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About the Corporate Net-Zero Standard
SBTi’s Corporate Net-Zero Standard provides companies with a framework for setting and achieving science-based net-zero targets. Built on the Greenhouse Gas Protocol, the standard outlines accounting and reporting requirements to drive corporate climate action.
Version 1, published in 2021, primarily focused on target-setting. The newly proposed Version 2 expands on this by offering enhanced guidance on implementation, ensuring that companies not only set ambitious goals but also take concrete steps to meet them.
Key Updates in Version 2
Greater Focus on Action Over Disclosure
The first version of the Corporate Net-Zero Standard focused primarily on guiding corporate target-setting. The Version 2 draft goes further, introducing new guidance for incentivizing and recognizing actions to meet targets. This guidance reflects market analysis that more than 90% of companies are currently on track to miss net-zero targets without doubling action by 2030.
The requirements for action plans are tailored by company size:
- Category A (large and medium sized companies operating in higher-income countries) must follow all criteria
- Category B companies (smaller) are afforded more flexibility
The guidance also underscores the importance of 3rd party verification and audits for reporting. The standard includes a new requirement that companies achieve limited assurance of reported emissions, and a recommendation for stronger verification methods.
What you can do today: Build or refine a plan for emissions reductions and start tracking progress. Conduct an assessment of Scope 3 categories and identify emission hotspots in your sourcing regions, which will allow you to make more efficient progress. You can create compliant Scope 3 assessments by using remote sensing and data analytics solutions like Sustainability Insights to quantify field emissions, which prepare you for annual reporting.
Supply-Specific Strategies Take Center Stage
The draft standard calls for prioritized supplier engagement, requiring that Tier 1 suppliers align with net-zero targets. In agricultural supply chains, this means engaging suppliers of key ingredients, given that around 70% of emissions in agricultural supply chains are on the farm. In reporting these emissions, the draft calls for companies to start moving towards primary data that is representative of their specific supply chains.
Version 2 continues to prioritize direct mitigation (actions and interventions that can be linked to specific emission sources in the company's value chain). For instances where traceability is difficult, a common challenge in food, beverage, and fiber supply chains, emission factors that reflect the average emissions in a company’s supply shed may suffice. The new guidance includes an added option of implementing indirect mitigation measures.
What you can do today: Work with Tier 1 suppliers (or direct suppliers) to develop and report on their decarbonization plans for scope 3 emissions. Start investing in tools and data that improve traceability, and collect primary data related to high impact emission sources in your scope 3 supply chain.
A More Comprehensive View of Emissions Management
For emissions that are hard or impossible to abate, the draft provides new guidance for Beyond Value Chain Mitigation investments such as offsets and potentially insets to neutralize residual and ongoing emissions. These actions could include high-integrity carbon credit purchases, direct financing of mitigation projects, or conservation of carbon in natural ecosystems.
Further, under the new standard companies are required to set and implement removals targets for mitigating projected direct Scope 1 & 2 residual emissions, with abatement and removal targets are set and reported separately.
Specific guidance for integrating carbon removals is still under development and will depend on the final revision of the Greenhouse Gas Protocol Land Sector Removals Guidance. SBTi is also deliberating the quality and durability thresholds that removals will need to meet.
Finally, the new draft recommends for the first time that companies calculate and take responsibility for historic emissions. For scope 3, this recommendation would require more comprehensive longitudinal data reflective of the reported supply sheds and suppliers.
What you can do today: Set removals targets for addressing residual emissions, as well as indirect mitigation measures for making progress against targets when traceability is limited. Guidance suggests that companies will have more leeway to use Beyond Value Chain Mitigation activities such as offsets, as well as indirect mitigation measures such as book & claim and possibly insets (guidance under deliberation) as part of their decarbonization journey. There is a clear expectation that these mechanisms meet high quality standards, so make sure you have strong partnerships for science and protocol guidance.
Your to do list
While the final standard won’t be released until later this year, climate progress can’t wait. Here are three proven steps agrifood companies can take now to align with the upcoming changes:
- Identify your highest impact suppliers: Develop a prioritized list of suppliers by quantifying emissions for each. Modern supply chain software enables you to map representative supply sheds for each supplier and ingredient using remote sensing and soil carbon modeling, providing best available traceability for agricultural supply chains. This prioritization is the foundation for your action plan.
- Quantify your reduction and removal potential: Go a level deeper with the suppliers that represent your scope 3 emission hotspots. Evaluate how regenerative agriculture interventions like nutrient management and tillage practices can make progress toward net zero. Solutions like Regrow’s PlanAI go beyond rough estimates to providing prioritized program recommendations for each supplier along with expected ROI.
- Engage suppliers with a clear action plan: Engage your suppliers with a tailored net zero action plan based on your supply chain evaluation. Regrow recently spoke with Stacy Cushenbery, who leads regenerative agriculture programs in Canada and Sweden at Oatly. Her recommendation? Build your supply chain partnerships on a foundation of data to spark a collaborative conversation about a shared strategy for GHG abatement.
- Prepare for audits: Build systems today that will withstand tomorrow’s scrutiny. Ensure you have transparent documentation of rigorous methods, data sources, and assumptions, as well as systems that link emissions estimates to primary activity data, like field-level management or remote sensing.
Want to get a head start on the new SBTi Net-Zero standard? Connect with a Regrow expert to discuss your opportunity to take action on supply chain emissions.
