SBTi's Revised Net-Zero Standard: Impact on Carbon Credits and Carbon Market

The Science Based Targets initiative (SBTi) is consulting on version 2 of its corporate net-zero standard, introducing new requirements that will significantly shape the carbon market.

The revised standard emphasizes real decarbonization by requiring companies to reduce emissions across all scopes before turning to carbon credits for neutralization. Carbon credits remain a supplementary tool rather than a substitute for direct emissions reductions.

What does this mean for companies?

SBTi is tightening regulations on residual emissions marking a pivotal shift for the carbon credit industry.

• Companies must set clear carbon removal targets: utilizing interim milestones to ensure a credible pathway to net-zero
• A stronger focus on carbon removal: employing the "like-for-like" principle, whereby removals must match the permanence of emitted CO₂, and the "gradual shift" approach, which demands that companies transition to more durable carbon removals over time
• Removals should complement, not replace, direct reduction measures: the goal is to eliminate residual emissions by the net-zero target year
• Three options to address residual emissions: to set separate carbon removal targets, to receive recognition for removal efforts and to combine additional reductions with removals
• Take responsibility for ongoing emissions during their transition through Beyond-Value-Chain Mitigation (BVCM): to provide recognition for companies that engage in high-integrity carbon credit purchases, finance mitigation projects, or invest in the conservation of carbon in natural ecosystems beyond their direct operations

Why is this important for the industry?

• Strengthens the voluntary carbon market: by establishing clear, actionable guidelines for integrating carbon credits into net-zero strategies
• Reinforces demand for high-integrity credits: SBTi enhances the credibility of carbon offsetting
• Contributes to long-term climate impact: by ensuring that purchased credits meet stringent quality and sustainability criteria

Why is this important for businesses?

• Incentivizes climate leadership: providing recognition for addressing ongoing emissions while allowing flexibility in reduction strategies
• Creates opportunities for organizations: by enabling demonstration of enhanced climate action while meeting net-zero commitments

Our role in the carbon credit industry

The revised SBTi standard highlights the increasing need for rigorous verification in the carbon credit space.

Shikha Sharma, Global Technical Lead – Offsets and Removals clarifies: “As the demand for credible, verifiable emissions reductions rises, SGS’s role in validating and verifying high-quality carbon credits becomes increasingly essential. Our expertise in independent verification ensures that companies can confidently meet SBTI’s new standards, reinforcing trust in the evolving carbon market.”

Sources: Version 2 of the SBTi Corporate Net-Zero Standard

For further information, please contact:

Shikha Sharma
Global Technical Lead – Offsets and Removals, SGS
t: +91- 8655790130