Recognition without mobilisation: Carbon credits and SBTi CNZS 2.0

Introduction

The Science-Based Targets Initiative (SBTi) has published the final version of its Corporate Net-Zero Standard 2.0, setting out the next phase of the world’s most influential corporate climate framework.

The stakes are significant. More than 10,000 companies now have validated science-based targets, including some of the world’s largest and most recognisable businesses. SBTi-aligned companies represent more than 40% of global market capitalisation, meaning changes to the standard can materially shape corporate climate action worldwide.

BeZero responded to SBTi’s consultation on the updated standard in December, focusing on aspects related to the role of carbon credits within corporate decarbonisation strategies. Our response focused on five areas:

• The “Ongoing Emissions Responsibility” framework

• Carbon removals targets

• Addressing scope 3 emissions

• Remediating target underperformance

• Credit integrity and transparency

Below, we assess where the final standard landed against our key recommendations in these areas, and score SBTi’s response.

1. Ongoing emissions responsibility

BeZero’s consultation asks:

We supported SBTi’s shift from the previous “Beyond Value Chain Mitigation” framing toward Ongoing Emissions Responsibility (OER) because it is more intuitive and more directly connected to the emissions companies continue to produce while they decarbonise. We also supported applying the concept across all scopes, rather than treating it as a narrow issue pertaining only to expected residual emissions at the point of net zero.

Our core ask was that addressing ongoing emissions be mandatory to some degree, with immediate effect, not simply an optional activity which may be required in the future. We did not argue that every company should immediately compensate for 100% of ongoing emissions. Instead, we proposed an achievable minimum expectation, differentiated by company category (and potentially by sector), with additional recognition for companies that go further. We also asked for a more graduated recognition model, rather than a binary approach, including a middle tier between the SBTi’s proposed 1% (“recognised”) and 100% (“leader”).

Where SBTi landed:

The final standard creates an optional OER recognition programme with three levels: Engaged (1% of total ongoing emissions), Advanced (10% of total ongoing emissions), and Leadership (100% of total ongoing emissions for larger companies; 10% for smaller companies). That is a clear improvement and aligns with our ask for more nuanced recognition. SBTi also requires companies to state whether they intend to participate in OER, with non-participating companies required to submit an explanation.

However, the central issue is timing. OER action will remain voluntary for all companies until 2035, meaning carbon credit spending will continue to sit outside what is required to remain SBTi-aligned. For many companies, that kind of discretionary spending has proven difficult to justify, and the new framework does little to change the incentive. After 2035, larger companies will face a minimum requirement, but this will be focused on removals rather than the full range of high-integrity carbon credits and climate finance.

Score: 1/5

The improved tiering system and requirement to justify non-participation could have some marginal impact, and may encourage some companies to engage at the minimum level. Much will depend on whether OER status is displayed prominently enough to influence corporate decision-making. Ultimately, however, the central issue remains unchanged: SBTi has delayed any mandatory OER requirement for almost a decade.

The state of the carbon credit market has changed materially since the original CNZS was developed. Scrutiny of credit integrity has increased and tools have emerged to manage risks more effectively. Consumer and shareholder pressure to voluntarily compensate for ongoing emissions has weakened. Companies have become more cautious about using credits. At the same time, emissions pressures are rising in areas such as data centres. In that context, the SBTi had an opportunity to create a credible, near-term demand signal for high-integrity carbon credits alongside decarbonisation. That opportunity has been missed.

2. Removals targets

BeZero’s consultation asks:

We supported the SBTi creating a clearer role for removals within the CNZS, because removals need to scale well before companies reach the point of final neutralisation. As above, our key ask was for an immediate demand signal to build the removals industry: companies should be guided to start supporting removals now, even at small scale, rather than waiting until 2035.

We also argued for a technology-neutral approach. The standard should not treat “long-lived” as synonymous with a narrow set of engineered removals. Any removal pathway should be eligible where long-lived storage can be robustly demonstrated, including through portfolio management, ongoing monitoring, reversal risk tools, financial buffers, stewardship arrangements and appropriate safeguards. A rising durability expectation over time is sensible, but it should be evidence-led rather than technology-prescriptive.

Where SBTi landed:

The final standard brings removals under the OER framework. The SBTi has put forward an “illustrative requirement”, to be confirmed in CNZS 3.0, under which companies would begin supporting removals from 2035. This would require companies to support carbon removals equal to at least 1% of ongoing scope 1, 2 and 3 emissions, rising linearly to 100% by the net-zero target year, and no later than 2050.

SBTi also plans to introduce a specific long-lived removals ramp. From 2035, companies would need to support long-lived removals equal to at least 10% of their removals portfolio, or lower where company emissions include some short-lived GHGs. This would rise linearly to 100% by the net-zero year. A “long-lived” removal is defined as an activity capable of retaining carbon for centuries to millennia. SBTi has also committed to issuing a call for evidence on whether shorter-lived carbon removals can deliver equivalent performance to long-lived removals through “contractual, financial or stewardship mechanisms”.

