Climate change is a big problem we’re all facing. It’s causing warmer weather, melting ice, rising sea levels, floods, and stronger storms. These changes hurt our planet and everything living on it. To fight this, we need to reduce the gasses that warm the earth, mainly carbon dioxide. This is where carbon credits come in. They are a way for businesses and people to do less harm to the environment. By using carbon credits, we can fund projects that make the air cleaner, like planting trees or using energy from the sun and wind. This helps us create a better future for everyone.
Now that we understand how climate change affects us, let’s dive into what carbon footprints are and how they play a role.
Carbon Footprint: Measuring Our Impact on the Planet
The most significant driver of climate change is the release of greenhouse gasses,primarily carbon dioxide, into the atmosphere. Carbon footprints are a measure of how an organization is contributing to this detrimental process through its responsibility for the total amount of greenhouse gasses emitted directly or indirectly by the organization’s activities.
Carbon footprints take into account direct emissions from burning fossil fuels and indirect emissions from the production and consumption of goods and services such as:
- Energy use
- Transportation
- Waste management
- Deforestation
- Other forms of pollutants
After seeing how our activities create carbon footprints, it’s clear why we need standards to measure and reduce them effectively.
Setting Standards: How to Measure Your Carbon Footprint
Carbon footprint standards ensure consistency and comparability across different organizations and projects. They provide guidelines for calculating emissions, setting emission reduction targets, and reporting results. This framework spans various activities and sectors taking into account factors such as energy use, transportation, waste management, and production processes. By following these standards, businesses and individuals can ensure that their carbon footprint calculations are reliable and credible.
With these standards in place, we can explore how carbon credits work to make a real difference in reducing our carbon footprints.
Bridging the Gap: Carbon Credits and Carbon Footprint Reduction
Carbon credits are a market-based mechanism designed to encourage organizations to reduce their carbon footprints, and effectively reduce their greenhouse gas emissions, by providing a global monetary incentive framework for activities that reduce or remove harmful greenhouse gasses from the atmosphere.
The basic principle behind carbon credits is that for every ton of greenhouse gas emissions reduced or removed by an activity or project, a carbon credit is generated. These credits can then be bought and sold on the carbon market, and the revenue generated provides a financial incentive for environmentally responsible behaviors. This is the goal of the carbon credit system – To create the financial incentives to drive organizations to reduce their carbon footprints. Putting a price on carbon emissions, and turning them into an expense encourages the adoption of cleaner technologies and practices, ultimately leading to a reduction in greenhouse gas emissions and a safer planet.
Understanding carbon credits leads us to see how they can actually lower the harmful gasses we release into the air.
Carbon Credits: A Path to Less Pollution
Let’s take a closer look at the ways in which carbon credits drive reductions in greenhouse gas emissions:
Carbon Credits: Fueling a Cycle of Improvement
Incentivizing emission reduction projects by putting a price on carbon emission encourages the adoption of cleaner technologies and practices, leading to reductions in greenhouse gasses. Revenue generated from sale of carbon credits is then used to further finance emission reduction projects. The more credits sold, more funding is available for new projects, further shrinking greenhouse gas emissions.
Innovating for the Planet with Carbon Credits
Providing value to emission reductions incentives businesses and individuals to develop and implement new technologies that reduce greenhouse gas emissions. This drives the development of more efficient energy systems, cleaner transportation options, and more sustainable practices and technologies across various sectors.
Seeing the positive impact of carbon credits, let’s look at how they help start and support projects that are good for our planet.
How Carbon Credits Fund a Greener Future
Carbon credits also play a crucial role in driving sustainable projects by providing the financial incentive for businesses and individuals to invest in emission and pollution reduction initiatives. Businesses can show that promoting renewable energy, driving for energy efficiency, and even supporting afforestation, and other sustainable practices, translates into real gains on balance sheets, and greater value for both stakeholders and shareholders alike.
Now, let’s explore some specific projects that can benefit from carbon credits, contributing further to our planet’s health.
