By: Nicole Gotthardt, Leslie Guerra, Anastasia O'Rourke, and Meghan E. Gavin

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.

SBTi’s second consultation for its CNZS V2.0 is currently underway. In our initial response to the first consultation back in May, which can be viewed in our blog posts, the CC Lab argued for increased flexibility in how companies can achieve their decarbonization targets, strengthened incentives for supporting innovation, and more pathways for companies to use high-quality carbon credits to meet goals in the near-term—including those from super pollutant projects.

We are pleased with SBTi’s addition of the Ongoing Emissions Responsibility Framework (OER), which encourages companies to take voluntary climate action to address their ongoing emissions. This could help catalyze near-term investment in removal, avoidance, and reduction activities. Companies that meet their decarbonization targets can choose to invest in carbon markets or other types of innovative climate finance until 2035 and be distinguished through a two-tier recognition framework. ‘Recognized’ companies must cover 1% of their ongoing Scope 1–3 emissions, and ‘Leadership’ companies must cover at least 40% of their ongoing emissions. These goals can be met through “ex-post mitigation” (reduction, avoidance, or removal credits) or “carbon pricing” (including low/zero-carbon R&D and other types of innovation finance). Recognition ends after 2035, and Type A companies (large- and medium-sized companies in high-income countries) will be required to purchase carbon removals—with the percent of long-lived removals increasing to 41% in 2050—to address their ongoing emissions. 

We have several remaining concerns with the latest SBTi standard. First, by limiting carbon credit purchases to the OER framework, we believe SBTi is missing the opportunity to facilitate meaningful and necessary private investment in climate action. Allowing companies to meet a portion of their overall decarbonization targets through high-quality carbon credits like carbon removal and super pollutant avoidance credits would help to address near-term warming goals and support longer-term needs for scaling up carbon removal projects. 

Secondly, we believe SBTi is unreasonably limiting investment in high-quality, verifiable emissions reductions within value chains by disallowing companies from using insetting to meet Scope 3 targets. Insetting—where a company invests in carbon projects that reduce or remove GHG emissions directly within its own supply or value chain—enables companies to secure and support high-quality emissions reductions by aligning carbon project activities with specific emission sources. Instead, SBTi allows companies to use “commodity” Environmental Attribute Certificates (EACs), which use an attributional life cycle assessment to certify the lower emissions-intensity of goods and services purchased by companies. While commodity ECAs offer companies some flexibility in meeting emissions targets tied to purchased goods, the market remains relatively immature and lacks robust supply-side guidance and frameworks for integrity and verification. Carbon credits—supported by mature markets, established integrity principles, and strong quality verification entities—are better understood and suited for driving near-term Scope 3 reductions. Carbon credit standards, registries, verifiers, and project developers can help inform or even undertake high-quality insetting projects.

Public comments are open until December 12th. Now is the time to help shape this important standard bearer for practicable corporate climate action. You can access SBTi’s second public consultation survey here: https://sciencebasedtargets.us4.list-manage.com/track/click?u=783997a022a4a843a0ac9d4ee&id=b0bae6d6a1&e=279cb7115d 

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