Score: 1/5 

As above, the big-picture issue remains the lack of any requirement to do anything in the short term, with any need for action delayed until 2035. That is a very late starting point for a market that will need to scale dramatically, especially given that many companies have 2040 net zero targets, or earlier. The idea that the removals industry will emerge at scale just when companies need it is unrealistic. SBTi has defined the destination, but has not created the early demand signal needed to make the journey possible.

There also remains a live issue around how “long-lived” will be interpreted in practice. If the concept is defined too narrowly around geological storage, the standard risks excluding credible nature-based and other non-geological approaches that can demonstrate durable outcomes. However, the promised call for evidence on whether shorter-lived removals can achieve equivalent permanence is a positive signal for market participants pursuing technological, financial and legal innovations to strengthen the durability claims of non-geological removals.

3. Addressing scope 3 emissions

BeZero’s consultation asks:

We supported the direction of travel towards a more pragmatic approach on scope 3 action, recognising that some emissions will be extremely difficult for companies to address through direct intervention. Scope 3 emissions often sit in complex, shared systems where a company may not have direct operational control over the source of emissions.

Our core ask was that SBTi should allow credible indirect mitigation to play a role in scope 3 target achievement where direct mitigation is not possible. This should include carbon credits which support decarbonisation at the activity-pool or sector level (e.g. regenerative agriculture credits for agri-food businesses). However, this should be subject to strong guardrails: actions should be evidenced, follow well-established standards, and be transparently reported, down to the level of the specific instruments used. More broadly, we challenged the apparent asymmetry of integrity and reporting requirements between “offsetting” under the OER framework and “insetting” under the revised scope 3 approach.

Where SBTi landed:

The final standard does move towards a more practical scope 3 framework. It introduces a hierarchy of action. First, companies should prioritise direct activity-level interventions. Where that is not possible, they should support activity-pool interventions within shared systems such as supply sheds, logistics networks or agricultural sourcing regions. Finally, where structural barriers are limiting, they may support broader sector-level interventions.

The standard formally recognises the role of market-based instruments, including energy attribute certificates (EACs) and commodity certificates, where these support activity-pool or sector-level decarbonisation. It also explicitly references book-and-claim and mass balance approaches, which are particularly relevant for shared systems and commodity supply chains where physical traceability may be limited.

For agriculture, this creates a potential route for supply shed-based interventions to support scope 3 action. Reductions linked to lower-emission farming practices could be recognised through sourcing attributes, while soil organic carbon removals would need to be accounted for through the relevant FLAG and Land Sector and Removals Standard architecture.

However, the standard does not clearly state how supply chain-relevant carbon credits fit into this framework. It gives clearer treatment to attribute- and certificate-based approaches than to credited approaches, even where the underlying activity is similar. Where actions are not reflected in the physical inventory, they must be accounted for and reported separately, and generally support contribution-style claims rather than straightforward target-delivery claims. In practice, some activities currently structured as carbon credits may need to be accounted for differently if they are to contribute to scope 3 target implementation.

Score: 3/5

SBTi has made a meaningful improvement by recognising that scope 3 cannot always be solved through direct intervention. The activity-pool and sector-level architecture is a more realistic framework for companies operating in complex value chains, and is particularly relevant for agriculture, commodities, energy and transport.

From a carbon market perspective, this is probably the most constructive part of the new standard. It gives a clearer home to interventions within the systems that generate a company’s scope 3 emissions, including supply shed-based agricultural projects that might otherwise struggle under strict physical traceability requirements.

But the landing remains incomplete. SBTi gives clearer treatment to EACs, commodity certificates, book-and-claim and mass balance than to carbon credits. That leaves uncertainty for project developers and buyers using credited approaches, even where the underlying activity is directly relevant to a company’s supply chain. The direction of travel is positive, but much will depend on future accounting guidance, including how the GHG Protocol treats market-based instruments.

4. Remediating target underperformance

BeZero’s consultation asks:

We asked the SBTi to allow companies that miss their emissions reduction targets to take responsibility for the shortfall through high-integrity carbon credits. This was not about allowing credits to replace decarbonisation. It was about creating a corrective mechanism where a company’s actual emissions exceed its target level.

Our view was that companies which miss targets should be expected to do more, not less. Underperformance should trigger both stronger future decarbonisation requirements and an obligation to address the excess emissions through eligible credits, with appropriate guardrails on integrity, durability and transparency.

Where SBTi landed:

SBTi did not adopt this approach. Where companies miss targets, the remedy remains procedural rather than compensatory. Higher emissions in the target year lead to steeper reductions in the next target cycle and an expectation of accelerated action, but there is no requirement to address the excess emissions.

Score: 0/5

This is a clear missed opportunity. A well-designed remediation mechanism could have preserved the integrity of emissions reduction targets while ensuring that missed targets still resulted in immediate additional climate action, with finance flowing to mitigation activities beyond the company’s operational footprint.