Green Projects: How They Earn Carbon Credits
While every sustainable project capitalizes on carbon credit opportunities in different ways, there’s a shared underlying logic for their execution and lifetime management wherein these projects help manifest a tangible saving and reduction in the overall amount of greenhouse gasses driving climate change outcomes. Let’s consider a few examples:
Renewable energy
Renewable energy projects involve the generation of electricity from renewable sources such as solar, wind, hydro, or geothermal power. These projects help reduce greenhouse gas emissions by displacing fossil fuel-based power generation. Renewable energy projects such as wind farms generate carbon credits based on the amount of greenhouse gas emissions they displace compared to conventional fossil fuel-based power generation. These credits can then be sold on the carbon market, providing an additional source of revenue for the project and making it even more financially viable.
Energy efficiency
Energy efficiency projects aim to reduce energy consumption and improve energy efficiency in buildings, industries, and transportation. By implementing energy-saving measures such as upgrading insulation, installing efficient lighting systems, or optimizing industrial processes, businesses can help reduce greenhouse gas emissions associated with energy use, reduce their carbon footprints, and earn carbon credits (we recently covered how these steps help make SMEs more environmentally friendly). This carbon credit income can offset some of the required upfront investment, while longer term operational cost savings provide the justification for the rest.
Afforestation
Trees act as carbon sinks, sequestering carbon dioxide through photosynthesis. Afforestation and reforestation projects help offset emissions and contribute to climate change mitigation because trees trap greenhouse gasses that would otherwise be free in the atmosphere. This is the logic through which creating new forests or restoring degraded ones are activities that are also eligible for earning carbon credits.
Methane capture
Methane is a potent greenhouse gas with a much higher warming potential than carbon dioxide. Methane gas is usually emitted during the production and transport of coal, oil, and natural gas. By capturing methane emissions from sources such as landfills or livestock operations and using it as a fuel or converting it into other products, methane capture and utilization projects help reduce greenhouse gas emissions and promote sustainability goals, and are therefore eligible for earning carbon credits. With these projects in mind, we’ll understand why investing in carbon credits is not just good for the environment but can also be beneficial for us.
The Benefits of Investing in Carbon Credits
Now that we’ve understood the rationale and methodologies for creating carbon credits, let’s examine another important aspect of how they help drive sustainable projects by looking at some of the reasons for investing in carbon credits:
Financial gains
Carbon credits are a tradable commodity, and as such they can be traded for gains on the open market, , like any other commodity.
Environmental impact
For many companies reducing greenhouse gas emissions and supporting sustainable projects isn’t so much a matter of choice, but rather a matter of necessity. These types of initiatives are increasingly becoming compliance requirements driven by legal frameworks and/or shareholder preferences.
Social responsibility
By taking action to reduce their carbon footprints, businesses and individuals show their commitment to sustainability and environmental stewardship. This can enhance their reputation and brand image, attracting environmentally conscious customers and stakeholders.
Even with all these benefits, the road to sustainable development using carbon credits isn’t without its challenges. Let’s take a closer look.
Overcoming Challenges in the Carbon Credit Market
In the quest for sustainability, carbon credit markets play a pivotal role but face significant hurdles. At the core, the absence of uniform standards muddles the market’s clarity, making it tough for firms to confidently offset emissions. Organizations like the Verified Carbon Standard strive to bring rigor and reliability, yet challenges persist.
Market volatility adds another layer of complexity, with regulatory shifts causing price swings that disrupt financial forecasts. The intricate process of measuring and verifying emissions adds to the administrative load, especially for resource-strapped companies. Furthermore, the balance of carbon allowances is fragile, where overallocation or scarcity can tilt the market, affecting affordability and compliance.
The integrity of carbon offsets is under scrutiny too. Projects must prove their emission reductions are additional and verified, a task demanding stringent checks to uphold market credibility. Addressing these issues requires solid frameworks for transparency and accountability, ensuring carbon credits genuinely contribute to sustainable development.
