By: Nicole Gotthardt, Meghan E. Gavin, and Anastasia O’Rourke

This post is part of a blog series sharing the Carbon Containment Lab’s review of the Science Based Targets Initiative’s (SBTi’s) draft Corporate Net Zero Standard (CNZS) Version 2.0, currently under public consultation. Please see here for an executive summary of our major takeaways.

The CC Lab advocates for greater flexibility in how companies can achieve their climate goals to increase widespread adoption of the CNZS V2.0, which would ultimately drive more climate action. Meeting Paris Agreement goals requires greater adoption of climate targets in the private sector, and SBTi is uniquely positioned to facilitate increased voluntary climate action. However, if the CNZS V2.0 is in areas too prescriptive or difficult to understand, and/or misaligned with current action in compliance or voluntary carbon markets, it risks discouraging companies from engaging in meaningful climate action. 

This post focuses on the following question: Generally, does SBTi’s CNZS V2.0 drive corporate climate action in line with global climate goals? We argue the following:

1. Overall, CNZS V2.0 is complex and complicated, and compliance with it will be time-consuming and costly for its member-companies. The CC Lab encourages streamlining the guidance and providing increased flexibility to lessen these hurdles, paving the way for additional corporations to join the initiative. 

2. While we strongly support SBTi in recognizing companies that invest in climate action beyond their value chain, we believe SBTi should look for additional ways to incentivize innovation, particularly in climate technologies aligned within a member-company’s value chain. 

3. The CNZS V2.0 should align net-zero target cycles with the Paris Agreement’s global stocktake by using fixed five-year milestones that fall before or within the stocktake years. 

4. SBTi should encourage the wide adoption of and participation in its initiative by align net-zero target cycles with the Paris Agreement’s global stocktake by using fixed five-year milestones that fall before or within the stocktake years.

Because the CNZS V2.0 is complex and complicated, administrative compliance with it will be costly. SBTi should streamline and simplify the standard, increase flexibility to increase its approachability, lessen hurdles, and pave the way for additional companies to join the initiative. 

The CC Lab supports the improvements in accountability and validation that will result from corporations publicly tracking their target progress in SBTi’s CNZS V2.0. However, CNZS V2.0 is complicated, and compliance with it will be time-consuming and costly for its member-companies, many of whom do not have large sustainability teams. Complying with the 133-page standard demands extensive time and resources from internal corporate sustainability teams and/or from external consultants. While increasing the technical rigor of the CNZS is appropriate for ensuring accurate emissions reductions and meeting global climate goals, in practice, we worry that this excessive complexity will deter corporations on the fence about publicly committing to net zero. Companies will need to dedicate their sparse resources just to understand SBTi’s accounting and reporting requirements, resources that in turn will be missed for the physical and operational work needed for transformative climate action. The CC Lab recommends increased flexibility in how climate goals can be achieved to encourage additional corporations to join the initiative.

While we support SBTi in recognizing companies that invest in climate action beyond their value chain, we believe SBTi should look for other ways to incentivize its member-companies to finance innovation in climate technologies aligned with their value chain.

SBTi has meaningfully advanced its CNZS V1.2 by introducing recognition for companies that engage in Beyond Value Chain Mitigation (BVCM), a mechanism through which SBTi hopes to empowers member -companies to accelerate the global net-zero transformation by going above and beyond their science-based targets. See CNZS-C21 & CNZS-C22.^[1] Companies can be rewarded for addressing their ongoing emissions by voluntarily engaging in activities like purchasing high-quality carbon removal credits, financing mitigation projects, and implementing other efficiency or conservation efforts. 

Although this development signals that SBTi is committed to facilitating corporate leadership in funding diverse climate mitigation projects, we believe that CNZS V2.0 should more actively encourage and recognize innovation. Private investment in technological and nature-based solutions is essential to achieving the Paris climate goals, as these innovations have the potential to dramatically mitigate warming in the near term and remove emissions in the longer term. The CC Lab recommends that the diverse climate activities included in BVCM should not be limited to actions outside the value chain, but should also be leveraged to help meet emissions reduction goals within the value chain, where companies have the greatest leverage and know-how to help.

