Corporate Net-Zero Standard
he Intergovernmental Panel on Climate Change (IPCC)’s Special Report on Global Warming of 1.5°C (SR15, 2018), was widely accepted as a warning that we must limit global temperature rise to 1.5°C above pre-industrial levels and reach net-zero CO2 emissions by 2050 for the best chance of avoiding catastrophic climate breakdown. More recently, the IPCC’s Sixth Assessment Report (2021) has confirmed that climate change is already affecting every region on Earth, its impacts increasingly visible in the form of extreme weather, worsened droughts and heightened risk of forest fires.
Against this backdrop, companies are increasingly adopting net-zero targets. The number of businesses committing to reach net-zero emissions has grown rapidly, but not all net-zero targets are equal. Without adhering to a common definition, net-zero targets can be inconsistent, and their collective impact is strongly limited.
While the growing interest in net-zero targets represents an unparalleled opportunity to drive corporate climate action, it has also created a pressing need for a common understanding of ‘net- zero’ in a corporate context. Business leaders need a robust, science-based framework for setting net-zero targets. Otherwise, they risk continuing to invest in business models that are inconsistent with the goals of the Paris Agreement.
Through a transparent multi-stakeholder process, the Science Based Targets initiative (SBTi) has developed the first global science-based standard for companies to set net-zero targets. The Net- Zero Standard gives business leaders confidence that their targets are aligned with what is needed for a habitable planet, and it provides clarity on business climate action to a wide range of stakeholders.
1. The Science Based Targets initiative
The SBTi is a global body enabling businesses and financial institutions to set ambitious emissions reductions targets in line with climate science. It is focused on accelerating companies across the world to halve emissions before 2030 and achieve net-zero emissions before 2050.
The initiative is a collaboration between four of the world’s most respected environmental organizations: CDP, the United Nations Global Compact, World Resources Institute (WRI) and the World Wide Fund for Nature (WWF), and is one of the We Mean Business coalition commitments.
The SBTi defines and promotes best practice in science-based target setting, offers resources and guidance to reduce barriers to adoption, and independently assesses and approves companies’ targets.
2. Purpose of the Net-Zero Standard
The SBTi’s Corporate Net-Zero Standard (also referred to as the ‘Net-Zero Standard’) contains guidance, criteria, and recommendations to support corporates in setting net-zero targets to be validated by the SBTi. The main objective of this standard is to provide a standardized and robust approach for corporates to set net-zero targets aligned with climate science.
It is important to note that while the SBTi does provide some supplementary guidance on greenhouse gas (GHG) accounting, companies should refer to the suite of corporate Greenhouse Gas Protocolstandards on this topic.
3. Who should use the Net-Zero Standard?
The intended audience for this document is corporates with more than 500 employees that wish to commit to setting and submitting science-based net-zero targets through the SBTi.
Although not directly intended for small and medium-sized enterprises (SMEs), these organizations should use this document to understand the key elements of a science-based net-zero target and the SBTi’s recommended target-setting process. The SBTi offers a simplified route for SMEs to set net- zero targets, meaning that some of the detail contained within this document will not be applicable. SMEs should refer to the SME FAQ for more information.
This document does not cover net-zero targets for financial institutions. The SBTi is developing a separate Net-Zero Standard for Financial Institutions.
4. The Net-Zero Standard Development process
The SBTi initiated a scoping phase of work in 2019 to develop a framework enabling companies to set robust and credible net-zero targets in line with a 1.5°C future. The standard development process formally began after the SBTi’s publication of Foundations for net-zero target setting in the corporatesector in September 2020. After publication, the SBTi convened a dedicated Net-Zero Expert AdvisoryGroup (EAG), which was to be the main consensus building body for the project.
The SBTi then developed detailed criteria and guidance in regular consultation with the EAG, as well as the SBTi’s Scientific and Technical Advisory Groups. The SBTi requested feedback from stakeholders to improve the standard through two public consultations and a company road test. The standard was launched on 28 October 2021.
Figure 1: An outline of key milestones in Net-Zero Standard development process.
5. How the Standard relates to other key SBTi documents
The table below describes some of the key SBTi resources companies may find useful when going through the target setting process. All resources, including translations, can be found on the Resources and Net-Zero sections of the SBTi website.
Table 1: A mapping of key SBTi resources that companies should refer to when setting science- based net-zero targets.
Companies wishing to set targets through the SBTi – both for near-term and net-zero commitments – should complete and submit the commitment letter.
SMEs use a streamlined process to set targets in line with climate science for both near-term and net-zero targets. This route enables SMEs to bypass the initial step of committing to set a science-based target and the regular target validation process and to immediately set near-term science-based targets for scope 1 and 2 emissions, and, optionally, net-zero targets, by choosing from one of several predefined target options.
Background and technical resources
This paper lays out the conceptual foundations for credible, science-based net-zero targets for the corporate sector.
Produced in collaboration with more than a dozen pioneering academics, IPCC lead authors and mitigation experts, this technical summary provides an overview of how the SBTi selects mitigation pathways to steer action.
The SBTi is continuing its work on beyond value chain mitigation. This FAQ will be used to provide information and updates during this process.
A simple, step-by-step flow chart helping companies understand how to set science-based targets in their specific situation.
This document, providing guidance, criteria, and recommendations to support corporates in setting net-zero targets through the SBTi. The Net- Zero Standard criteria are set out in Chapter 7 of this document.
The criteria companies' net-zero targets must meet to be approved as science-based by the SBTi. This is a standalone version of chapter 7 of this document.
Target-setting tool to calculate long-term science-based targets in line with the Net-Zero Standard.
Detailed step-by-step guide on the process of setting a near-term science- based target through the SBTi.
The criteria companies' near-term targets must meet to be approved as science-based by the SBTi. These criteria are also included within this document.
Guide to the target validation process. To be used in conjunction with other key resources, the Target Validation Protocol explains the target setting process, how targets are assessed and sector-specific requirements.