SBTi Corporate Net-Zero Standard V2 – Second Consultation Draft: Aligning Ambition with Action

To achieve a net-zero economy, businesses need a practical roadmap for immediate, high-integrity action. The Science Based Targets initiative (SBTi) recently released the second consultation draft of its Corporate Net-Zero Standard (CNZS) V2, offering a crucial opportunity to influence corporate climate strategy.

The Beyond Alliance welcomes this draft as a key step for effective corporate climate action. We support the standard’s expanded mitigation levers, tougher accountability, and pragmatic approach to target-setting. We have long maintained that practical, market-based tools help businesses deploy capital effectively, accelerating global decarbonization. However, refinements are needed to maximize the standard’s impact and catalyze large-scale finance. Below is a summary of core feedback from our corporate members.

1. Unlocking Innovation in Scope 3 (Environmental Attribute Certificates)

Scope 3 emissions—those from suppliers and customers—typically make up the largest share of a company’s climate footprint. However, they remain the most difficult to address, often hindered by limited leverage over value chain partners and the challenge of obtaining traceability across complex global supply networks.

To address this, the draft standard introduces Environmental Attribute Certificates (EACs), which represent the climate benefit of producing a lower-carbon version of a commodity, such as green steel or low-carbon cement. EACs allow companies to support emissions reductions even when direct supply-chain traceability is not feasible or practical.

This inclusion is a meaningful step forward that reflects the constraints of current Scope 3 approaches and is consistent with Beyond’s previous recommendations. However, the current draft places three major limits on how EACs can be used:

• First, EACs are limited to a few “priority emissions sources,” such as aluminum or aviation fuel. Although prioritizing heavy emitters is important, this restriction risks freezing investment in other critical sectors, such as copper and chemicals, where official decarbonization pathways are still being developed by the SBTi. This creates a “chicken-and-egg” problem: absent clear incentives to buy low-carbon versions of these materials, suppliers in these emerging sectors may not invest, and without that investment, the market cannot mature.
• Second, EACs are permitted only for “volume alignment” targets, inexplicably excluding other target types such as “emissions-intensity” targets. This restriction unnecessarily limits companies with emissions-intensity targets from deploying capital through EACs when they face structural or insurmountable barriers to direct decarbonization.
• Third, EACs are only allowed if issued using attributional accounting. However, some interventions (such as methane abatement, and early coal phase-out) are better captured using consequential accounting, which measures the net change in global emissions caused by a specific action or project. These certificates should also be eligible if they meet integrity criteria.

Our Recommendation: Expand EAC eligibility to include Scope 3 intensity targets cross all sectors, not just “priority emissions sources,” and allow EACs using consequential accounting if they meet integrity criteria. EACs unlock much-needed capital for supplier decarbonization, especially as initiatives like the AIM Platform and Value Change Initiative are developing needed frameworks for hard-to-abate sectors. We support the SBTi’s desire to protect the integrity of emissions inventories and avoid the misuse of market-based instruments. However, this risk can be effectively managed by reporting these outcomes separately, using distinct accounting ledgers, as proposed in the Greenhouse Gas Protocol’s update to the Corporate Standard. These safeguards allow recognition of robust climate action regardless of target type, without compromising core emissions accounting.

Crucially, we also believe EACs can solve the “free-rider” problem by ensuring only the company that finances a low-carbon upgrade claims the emissions reduction. In practice, companies have been discouraged from directly investing in decarbonizing shared suppliers, given that competitors using the same supplier can claim the resulting emissions reductions without contributing to the investment.

2. Bridging the Ambition Gap (Ongoing Emissions Responsibility)

SBTi’s new “Ongoing Emissions Responsibility” (OER) framework, formerly known as Beyond Value Chain Mitigation, encourages companies to take responsibility for emissions they generate on their way to net zero. Companies covering 1% of ongoing emissions with climate finance (e.g., carbon credits and/or R&D, adaptation projects, etc.) achieve “Recognized” status; those covering 100% earn “Leadership.”

We strongly support this mechanism as a way to unlock climate finance now, rather than waiting until 2050.

However, the current framework creates a stark binary choice between the 1% floor and the 100% ceiling, with a fixed dollar cost per ton articulated for each tier. We are concerned that the strict spending formula for “Leadership” status is likely to favor financial inputs over verified environmental impacts. By requiring companies to budget based on high theoretical price estimates rather than the actual cost of validated projects, the framework risks penalizing efficiency, artificially inflating market prices without commensurate quality, and discouraging companies from surpassing the minimum 1% commitment.

Furthermore, requiring companies to achieve at least 90% of past targets to qualify for “Recognized” status could penalize ambitious companies, since in practice, decarbonization progress often happens in steps and jumps, not linearly.

Our Recommendations: The SBTi should replace the dollar threshold in the OER framework with rigorous quality and integrity principles based on established market frameworks, such as the Integrity Council for the Voluntary Carbon Market (ICVCM).