SBTi should align net-zero target cycles with the Paris Agreement’s global stocktake by using fixed five-year milestones that fall before or within the stocktake years.

SBTi proposes to revise the interval between member-companies’ near-term net-zero targets, which previously ranged from five to 10 years, to a fixed five-year period. The CC Lab supports standardizing interim target cycles to enhance consistency and comparability across member-companies, but recommends SBTi reconsider the timing of its cycles to align them with the Paris Agreement’s global stocktake.

CNZS V2.0 requires member-companies to set net-zero targets in accordance with limiting global warming to 1.5°C with no or little overshoot. Each Category A and B member-company participating in CNZS 2.0 must set near-term targets for scope 1 and 2 emissions, and each Category A member-company must also set near-term targets for scope 3 emissions and long-term targets for scope 1 and 2 emissions. Near-term targets must be set at fixed five-year periods that may run from a member-company’s target base year or be aligned with “fixed milestone years,” meaning “a predetermined target year that occurs at regular intervals, specifically ending in either 0 or 5” such as 2030 and 2035. See CZNS-C13.2.2.^[2]

At these intervals (at the end of each “interim target cycle”), member-companies assess their performance; within 12 months, undergo a renewal validation with SBTi; and, within six months of a grant of renewal, report on their progress and new targets. See CZNS-C25.1, 26.1, 27.1.^[3] Consequently, a member-company’s comprehensive reporting^[4] of its progress and setting of new targets might not occur until 1.5 years, plus the duration of the renewal process, after a fixed-milestone year.^[5]

The Paris Agreement, like CNZS V2.0, asks the signatory national parties to take stock of their performance and increase their ambition every five years, but, unlike CNZS V2.0, their assessment is due two years before a fixed milestone year, when new targets are announced. The global stocktake enables parties to the Paris Agreement and other stakeholders to assess our collective performance in limiting global warming. It also informs the parties’ next round of climate action plans, otherwise known as “nationally determined contributions” (NDCs). The first stocktake occurred in 2023, and then in 2025, the parties submitted updated NDCs with their targets for 2035. The next stocktake will occur in 2028 with updated NDCs presenting 2040 targets due in 2030, and so forth.

The CC Lab recommends that SBTi align its requirements for reporting on progress and target-setting—not commencement of an assessment of performance—to occur at or before these same fixed-milestone years. Ideally, the fixed five-year milestones should occur by or before the global stocktake years of 2028, 2033, 2038, etc. By slightly accelerating when assessments and target reporting occur, the data gathered by SBTi will be in a form convenient to parties to the Paris Agreement and will have increased timeliness and utility to them while they update their NDCs, particularly their plans for carbon credit trading and capacity building.^[6] Furthermore, we could have a shared and improved scientific understanding of our collective progress towards limiting global warming and the scale of the remaining challenge.

SBTi should encourage broader participation by allowing non-profit organizations to have validated Corporate Net-Zero Targets.

The exclusion of non-profits, including non-governmental organizations, foundations, trusts, and partially public non-profits from receiving validation of SBTi’s CNZS V2.0 is a missed opportunity for meaningful emissions reductions across influential organizational bodies. See CNZS A.4.^[7] Non-profits play a vital role in shaping policy, influencing public opinion, and modeling sustainability leadership. From universities and hospitals to philanthropic foundations and research institutes, many non-profits possess sizable emissions footprints that extend across considerable supply chains. Every company should have the opportunity to set and receive recognition for SBTi-validated net-zero standards, not solely for-profit companies.

SBTi’s CNZS is an essential tool for mobilizing private-sector action in the global effort to limit warming to 1.5℃. The improvements made in CNZS V2.0—particularly in requiring accountability in target progress and acknowledging diverse climate efforts beyond the value chain—demonstrate SBTi’s commitment to optimizing its standard to drive science-based emissions reductions in the private sector. However, the standard must remain ambitious without becoming overly complex and prescriptive to facilitate widespread adoption. By embracing greater flexibility, supporting innovation within value chains, aligning with Paris Agreement target cycles, and including non-profits in target validation, SBTi can unlock greater corporate climate leadership.