The voluntary Science-based Targets Initiative (SBTi) was established in 2015 to support private sector actors in achieving the goals of the Paris Agreement on Climate Change. The SBTi supports companies in establishing and achieving science-based emissions reduction targets, aligned with the climate science given by the Intergovernmental Panel on Climate Change (IPCC).
In order to achieve their emissions reduction target, companies participating in the SBTi must also comply with the mitigation hierarchy, whereby they should reduce or avoid emissions within the value chain before purchasing carbon credits. The Initiative emphasises that high-integrity carbon credits do have a critical role in supporting emissions reductions trajectories and broader climate action, but should not be used in place of direct decarbonisation investments where these are possible.[1]
In 2021, the SBTi released their Corporate Net-Zero Standard to provide corporates with a formal framework to setting and enacting a science-aligned net zero target. The Corporate Net-Zero Standard is centred around 4 key requirements:
- Near-term targets
- Long-term targets
- Neutralise residual emissions
- Beyond value chain mitigation
Requirements 3 and 4 directly engage the carbon market to account for residual or unavoidable emissions through permanent capture and storage. The Initiative supports corporate investment in carbon sink restoration and conservation (nature-based solutions), and the investment in direct air capture technology as well as other technology-based removals. Beyond a company’s own residual or unavoidable emissions, SBTi further emphasises the importance of beyond value chain mitigation for all companies as a contribution towards hastening the path to net zero, and eventually net negative emissions.
At COP28, the SBTi was announced as one of a coalition of organisations to support credible corporate climate action. The coalition includes the Voluntary Carbon Market Integrity Initiative, and the Integrity Council for the Voluntary Carbon Market, both of which set clear guidelines to assure the integrity of carbon credits and their use.
Additional guidance on treatment of scope 3 emissions in the Standard is expected to be released in July 2024.
Beyond Value Chain Mitigation Guidance
In February 2024, the SBTi published two additional reports on investment in decarbonisation outside of a business’s supply chain, known as beyond value chain mitigation (BVCM). The BVCM guidance builds on SBTi’s Corporate Net-Zero Standard to suggest that in addition to avoiding and reducing on-site and direct value chain emissions, companies should also invest in climate solutions beyond their business.
[1] Science-based Targets Initiative, SBTi Corporate Net-Zero Standard Criteria, v1.0, October 2021, pp. 1-2.
