The Science Based Targets initiative (SBTi), a global organization that helps companies set science-based climate targets, has recently released a draft of a new and updated standard. This draft contains several major changes that could have a significant impact on companies' climate action.

More flexibility for Scope 3 targets

One of the most significant changes is that the new standard gives companies more flexibility in how they set their Scope 3 targets. Scope 3 covers indirect emissions across a company's value chain, which is often the largest source of emissions for companies and organizations. Examples of emissions found in Scope 3 can range from purchases for the office to air travel and investments. In the new standard, targets will be based on the intensity and impact potential of activities, which increases flexibility but also requires clear guidance on what is material. Without clear guidance, there is a risk of confusion when setting targets and significant emissions activities being missed. Targets that are difficult to interpret are also more difficult to communicate.

Another update is an increased focus on "Alignment targets", which means that targets are set for, for example, the proportion of suppliers or revenues that meet the Net-Zero requirements. This is to provide greater flexibility when access to primary data is limited.

There are several reasons why SBTi is making these changes at this time. First, there has been increasing criticism of the current standard, particularly in relation to Scope 3 targets. Secondly, scientific knowledge on climate change has evolved, requiring the standard to be updated. Finally, pressure on companies to act in line with the Paris Agreement is increasing, and SBTi wants to ensure that their standard is sufficiently ambitious.

100% fossil-free electricity by 2040 - is it realistic?

Another of the updates in the new standard is that targets for scope 1 and 2 are split instead of being reported together. For scope 2, a location-based target must be set, and the company must choose between setting a market-based target or a zero-carbon target. Achieving 100% fossil-free electricity by 2040 refers to the targets in scope 2. This is an ambitious target that can present major challenges, but it is also a target that is absolutely necessary to achieve the goals of the Paris Agreement. For it to be feasible, major investments in renewable energy and energy efficiency are needed. The fact that the standard is now being developed to set this target can help companies to in turn put pressure on and invest in infrastructure changes themselves.

Tighter requirements for residual emissions and carbon capture

The new standard also tightens the requirements for companies to manage residual emissions and use negative emissions. Residual emissions are those emissions that cannot be eliminated through emission reductions. Companies must now demonstrate how they plan to manage these emissions responsibly, for example by investing in carbon capture and storage.

What should businesses with existing SBTi targets consider?

Companies that already have SBTi targets should carefully review the new draft and evaluate how it may affect their current targets. They may need to adapt their objectives and strategies to ensure they are in line with the new standard.

Executive summary

The draft of the new SBTi standard implies major changes for companies' climate work. The increased flexibility for Scope 3 targets can both facilitate and complicate companies' climate work. The stricter requirements for fossil-free electricity and the management of residual emissions are necessary to achieve the goals of the Paris Agreement. Companies should now carefully review the draft and prepare to adapt to the new standard.