Despite the obstacles, the carbon credit market’s potential to drive sustainability is undeniable, poised for growth as global consciousness around climate change rises.
Despite these hurdles, the opportunities within the carbon credit market for sustainable growth are vast and promising.
Seizing Opportunities: Carbon Credits and Sustainable Growth
Carbon credit markets offer big chances to help the planet and grow our economy by encouraging less pollution and supporting important projects for a healthier environment:
Engaging the Private Sector
Carbon credit markets are key for getting companies to invest in clean and green projects, helping fight climate change. Carbon credit markets unveil remarkable opportunities for fostering sustainable development by funding climate initiatives and motivating emission reductions. These markets draw private sector investments into climate action, steering capital towards clean energy and resilience projects, particularly in communities that host these projects. This mechanism not only mobilizes climate finance from affluent regions to those in dire need but also propels funding towards net-zero initiatives across continents like Africa, enhancing sustainable development and generating valuable export revenues.
Driving Climate Finance and Innovation
These markets are changing how money is used to fight climate change. They bring new tech and clear information, making it easier to trust and invest in these projects. Technological innovations, including data analytics and blockchain, are refining the transparency and reliability of carbon markets. Such advancements ensure the quality of carbon credits, bolstering the market’s credibility and effectiveness in supporting sustainable development. Additionally, carbon credit projects, particularly those based on nature, like reforestation, extend benefits beyond emission reduction. They contribute to biodiversity conservation, pollution prevention, public health, and job creation, presenting a multi-faceted approach to combating climate change.
Beyond Emission Reductions
Looking closer at carbon credit projects shows us they do a lot more than just cut down on pollution. They also make our air cleaner, protect nature, and create jobs, making our world a better place. As carbon markets evolve, they encourage investment in a variety of projects, including nature-based solutions and clean technologies, leading to a low-carbon economy. The expansion of these markets into new regions promises not just environmental benefits but also rural development, technology transfer, and improved livelihoods, making carbon credit markets a cornerstone in the global pursuit of sustainable development goals.
Carbon Credits’ Role in a Shared Green Future
Tackling climate change requires practical, impactful actions, and carbon credits are a key part of the solution. By supporting projects like the EKI Wind Power Project, the Sichuan Household Biogas Project, and the Inner Mongolia Forest Conservation, we’re directly contributing to reducing carbon emissions and promoting sustainability.
The EKI Wind Power Project is a clear example of how investing in renewable energy can have a major impact on cutting down our carbon footprint. On the other hand, the Sichuan Household Biogas Project shows the importance of small, local solutions in making a difference, by turning waste into energy and reducing the need for polluting fuels. Meanwhile, the Inner Mongolia Forest Conservation effort highlights the critical role of forests in capturing carbon and preserving biodiversity.
Investing in these types of projects through carbon credits doesn’t just help balance out emissions; it’s a step towards a more sustainable and healthier planet. It’s about making smart choices now that will pay off for future generations.
David Attenborough put it simply and powerfully: “The future of humanity and indeed, all life on Earth, now depends on us.” It’s a call to action for all of us to make informed decisions and invest in a sustainable future, using proven solutions like carbon credits to make a real difference. If you believe you have a sustainable project that can be certified for carbon credit issuance, and would like to learn about how such projects are conceived and conducted, please feel free to contact us for guidance.
FAQs:
What are carbon credits?
Carbon credits are a type of tradeable permit that allows organizations to emit a certain amount of carbon dioxide or other greenhouse gasses. One carbon credit is equal to one tonne of carbon dioxide or its equivalent in other greenhouse gasses.
How do carbon credits support sustainability projects?
Carbon credits provide a financial incentive for organizations to reduce their greenhouse gas emissions. By purchasing carbon credits, organizations can offset their emissions by supporting sustainability projects such as renewable energy, energy efficiency, and reforestation.
Who can purchase carbon credits?
