Understanding the SBTi Corporate Net-Zero Standard V2.0

Companies looking to develop sustainability policies that align with complex, globally recognized frameworks, such as the Science Based Targets initiative (SBTi), often struggle to navigate and understand their intricacies. Without being an expert in the space, it's difficult to track emissions and measure progress toward your SBTs. 

Recently, SBTi released draft Version 2.0 Corporate Net-Zero Standard, which introduces updated guidance that will be mandatory for setting targets starting January 1, 2028. This new version provides expanded methods for companies to reach their climate goals, particularly concerning transportation and distribution emissions. 

Key Takeaways 

• SBTi has developed a draft Version 2.0 Corporate Net-Zero Standard that includes expanded methods by which companies can achieve net-zero emissions by 2050.

• There is a new element focused on ensuring biomass and biofuels do not contribute to harmful land-use change and deforestation.

• A new option allows for employing environmental attribute credits (EACs) to address emissions when alternative solutions are not physically and readily available for implementation.  

Frequently Asked Questions About the SBTi Corporate Net-Zero Standard V2.0 

The Science Based Targets Initiative (SBTi) is a global standard-setter for companies seeking to develop clear, trustworthy sustainability policies and processes. Through standardized frameworks for sustainability analysis and action, companies are better able to understand their sustainability positioning relative to other organizations and also determine how to improve upon their sustainability metrics. Over 12,000 companies have developed science-backed targets through the use of SBTi’s resources.  

The draft Version 2.0 Corporate Net-Zero Standard aims to provide guidance for companies seeking to implement sustainability measures that are aligned with achieving net-zero emissions by 2050. Starting January 1, 2028, companies who want to align with SBTi will be required to use the final Version 2.0 Corporate Net-Zero Standard for setting targets.  

How does the new standard address emissions from biomass and biofuels? 

Version 2.0 includes a section that directs companies using or producing biofuels to: 

• Provide data on land-related emissions and removals 

• Show evidence that the production of the biomass feedstock is not linked to deforestation 

• Obtain a sustainability certification, when available.  

This addresses long-standing concerns around land-use change, especially as it relates to food security and deforestation. Leaders such as the European Union and California are continuously adapting their fuel decarbonization policies in an effort to minimize adverse land-use change.  

What are environmental attribute credit guidelines (EACs) under the new SBTi standard? 

One of the most notable and closely monitored developments in Version 2.0 is the option for companies to procure environmental attribute credits (EACs). EACs generally represent one metric ton carbon dioxide equivalent. Companies can purchase and retire EACs, which exist independently and separately from the physical alternative energy. These credits support companies who are looking to reduce emissions but are in a market where alternative energy is limited, thereby signaling the demand for alternative energies.  

Some notable requirements for this new option are:  

• EACs should be issued and retired within the same 24-month period in which the standard fuel was purchased. 

• Companies should purchase EACs closely to where the corresponding activity occurs to signal interest in alternative energy production and distribution in those areas.  

• Align with integrity principles, such as:  

  • Accuracy  

  • Exclusive issuance 

  • Verifiability  

  • Traceable chain of custody  

  • Timeliness  

  • Attribution integrity  

  • Additionality  

  • Expiration  

• Companies should use EACs as a temporary measure and transition toward direct physical emissions reduction.  

• Companies should include justification of why EACs are being used instead of physical solutions. Reasons can include: 

  • Solutions are not yet commercially available at scale.  

  • Solutions are unavailable due to region-specific infrastructure, regulatory, or supply constraints.

• The emissions impact of EACs should be reported separately from the company’s GHG inventory.  

What else is new in the SBTi's draft Version 2.0 Corporate Net-Zero Standard? 

Third-Party Assurance  

The new standard stipulates that companies should obtain third-party assurance of the values used for setting their targets. The guidance is to have limited assurance that covers scope 1, 2, and 3 emissions. In emissions data auditing, limited assurance suggests that the company has strong standards and methodologies in place.  

Scope 1: Asset Decarbonization  

For scope 1 emissions, the update provides further guidance on the asset decarbonization plan approach. With the asset decarbonization plan approach, companies develop a carbon budget and set targets to reduce absolute emissions from assets. Companies are encouraged to develop a plan for abating, replacing, or phasing out relevant assets, including through efficiency measures, fuel-switching, asset replacement.  

Scope 3: Supplier Energy Alignment Target  

SBTi guidance calls for companies to address emissions from their suppliers. In Version 2.0, companies would use a supplier energy alignment target, which would involve setting targets to increase the share of low-carbon energy to 100% by 2050. This would include scope 3 category 4 (upstream) and category 9 (downstream) transportation and distribution and category 6 (business travel). 

Additionally, zero-tailpipe-emission vehicle (ZEV) adoption, which includes electric and hydrogen fuel cell vehicles would be included. With this approach, companies would increase the percentage of total transport activity (in ton-km or vehicle-km) conducted with ZEVs. Managing scope 3 emissions requires robust data and strategic planning, which is where solutions like CleanMile become critical for turning data into actionable emissions reduction initiatives. 

Stay ahead of SBTi standards with CleanMile  

The draft Version 2.0 of the SBTi Corporate Net-Zero Standard marks a significant step forward in corporate climate action. By offering more detailed guidance on biofuels, EACs, and scope 1 and 3 emissions, the proposed standard helps companies set more credible and effective net-zero targets. As organizations work to align their strategies with these new standards, CleanMile can help navigate the complexities of these policies and make measurable progress toward net-zero.