SBTi shifts approach to net-zero, offering more scope 3 flexibility and a bigger role for removals

In a draft update to its Corporate Net-Zero Standard, SBTi suggests allowing interim removal targets before companies achieve net-zero and recognizing investments in Beyond Value Chain Mitigation (BVCM).

These changes, which are open for public consultation until June 1, could reshape corporate demand for high-quality removals and influence voluntary carbon market dynamics, sources told Fastmarkets.

The expanded role of removals reflects growing recognition that direct emissions reductions alone may not be sufficient to reach net-zero, particularly for sectors with hard-to-abate emissions. While SBTi maintains that direct reductions remain the priority, the new framework could provide companies with more structured guidance on integrating removals into their decarbonization plans.

“The draft standard addresses complex, emerging issues and lays the foundation to enable more companies to move further and faster towards net-zero,” SBTi chair Francesco Starace said.

The proposed revisions could also reshape dynamics within the voluntary carbon market, particularly in the removals segment, sources said.

By signaling greater recognition of interim carbon removal targets and Beyond Value Chain Mitigation (BVCM), SBTi may encourage corporate buyers to prioritize durable removals over traditional avoidance or reduction credits.

This shift could increase demand for high-integrity removals, such as biochar, direct air capture, and reforestation projects, while putting pressure on conventional avoidance credits like REDD+ to demonstrate additionality and permanence, according to sources.

At the same time, the added flexibility in Scope 3 target-setting might reduce immediate pressure on companies to offset emissions through carbon markets, potentially slowing demand for certain credit types. How these changes play out will depend on whether businesses see removals as a necessary complement to their decarbonization strategies or a way to defer deeper reductions.

Beyond removals, the draft proposes increased flexibility in Scope 3 target-setting, which is a shift that could have broad implications for corporate climate strategies, sources said.

Currently, SBTi requires companies to cover 67% of Scope 3 emissions in near-term targets and 90% in long-term targets. But tracking Scope 3 emissions remains a significant challenge, as they often account for over 70% of a company’s footprint and rely on complex supplier data.

Revised approach is a departure from fixed thresholds

The revised approach moves away from fixed thresholds, instead encouraging companies to prioritize high-impact activities and supply chain partners. This change is designed to help businesses take more effective action while addressing concerns over data availability and control over value chain emissions.

“Scope 3 is the most commonly cited challenge by businesses,” SBTi’s Chief Technical Officer Alberto Carrillo Pineda said.

“This draft introduces a more pragmatic approach that allows companies to take action where they have the most influence, while maintaining scientific integrity,” Pineda added.

While this increased flexibility may encourage broader adoption of net-zero commitments, industry experts told Fastmarkets that it could also lead to companies focusing on easier reductions rather than tackling the most emissions-intensive areas. The effectiveness of the new approach will then depend on how companies implement it and whether the revised framework ensures meaningful action.

The draft also introduced simplified requirements for medium-sized companies in developing economies and small and medium-sized enterprises, reducing administrative burdens and making it easier for them to participate in climate action.

Public consultation on the draft will run until June 1, after which SBTi will review stakeholder feedback before finalizing the standard. Companies that have already set targets using Version 1.2 will be able to continue using them while adapting to future requirements.

“This draft standard serves as a comprehensive framework that aligns with the latest scientific research and global best practices,” SBTi Technical Council chair Dr. Kornelis Blok said.

“It will help businesses make informed decisions and drive meaningful change,” Blok added.

With these revisions, SBTi is positioning itself to expand corporate engagement with net-zero strategies, particularly through the use of removals and a more flexible Scope 3 framework.

The outcome of this consultation will be critical in shaping the future of corporate decarbonization, determining whether these changes accelerate action or introduce new loopholes, sources said.

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