5. Credit integrity and transparency

BeZero’s consultation asks:

We asked the SBTi to make its credit integrity guidance more actionable by building on existing market infrastructure, rather than creating an entirely new framework from scratch. Our central ask was that SBTi should recognise the complementary role of existing tools: notably standard/methodology-level integrity frameworks such as the ICVCM Core Carbon Principles (CCPs) alongside project-level assessment tools such as carbon credit ratings.

We asked for a transparency code requiring disclosure of any carbon credits used down to the project and vintage level, including the standard, methodology, relevant integrity framework alignment (e.g. CCPs) and any independent rating. Furthermore, we urged caution on any requirement for credits to be correspondingly adjusted.

Where SBTi landed:

The final standard provides some more actionable elements on credit integrity than the consultation draft. Most importantly, it requires companies to conduct documented due diligence on supported activities and to report information on methodologies, outcomes and, where applicable, benefit-sharing arrangements. This creates a clearer potential role for independent project-level assessment tools, including carbon credit ratings, even though these are not explicitly recognised.

SBTi also says it will develop criteria and processes for recognising third-party frameworks, standards and programmes. This could create a route for frameworks such as the CCPs to be recognised in future, but the standard does not yet say which frameworks will qualify, how they will be assessed, or how companies should use them when procuring credits.

On reporting, the final standard requires companies to disclose information on OER participation, including total ongoing emissions, OER coverage, recognition level, carbon price where applicable, financial contribution, mitigation contribution by eligible activity, shared responsibility arrangements and independent assurance. However, it still falls short of the transparency code we recommended. There is no clear requirement to disclose the specific projects used, the number of credits retired from each project and vintage, the methodology applied, relevant integrity framework alignment, or any independent project-level rating.

On corresponding adjustments, the SBTi recommends that, for removals used towards neutralisation, companies use credits that are not simultaneously claimed against host-country NDCs where possible, including through corresponding adjustments where available, and should report on this. However, they stop short of a formal requirement for all removals used towards neutralisation to be correspondingly adjusted.

Score: 2/5

SBTi has made some progress on making integrity and reporting more actionable. The due diligence and reporting requirements create more space for independent assessment tools like ratings, and the planned recognition of third-party frameworks such as CCPs could eventually make the standard easier for companies to apply in practice.

But the biggest gap remains transparency. Without clear disclosure of the specific credits companies use, including projects, vintages, methodologies and independent rating assessments, the standard will not enable meaningful scrutiny or create strong incentives to use the highest-integrity credits possible.

The treatment of corresponding adjustments - i.e. not introducing an absolute requirement - represents a modest positive. SBTi recommends their use for removals where available and requires companies to report whether they have been applied.

Conclusion: Carbon market winners and losers

Overall, the final standard is a disappointment from the perspective of the carbon credit market. The SBTi has created a clearer home for credits through the OER framework, but then chosen not to require meaningful action for almost a decade. This represents a failure not to use SBTi’s influence to mobilise near-term corporate capital into climate mitigation beyond companies’ value chains. With OER remaining voluntary until 2035, compliance and regulation remain the more important drivers of carbon market growth.

The clearest winners are EACs, commodity certificates and other market instruments that can operate through book-and-claim or mass balance models. These are given an explicit near-term role in the standard, particularly for scope 3 activity-pool or sector-level decarbonisation. That creates a positive signal for companies and project developers working within shared value-chain systems, including non-credited insetting models and some credited interventions that may be capable of being reframed through attribute- or certificate-based accounting. Regenerative agriculture and soil carbon project developers are a notable example, although the position for credited activity-pool and sector-level interventions remains more ambiguous than for EACs and commodity certificates.

Engineered removals with geological storage are also potential winners, particularly after 2035. The post-2035 removals requirement strengthens the long-term business case for projects that can demonstrate durable storage. The challenge is that these projects still need to survive and scale without a major near-term demand injection from SBTi.

The position for non-geological removals, including nature-based removals, is more uncertain. Much depends on how SBTi interprets “long-lived” in practice, and on the outcome of its planned call for evidence on whether shorter-lived removals can deliver equivalent permanence. If the concept is applied too narrowly, credible non-geological approaches that can demonstrate durable outcomes could play a more marginal role.

The clearest losers are reduction and avoidance credits that cannot be directly linked to a company’s supply chain. This notably includes many avoided deforestation, peatlands, blue carbon, cookstove, water and waste projects. That matters because these activities can deliver real climate and development benefits, often in the Global South. A standard that narrows corporate demand away from these project types risks leaving significant climate finance on the table.

The positive interpretation is that voluntary action to address ongoing emissions is still possible, and now has a clearer enabling home under the OER framework. Companies that want to go beyond minimum requirements can still do so, and SBTi has created a framework that may give them more reason to than before. But the standard relies heavily on hope: hope that companies opt in voluntarily, hope that removals scale before they are required, and hope that future guidance resolves the biggest integrity and transparency gaps.