Any organization or individual can purchase carbon credits to offset their greenhouse gas emissions. This includes businesses, governments, non-profit organizations, and individuals.
How are carbon credits verified?
Carbon credits are verified by independent third-party organizations that assess the emissions reduction projects and ensure that they meet specific standards. These standards include additionality, permanence, and verifiability.
What are the benefits of using carbon credits?
Using carbon credits can help organizations reduce their carbon footprint, support sustainability projects, and demonstrate their commitment to environmental responsibility. It can also help organizations comply with regulations and meet sustainability targets.
What types of sustainability projects can carbon credits support?
Carbon credits can support a wide range of sustainability projects, including renewable energy projects such as wind and solar power, energy efficiency projects such as building retrofits and efficient lighting, and reforestation and afforestation projects.
Image credit:
Photo by Marcin Jozwiak on Unsplash
Key takeaways
- SBTi is the default reference point for corporate climate action: 51% of Fortune Global 500 companies now hold net-zero targets, up from 8% in 2020, and over 11,000 organizations worldwide have SBTi-validated targets.
- Net Zero Standard V2 redefines climate leadership as reducing emissions and mitigating ongoing emissions, not reduction alone.
- The new standard adds flexibility through five-year cycles, a “best efforts” standard, and an Asset Transition Method for companies whose path to net-zero doesn’t fit a straight-line trajectory.
- Voluntary carbon credits are formally recognized for the first time, with reduction and removal credits accepted from 2027, and removals required from 2035.
- Companies with 2030 targets keep using V1 for their current cycle and move to V2 in 2028; companies without targets can start using V2 on February 1, 2027.
Why every business needs to understand the SBTi Net-Zero Standard revision
The Science Based Targets initiative (SBTi) has become the default reference point for credible corporate climate action. Net-zero targets are now held by 51% of Fortune Global 500 (FG500) companies, up dramatically from just 8% in 2020, and more than 11,000 organizations worldwide have set SBTi-validated targets.
However, SBTi’s influence extends well beyond the companies formally participating in the program. Every business in the value chain of an SBTi participant will have to reduce its own carbon emissions, and businesses that aren’t SBTi participants themselves still look to the program for guidance on climate action.
In short, SBTi gives every business a credible blueprint for climate action, and companies that follow its principles can pursue climate action with confidence, whether or not they’re formally part of the program.
How will the Net Zero Standard revision affect business climate action?
SBTi participation is expected to grow. Despite strong target-setting participation among the F500, only 17% of companies use the SBTi Net Zero Standard V1 beyond target setting, largely because its rules have been seen as too rigid to apply in practice. Much of the Net Zero Standard revision has focused on creating more flexibility to enable higher participation. Medium and small businesses will also increasingly feel pressure for climate action, since SBTi mandates that its participants reduce carbon emissions across their value chains.
Net Zero Standard V2 also redefines climate leadership: leading climate action now means reducing emissions and mitigating ongoing emissions. Reducing your own emissions while ignoring the emissions you continue to release along the way is no longer considered leadership. Supporting voluntary carbon projects with high-integrity carbon credits is now backed by the leading authority on corporate climate action.
What lessons shaped the Net Zero Standard V2 revision?
The revision reflects a few learnings about what actually drives climate progress, and how SBTi built those lessons into the new standard.
| Net Zero Standard V1 Learnings | Net Zero Standard V2 Implementation |
|---|---|
| Making real short-term progress is more important and more difficult than making big long-term promises | Focus on short-term climate progress |
| Every company has a different path to net zero that doesn’t always fit generalized net-zero rules | Create asset transition plans based on each company’s unique asset lifecycles and capital planning |
| We need to mitigate our ongoing emissions to keep global carbon emissions in check | Reduce global carbon emissions by financing voluntary carbon projects with high-integrity carbon credits |
What are the key changes between the old and new Net Zero Standard?
