A revision of the Science Based Targets initiative’s CNZS v2.0 corporate net-zero standard reveals a welcome push towards greater accountability, despite some shortcomings.
The Science Based Targets initiative (SBTi) has released a long-awaited draft update of its Corporate Net-Zero Standard (CNZS v2.0).
Several developments in the new standard are welcome. SBTi intends to gauge actual progress towards reaching targets instead of only checking the level of expressed ambition when aspirational targets are set. In addition, the SBTi has indicated readiness to take steps to improve emissions scope coverage and target-setting, while ensuring improved accounting of the use of renewable electricity by companies.
Previously under SBTi, companies could use market-based methods for emissions like electricity, steam, heat or cooling, which can often make a company’s Scope 2 emissions look far lower than they are. This was problematic because companies could purchase renewable energy certificates (REC’s), and similar products, to claim lower emissions without actually lowering real grid emissions. The new draft addresses this by requiring companies to set both a location-based target which reflects actual grid emissions, as well as either a market-based or a zero-electricity-based target.
When it comes to the role of carbon credits, SBTi’s latest draft includes other positive changes. Despite the deluge of proposals to water down corporate climate targets by allowing offsetting, the scope and role of carbon credits is limited in this new draft version.
No offsetting
Past proposals for the much broader use of carbon credits towards corporate targets seem to have been cast aside. The SBTi needs to clarify further what its approach towards indirect mitigation measures will be, since the measures don’t have a direct traceable link to a companies value chain and will not be counted in the same way as direct mitigation measures. Clear safeguards will be needed to ensure the impact and credibility of these measures.
In another welcome step, the new draft standard explicitly calls for beyond value chain mitigation (BVCM) as an alternative for compensation claims. This strengthens incentives for companies to take responsibility for their climate impact without allowing such funding to be used for questionable offsetting purposes.
While SBTi is setting a positive direction of travel on carbon credits, we have concerns about the proposed framework to offset the unavoidable direct emissions that will remain mid-century with carbon dioxide removals. More clarity is needed about how companies should determine their residual emissions, including by mandating a progressive decrease in their levels over time. Companies with no projected residual emissions must not be allowed to use removals to reach net zero.
Overall, while the new Corporate Net-Zero Standard draft signals several steps in the right direction to strengthen corporate climate accountability, including by limiting the scope of carbon credits and consolidating support behind a credible beyond-value chain mitigation approach, key issues to ensure greater clarity to prevent loopholes that could weaken climate action still remain. As the SBTi continues to refine the standard, we look forward to contributing in more detail to the open consultation.
