The Science Based Targets initiative (SBTi) has updated its corporate net-zero standard to let companies count purchased environmental credits and carbon removals toward their climate targets. The change acknowledges that some emissions are difficult to eliminate entirely. Previously, SBTi only allowed decarbonization within a company's own supply chain, such as on-site renewable electricity. Now, market-based efforts like sustainable aviation fuel credits and carbon removal technologies including direct air capture or reforestation credits can be part of a company's net-zero strategy, with removals counting only after 2035 for the hardest-to-abate emissions. The new rules also address how companies report electricity emissions. SBTi will continue to allow annual reporting for target-setting rather than hourly matching, which some environmental groups had pushed for. However, companies with large electricity use, such as tech firms, must report the share of their consumption matched with low-carbon electricity on an hourly basis to improve transparency. Power purchase agreements (PPAs) that generate new renewable supply can also be used to offset emissions, even if the PPA is outside the company's operating region when local barriers exist. SBTi CEO David Kennedy said the standard remains science-based but focuses on implementation and continuous improvement. The goal is to push companies to shift to low-carbon power by 2040. Critics may question whether allowing offsets weakens the incentive for direct emissions cuts, but SBTi insists physical decarbonization remains the priority. The update represents a major shift in how corporate net-zero targets are set and verified.