To address the ambition gap between “Recognized” and “Leadership” status, SBTi should also implement flexible, incremental recognition mechanisms. This could include:

• A public leaderboard on the SBTi website ranking companies by the percentage of OER contributions;
• Intermediate recognition tiers above 1% coverage;
• A gradually increasing percentage requirement over time (e.g., 10% by 2030) to create a natural path toward the mandatory minimum percentage (TBD) of future targets in 2035.

Lastly, we recommend the SBTi decouple OER eligibility from strict historical target performance, so that companies committed to climate finance but facing complex abatement challenges can still participate and invest in high-quality climate projects.

3. Avoiding Market Fragmentation (Integrity Criteria)

To ensure quality, the SBTi has drafted its own set of integrity principles for carbon credits and climate finance in Annex E. Creating a new, bespoke definition of “quality” in isolation risks confusing the market and undermining the emerging ecosystem of standards. Specialized bodies like the ICVCM are already dedicated to this task. The ICVCM’s Core Carbon Principles (CCPs) represent a robust, science-led assessment framework designed specifically to filter out low-integrity credits through deep, category-level scrutiny. By leveraging this centralized high-integrity benchmark, the SBTi can uphold robust safeguards without duplicating the massive technical undertaking required to vet carbon projects.

Our Recommendation: The SBTi should explicitly endorse and align with existing specialized standards, such as the ICVCM’s CCPs, ensuring consistency, reducing confusion, and allowing companies to focus resources on action rather than compliance with conflicting rules. To avoid bottlenecks while ICVCM assessments conclude, we suggest a ‘safe harbor’ transition period for early movers using credits undergoing review. We urge the SBTi to follow the precedent set by the VCMI Claims Code, which successfully used proxies (such as CORSIA-eligible credits) to bridge this gap without halting near-term capital deployment.

4. Future-Proofing Durability (Carbon Removals)

The draft requires “storage durability” for carbon removals at the net-zero year. Durability refers to the length of time carbon is safely stored after being removed from the atmosphere—ranging from decades (e.g., forestry) to millennia (e.g., direct air capture). Ensuring long-term storage is essential to maintaining the climate benefits of carbon removals, even in the face of potential reversals such as wildfires.

However, the current proposal to enforce rigid ratios of long-lived versus short-lived removals by 2035 is premature. This approach risks “picking winners” before the market and science have matured and precludes interventions to address near-term warming.

Our Recommendation: Instead of a binary choice, we propose a flexible Portfolio Approach that prioritizes two key principles:

• Addressing Near-Term Warming: Science suggests a 100% permanent removal portfolio might not be the single optimal intervention by 2035. Scalable, near-term solutions (like nature-based removals or super-pollutant avoidance) can reduce peak warming and delay dangerous climate tipping points while longer-duration technologies scale up.
• Managing Risk, Not Just Technology: We urge the SBTi to recognize financial innovation as a valid form of permanence. Mechanisms like “Permanence Trusts” (pooled funds to cover future reversals) and “Horizontal Stacking” (sequentially investing in shorter-term removals) allow companies to build a functionally permanent outcome over time using a diverse mix of solutions. This approach turns physical uncertainty into a managed financial risk, allowing companies to invest immediately in high-integrity climate action, rather than waiting for perfect technology.

By focusing on both near-term impact and risk management, the SBTi can encourage robust, practical climate action without locking the market into rigid rules that risk stifling innovation.

5. Removing Barriers to Global Investment (Corresponding Adjustments)

The draft requires “corresponding adjustments” (CAs) when companies use international carbon credits to neutralize their residual emissions. CAs are a Paris Agreement accounting tool to prevent emission reductions from being “double-counted” by both the host country and the buyer (e.g., another country under Article 6.2, or a corporation under Article 6.4).

While we support accurate national carbon accounting, requiring CAs for voluntary corporate action creates major obstacles:

• Because the U.S. has withdrawn from the Paris Agreement and therefore cannot issue corresponding adjustments, this requirement would deter Carbon Dioxide Removal (CDR) investment in the world’s largest economy.
• Most host countries, particularly in the Global South, currently lack the complex regulatory infrastructure to authorize the international trading of carbon credits.

Our Recommendation: The SBTi should remove the CA requirement and acknowledge the recent regulatory signal by policymakers from The Coalition to Grow Carbon Markets, which supports the distinction between national inventory accounting and voluntary corporate claims. It should rely on existing integrity principles from frameworks such as the ICVCM CCPs (e.g., robust registry tracking) to prevent double-counting in the voluntary market. Given that the draft already excludes CAs for contributions to avoid investment barriers in lower-income countries, applying this same logic to neutralization would create a more consistent and inclusive approach to global climate finance.

Conclusion

The Corporate Net-Zero Standard V2 represents a defining moment for corporate climate action. By refining these technical elements—removing barriers to global flows, expanding flexibility for supply chain innovation, harmonizing integrity standards, and adopting a portfolio approach to removals—the SBTi can deliver a final standard that is not only scientifically rigorous but also practically executable.

The Beyond Alliance remains a committed partner in this process. We believe that by balancing high ambition with market reality, we can unlock the trillions of dollars in corporate finance needed to secure a 1.5°C future.

See the Beyond Alliance’s full submission to the SBTi here.