SBTi’s New Paper on Setting Science-Based Net Zero Targets in the Corporate Sector

To meet the goal of keeping global warming below 1.5°C, the Intergovernmental Panel on Climate Change (IPCC) confirmed in 2018 that we must halve emissions by 2030 and reach net-zero CO₂ emissions by mid-century. We are in the decisive decade where corporate action is paramount to achieve net zero global carbon emissions by 2050. As our understanding of net zero grows, so too has the number of companies with net zero commitments. According to Race to Zero, a quarter of global CO₂ emissions are covered by net zero commitments by private actors. And yet, there is inconsistency in the corporate approach to achieve these targets, the metrics to measure them, and the timeline to reach them, and most notably there may be inconsistencies between how companies have defined net zero and the actions necessary to reach net zero on a global level.

The recent SBTi net-zero “Foundations” paper provides recommendations and guiding principles to standardize corporate net zero targets to better align with the global transformation required to limit warming to 1.5 °C. The paper serves to present the foundations upon which SBTi intends to build a stakeholder engagement process to establish detailed criteria and guidance for corporate net-zero targets. As the full paper from SBTi is lengthy and in-depth, we’ve provided a brief synopsis with key points. Visit SBTi’s paper for the full context and detailed descriptions around this summary.

Tactics to put these Principles into Practice

SBTi translated these guiding principles into 10 initial recommendations for companies setting net zero targets.

1. Boundary: A company’s net-zero target should cover all material sources of GHG emissions within its value chain.
2. Transparency: Companies should be transparent about the sources of emissions included and excluded from the target boundary, the timeframe for achieving net-zero emissions, the amount of abatement and neutralization planned in reaching net-zero emissions, and any interim targets or milestones.
3. Abatement: Companies must aim to eliminate sources of emissions within its value-chain at a pace and scale consistent with mitigation pathways that limit warming to 1.5°C with no or limited overshoot. During a company’s transition to net zero, compensation and neutralization measures may supplement, but not substitute, reducing value chain emissions in line with science. At the time that net zero is reached, emissions that are not feasible for society to abate may be neutralized with equivalent measure of CO2 removals.
4. Timeframe: Companies should reach net-zero GHG emissions by no later than 2050. While earlier target years are encouraged, a more ambitious timeframe should not come at the expense of the level of abatement in the target.
5. Accountability: Long-term net-zero targets should be supported by interim science-based emission reduction targets to drive action within timeframes that are aligned with corporate planning and investment cycles and to ensure emission reductions that are consistent with Paris-aligned mitigation pathways.

6.Neutralization: Reaching net-zero emissions requires neutralizing a company’s residual GHG emissions with an equivalent amount of carbon removals. An effective neutralization strategy involves removing carbon from the atmosphere and storing it for a long-enough period to fully neutralize the impact of any GHG that continues to be released into the atmosphere.

7. Compensation: While reaching a balance between emissions and removals is the end goal of a net zero journey, companies should consider undertaking efforts to compensate unabated emissions in the transition to net-zero as a way to contribute to the global transition to net-zero.

8. Mitigation hierarchy: Companies should follow a mitigation hierarchy that prioritizes eliminating sources of emissions within the value chain of the company over compensation or neutralization measures. Land-based climate strategies should prioritize interventions that help preserve and enhance existing terrestrial carbon stocks, within and beyond the value chain of the company.

9. Environmental and social safeguards: Mitigation strategies should adhere to robust social and environmental principles, ensuring amongst others, protection and/or restoration of naturally occurring ecosystems, robust social safeguards, and protection of biodiversity, amongst others.

10. Robustness: Compensation and neutralization measures should: (a) ensure additionality, (b) have measures to assure permanence of the mitigation outcomes, (c) address leakage and (d) avoid double counting.