Both versions of the standard are grounded in net-zero by 2050. However, the old standard treated climate leadership as simply reducing emissions, expected a long-term commitment to net zero, based emission reduction targets on generalized net-zero goals, revoked status from companies that fell behind on targets, and ignored voluntary carbon projects entirely.
The new standard treats climate leadership as reducing emissions and mitigating ongoing emissions. It shifts the focus to short-term progress through five-year cycles, and it bases emission reduction targets on both the net-zero goal and a company’s own asset decarbonization plan. A new Asset Transition Method lets companies set decarbonization targets through asset plans with committed, verifiable steps; an ambitious but achievable path based on a company’s starting point, financial resources, and technology, with multiple pathways to reflect the unique opportunities and constraints of different industries and companies.
Crucially, the new standard moves to a “best efforts” basis that creates real flexibility on progress against targets. Businesses that miss their targets can keep their status if they’ve used “every lever” within their control, and minimum progress rules will be set out in the SBTi Assurance Manual.
Finally, the new standard formally uses voluntary carbon projects to mitigate ongoing emissions. From 2027 through 2034, this mitigation is recognized, and both carbon reduction and removal credits are accepted. From 2035 forward, mitigation with carbon removal credits becomes required, with durability matching between the removal and the emission it offsets.
| Old Net Zero Standard | New Net Zero Standard |
|---|---|
| Grounded in net-zero by 2050 | Grounded in net-zero by 2050 |
| Climate leadership is reducing emissions | Climate leadership is reducing emissions and mitigating ongoing emissions |
| Make a long-term commitment to net-zero | Focus on short-term progress in 5-year cycles |
| Emission reduction targets are based on net-zero goal |
|
| Businesses who fall behind targets lose status |
|
| Ignores voluntary carbon projects |
|
When does the new Net Zero Standard take effect?
Companies with existing 2030 targets should continue using the old Net Zero Standard for their current cycle, and start using the new Net Zero Standard in 2028 to set targets for the next cycle (2030–2035).
Companies that don’t yet have targets can use the new Net Zero Standard starting February 1, 2027.
What are SBTi’s Category A and Category B companies?
The new Net Zero Standard splits companies into two categories, with different requirements attached to each.
Category A covers large companies from all countries and medium-sized companies from high-income countries. A company from any country qualifies if it meets at least one of: net turnover of €450 million or more, or 1,000 or more full-time employees. A company from a high-income country qualifies if its Scope 1 and 2 emissions are 10,000 tCO2e or more, or if it meets at least two of: balance sheet of €25 million or more, net turnover of €50 million or more, or 250 or more full-time employees.
Category B covers small companies from all countries and medium-sized companies from lower-income countries.
How do Scope 1 targets work under Net Zero Standard V2?
Scope 1 targets aim to transition companies to net-zero direct emissions by 2050 or sooner, and companies can choose from three approaches.
- Absolute emissions reduction follows a straight-line emissions trajectory from the target base year to the net-zero year.
- Emissions intensity reduction lets companies follow sector-specific pathways designed to reflect the reduction opportunities available in sectors like steel, cement, or chemicals.
- Asset transition is designed for companies whose capital stock turnover doesn’t follow a linear or sector pathway. These companies design a transition plan to operate existing assets efficiently and replace them with low-carbon assets, using predetermined milestones.
How do Scope 2 targets work under Net Zero Standard V2?
Scope 2 targets address emissions from purchased electricity through three pathways:
- Reducing electricity consumption,
- Reducing grid consumption by installing onsite or direct-line offsite clean energy generation, and
- Cleaning up the regional grid using market-based tools like PPAs, RECs, and GOs that drive clean energy development.
V2 introduces a dual Scope 2 framework requiring two separate targets, with an overall goal of 100% low-carbon electricity by 2040.
The location-based target addresses the carbon intensity of a company’s physical power use, and requires companies to show that their grid consumption is falling and/or that their physical grid use is getting cleaner; in other words, that their market-based solutions are actually making the grid cleaner.
