SBTi's Updated Net-Zero Standard Splits Business Over Ambition Versus Dilution

The Science Based Targets initiative has released the first major update to its Net-Zero Standard since its 2020 launch, prompting a divided response across the climate community over whether the revision strengthens corporate climate accountability or weakens it. The update introduces a new Ongoing Emissions Responsibility framework, makes large companies' support for carbon removals mandatory after 2035, and removes the previous requirement for mandatory long-term Scope 3 emissions targets, among other changes. More than 11,500 companies worldwide currently carry SBTi validations under the standard.

 

Why Removing Mandatory Scope 3 Targets Strikes at the Core Credibility Challenge

 

Perhaps the most consequential and contested change is that companies are now encouraged, but no longer required, to set long-term Scope 3 targets covering indirect emissions across their value chains. That change matters enormously given how corporate carbon footprints are actually distributed: Joel Mertens, director of environmental impact methodologies at apparel industry group Cascale, noted that a large apparel brand could easily source from hundreds of suppliers, meaning that even a company setting an ambitious target for its own direct operations will struggle to meaningfully reduce its overall emissions footprint without corresponding action at the supplier level, since the bulk of most large companies' total emissions sit in their value chains rather than within their own direct operations.

To address that structural challenge, SBTi introduced a new "implementation hierarchy" permitting companies to count collective mitigation efforts, conducted at an activity level, pool level or sector level, toward their targets. Nikol Ostianova of the International Platform for Insetting described this as giving companies greater flexibility to act specifically in areas where traceability of the physical commodities they purchase from suppliers is low, and as opening the possibility of companies working pre-competitively on shared Scope 3 challenges rather than each individually attempting the near-impossible task of decarbonising an entire supply chain independently.

 

Why Corporate Sustainability Leaders Frame the Flexibility as Pragmatic

 

Esther Finidori, chief sustainability officer at Schneider Electric, defended the shift toward prioritising near-term interim targets over rigid long-term modelling, arguing that no one can credibly model emissions all the way out to 2050 given the pace and depth of unknown future technology disruption, and that five-year targets are what actually drive corporate action in practice. She also welcomed the more versatile Scope 3 rules as making it easier for large companies to pursue varied strategies across eco-design, sourcing and supplier engagement simultaneously, and pointed to the new Scope 2 guidance's inclusion of market mechanisms like power purchase agreements and multi-year renewable energy certificate contracts as potentially boosting the broader clean electricity grid.

Amy Merrill, chief executive of the Integrity Council for the Voluntary Carbon Market, framed the update's new Ongoing Emissions Responsibility framework as resolving a long-running debate about where carbon removal credits belong relative to direct emissions reductions, describing the goal as ensuring everyone takes responsibility for as much of their emissions as possible, with high-integrity carbon credits functioning within that responsibility rather than as an alternative to it.

 

UPCOMING WEBINAR

Moving Sustainable Procurement Beyond Cost to Strategic Value Creation

Online, 09 September 2026 · Balancing cost, managing supplier risk and building long-term value

 

Why Critics Identify Specific Loopholes in the Revised Rules

 

Jessica Nicol, an analyst at Zero Carbon Analytics, identified what she called "pretty big loopholes" in the revised standard. Chief among them is a "best efforts" clause allowing companies that miss their targets to retain their validation if they can demonstrate the failure resulted from external constraints, a provision Nicol argues is undermined by the fact that targets are not assessed for feasibility when initially set, meaning companies' stated goals don't actually need to be realistic from the outset for the company to still claim validated status.

Nicol also pointed to the treatment of hourly matching for Time-based Energy Attribute Certificates, a mechanism linking clean energy consumption and production within the same timeframe that has been shown to be highly effective at stimulating grid transformation, but which remains optional under the new rules rather than mandatory. She argued this pattern, best practice being mentioned but left optional, recurs throughout the standard and provides little genuine incentive for companies to actually adopt the more rigorous approach.

 

Why the H&M-Shein Comparison Illustrates a Structural Validation Problem

 

Frederic Hans, senior climate policy advisor at NewClimate Institute, raised a concern predating this specific revision but potentially unresolved by it: the standard's binary validation approach fails to differentiate companies with genuinely high ambition and strong delivery from those with comparatively weaker substance behind similar headline targets. He cited H&M and Shein as an illustrative example, noting both fashion brands hold 2030 and 2050 targets validated as 1.5-degree Celsius aligned under the original standard, yet the substance of their respective climate plans differs considerably, with Shein's near- and long-term targets less ambitious than H&M's despite both carrying comparable validation status.

Given the new version's continued reliance on "best practice" criteria that remain largely optional rather than mandatory, Hans said he was not convinced the revision resolves that differentiation problem, warning that if frontrunner companies like H&M see their more substantive efforts go unrecognised relative to less ambitious peers carrying the same validation badge, that dynamic risks disincentivising exactly the kind of ambitious action the standard is meant to encourage.

 

RELATED EVENT

Reuters Sustainability Europe 2026

London, 20–21 October 2026 · 400+ sustainability, finance and procurement leaders on regulatory uncertainty and Scope 3 data

 

What Sector-Specific Guidance Could Still Change

 

SBTi is developing tailored guidance for specific high-emitting sectors, with power and automotive standards in their final stages, agriculture, buildings and finance currently in scoping work, and oil and gas guidance due to begin next year. Hans described an early draft of the automotive standard as promising, noting it includes mandatory activity-level targets and sales targets for zero-emission vehicles, a level of specificity and mandatory requirement he suggested the general standard's flexibility currently lacks. He framed the sector-specific guidance development as a genuine opportunity to remove some of the current optionality embedded in the general standard and potentially introduce an acknowledgement mechanism distinguishing frontrunner companies from those merely meeting minimum requirements, though he acknowledged how that opportunity ultimately unfolds remains uncertain.

David Picton, senior vice president of safety and sustainability at EcoOnline, noted that many of the standard's new rules are highly nuanced in practice, citing the use of suppliers described as "in transition" or "net-zero aligned" as a marker of Scope 3 progress. While that approach offers companies a practical way to demonstrate absolute Scope 3 reductions, Picton said it places a strong onus on suppliers to provide robust and reliable underlying data, meaning the real implementation burden shifts toward building genuine data visibility, identifying where supplier-level progress is falling short, and correcting course accordingly, work that happens well beyond simply adopting the standard's revised framework itself.

 

What This Means Going Forward

 

SBTi chief executive David Kennedy framed the balance of rigour and pragmatism embedded in the update as reflecting "the way the world actually is," rejecting the idea of a single predefined algorithm for corporate climate action across vastly different companies, sectors and circumstances. Whether that flexibility succeeds in encouraging more companies to set credible climate targets they can genuinely deliver on, as its defenders argue, or instead dilutes the standard's overall rigour and reduces the value of SBTi validation as a meaningful market signal, as its critics fear, will likely depend heavily on how the forthcoming sector-specific guidance addresses the optionality and validation-differentiation concerns raised across this debate, and whether SBTi's stricter data quality and transparency rules succeed in restoring the market confidence that was reportedly dented in 2024 following an earlier, more offset-permissive draft standard.