Science Based Targets Initiaive (SBTi) has launched a net zero standard enabling companies to verify their net zero targets.
The body said this is the world’s first net zero corporate standard, providing a “credible assessment” of net-zero target setting and help companies ensure their near- and long-term climate goals are Paris-aligned.
SBTi said aligning net-zero targets with science includes rapid action to halve emissions before 2030 and long-term deep emissions cuts of 90-95% before 2050. For the 5-10% of carbon emissions that it is not possible to cut, SBTi said they will have to be neutralised with offsets.
The standard, which applies to Scope 1, 2 and 3 emissions, should not be the beginning and end of corporate climate action, according to SBTi. It said companies should also invest in climate mitigation beyond their value chains.
Danish energy company Ørsted was one of the first five companies to have its net zero targets verified by SBTi.
Alberto Carrillo Pineda, co-founder and managing director of the SBTi, said: “Companies are currently self-defining net-zero targets without credible and independent assessment of their ambition and integrity.
“For the first time, the SBTi Net-Zero Standard offers companies robust certification to demonstrate to consumers, investors and regulators that their net-zero targets are reducing emissions at the pace and scale required to keep global warming to 1.5°C.
“We’re now inviting all companies with net-zero targets and ambitions to show stakeholders that their decarbonization pathway is aligned with science. And the rest of the business sector – we call on you to join the Race to Zero.”
Commenting on the standard in a Global ESG Research report, investment bank Jefferies noted when Scope 3 emissions are included, companies contribute 80% of global carbon emissions: “With these numbers, it is clear that the corporate sector has to be front and centre in the transition to a net-zero global economy.
“While there remains uncertainty around the near-term commitments governments will make to limit warming to 1.5°C, businesses can send a strong signal by committing to science-based targets. Further, the net-zero plans companies make will help drive policy.”
The report stated the standard will help companies communicate their net zero plans and progress transparently to investors, allowing for more trust between individuals, companies and governments.
“Trust will pave the way for radical collaboration to set strategies for net-zero within and across sectors, which will highlight existing gaps in technologies, markets, and policies, among other things, that will be needed in this transition,” Jefferies stated.