The market-based (or zero-carbon electricity) target tracks a company’s use of low-carbon power generation contracts and Energy Attribute Certificates. It requires geographical matching of these certificates with electricity consumption based on deliverability regions (grid regions); annual matching is allowed, though hourly matching is encouraged. Category A companies with large electricity loads must report the percentage of their Scope 2 electricity consumption matched with low-carbon attributes on an hourly basis, and there’s an optional recognition framework for companies that meet hourly matching thresholds.
How do Scope 3 targets work under Net Zero Standard V2?
Scope 3 targets share the same 2050-or-sooner net-zero goal, but companies set near-term targets only for material emissions sources in their value chain and areas where they have real influence. Long-term Scope 3 targets are generally not required.
Limited, justified exclusions are allowed for near-term targets, including categories that individually account for less than 5% of total Scope 3 emissions, and activities where a company lacks practical influence, like leased assets it doesn’t operationally control, or the processing of sold products. Optional exclusions are also available in specific categories.
Companies can choose from three approaches to near-term Scope 3 targets:
- An overarching emissions reduction target, which follows a linear contraction of emissions from the base year to residual emissions of 10% or less by 2050 or sooner;
- An overarching supplier/customer alignment target, benchmarked against a growing share of tier 1 suppliers and customers reaching net-zero by 2050 or sooner; or
- A category- or activity-specific target, tailored for companies with concentrated emissions in particular Scope 3 categories or high-emitting activities.
What is “ongoing emissions mitigation” under the new SBTi standard?
This is one of the most significant additions in Net Zero Standard V2. Accelerated climate contributions are needed to help the world achieve climate objectives, limit temperature overshoot, mitigate transition risks, and support the scale-up of climate solutions, and V2 formally recognizes that. Ongoing emissions mitigation runs as a parallel track to companies also reducing their own emissions.
The framework is initially voluntary, with recognition available at three contribution levels to encourage early action.
- Engaged companies address more than 1% of total Scope 1, 2, and 3 emissions.
- Advanced companies address more than 10% of total Scope 1, 2, and 3 emissions, including 100% of Scope 1 and 2 emissions.
- Leadership companies address 100% of total Scope 1, 2, and 3 emissions with a contribution budget of $80/tCO2e.
Carbon credits used for this purpose have to meet certain quality standards. They must be ex-post (issued after the mitigation has actually occurred), independently third-party-assured, emissions reductions or removals, measured in tCO2e, that occur within five years prior to the reporting year. They must be sourced from outside the company’s own value chain. Further minimum criteria will be set to align with high-integrity frameworks, with additional details on the recognition program expected in the second half of 2026.
Starting in 2035, carbon removals become mandatory for Category A companies. From that point, the carbon removal coverage requirement rises linearly from 1% of Scope 1–3 emissions to 100% by a company’s net-zero year. Within that, 10% of long-lived GHG emissions must specifically be covered by durable removals, also rising linearly to 100% by the net-zero year.
How must companies neutralize residual emissions?
At a company’s net-zero target year and thereafter, it must reduce its Scope 1, 2, and 3 emissions to zero or to residual levels, and neutralize all residual emissions using eligible carbon removals. Those removals have to meet two conditions: they must occur within the same reporting period as the residual emissions they’re neutralizing, and long-lived GHGs must be neutralized with long-lived removals, matching the durability of the removal to the atmospheric lifetime of the emission being addressed.
What is the SBTi implementation hierarchy?
Net Zero Standard V2 also lays out how companies should prioritize their actions for credible target delivery, in three tiers.
- Direct actions, at the activity level, are actions that reduce emissions at the source within a company’s own operations and value chain; things like efficiency improvements, fuel switching, and engaging suppliers and customers to reduce their emissions.
- Actions within shared systems, or activity pools that reduce the emissions of shared systems like electricity or gas grids. This includes market instruments that convey low-carbon attributes, such as PPAs, RECs, and GOs, all of which must meet minimum integrity criteria that SBTi will elaborate on in future guidance.
- Sector-level actions relate to the same type of activity occurring in a relevant geography or system, in a way that meaningfully reduces the emissions a company is responsible for.
How Terrapass helps businesses meet the new SBTi standard
As the rules around carbon credits become more rigorous, the quality of the credits behind them matters more than ever. Terrapass has expanded our global network of carbon projects: more project types, locations, prices, ICVCM CCPs, and UN SDGs, spanning super-pollutant destruction, nature-based solutions, and durable removals. We offer Green-e® Climate Certification and we only source from third-party-verified projects on ICVCM-Eligible registries.
We also help clients with impact beyond carbon: EACs, RECs, and GOs including Green-e® Certified credits that support leading renewable energy projects; water credits that support water restoration projects; and custom environmental product needs like RNG and SAF. Wherever your organization is on its sustainability journey, we help clients around the world address climate risk, advance their environmental and social goals, and get the most out of their sustainability budgets.
FAQ: SBTi Net-Zero Standard revision
What is the SBTi Net-Zero Standard?
It’s the framework the Science Based Targets initiative publishes for companies that want validated, credible net-zero targets tied to limiting global warming.
What is changing in the SBTi Net Zero Standard V2 revision?
The biggest changes are more flexibility (five-year cycles and a “best efforts” standard), a new Asset Transition Method for companies whose emissions don’t follow a straight-line path, and formal recognition of voluntary carbon credits for mitigating ongoing emissions.
When do companies need to switch to the new SBTi standard?
If your company already has 2030 targets, you keep using V1 for your current cycle and move to V2 in 2028. If you don’t have targets yet, you can start using V2 as of February 1, 2027.
Can companies use carbon credits to meet SBTi targets?
They can. Under V2, high-integrity carbon reduction and removal credits count toward mitigating ongoing emissions from 2027 through 2034. Starting in 2035, only removal credits count, and they need to be durability-matched to the emissions they offset.
What’s the difference between Category A and Category B companies under SBTi?
Category A is large companies everywhere plus medium-sized companies in high-income countries, based on thresholds like revenue, headcount, or emissions. Category B is small companies everywhere and medium-sized companies in lower-income countries.
What happens if a company misses its SBTi target?
Under the old standard, falling behind could cost a company its SBTi status. Under V2’s “best efforts” approach, a company can hold onto its status as long as it’s used every lever within its control, with minimum progress rules coming in the SBTi Assurance Manual.
Sources: This post is based on Terrapass’s internal analysis of the SBTi Corporate Net-Zero Standard V2.0. Facts and figures were checked against SBTi’s official V2.0 announcement, SBTi’s Corporate Net-Zero Standard V2.0 — Chapter 6: Ongoing Emissions Responsibility, Trellis’s coverage of the standard, Trellis’s reporting on Ongoing Emissions Recognition costs, Sylvera’s analysis of what comes next, Anthesis Group’s Fortune 500 net-zero commitments research, and Climate Impact Partners’ seventh annual FG500 analysis, as reported by CarbonUnits.com.
The post SBTi Net-Zero Standard V2: What the Revision Means for Every Business appeared first on Terrapass.
For most businesses, the emissions that matter most sit outside their own walls. Scope 3 emissions, everything generated across your value chain, from the suppliers who make your inputs to the customers who use your products, typically make up the majority of a company’s total carbon footprint. Under the Corporate Sustainability Reporting Directive (CSRD), those value-chain emissions now have to be measured and disclosed with a rigour that spend-based estimates alone struggle to satisfy. This guide sets out how to improve Scope 3 data accuracy for CSRD: the calculation methods open to you, how to move from estimates to verified supplier data, and how to govern that data so it holds up to audit.
A carbon credit is a commitment that extends well into the future. The tonne of CO₂ compensated for today from a nature-based carbon project must remain out of the atmosphere for good, which means the forest behind the credit has to remain standing long after the transaction is complete. For any buyer, this raises a defining question: What ensures that the forest endures?
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