SBTi has released the second draft of its Corporate Net-Zero Standard (v2) for public consultation. The update matters: for the first time, SBTi proposes a structured way for companies to use carbon credits as a supplementary tool alongside deep emissions reductions.
The mechanism remains in draft form, and the consultation window is still open, but the proposed changes would give companies clearer guardrails for using credits responsibly — and help align the market around high-integrity mitigation and removal.
Below is a clear, practical breakdown of what’s in the draft and what it could mean for corporate climate strategies.
1. Why SBTi updated the standard
Even the most ambitious companies continue to emit greenhouse gases while transitioning toward their net-zero year. These ongoing emissions consume the world’s limited carbon budget and continue to drive warming.
Until now, SBTi has not provided a formal pathway for companies to act on these ongoing emissions beyond internal decarbonisation. This gap has led to confusion and inconsistency in how corporates use carbon credits in net-zero strategies.
The new draft aims to address this by creating a transparent, structured mechanism that encourages companies to take responsibility for ongoing emissions — in a way that complements, rather than substitutes for, deep decarbonisation.
2. Introducing the Ongoing Emissions Responsibility (OER) mechanism
The centrepiece of the update is the Ongoing Emissions Responsibility (OER) framework. OER acknowledges that companies will continue to emit while transitioning and introduces a way to contribute to global mitigation efforts during this period — without weakening the obligation to reduce emissions in line with science. Under OER, companies can choose between two “statuses,” each reflecting different levels of ambition:
Recognised Status – A baseline, widely accessible contribution. Companies must either:
- Address 1% of their emissions using high-integrity carbon credits, or
- Apply an internal carbon price of $20/t across their inventory.
Leadership Status – A higher-ambition pathway for companies ready to lead. Companies must:
- Apply an internal carbon price of $80/t across all emissions, and
- Address up to 40% of emissions using high-quality carbon credits.
These pathways encourage companies to act on ongoing emissions now, while making clear that reductions remain the primary requirement.
3. Participation, disclosure, and future expectations
Under CNZS v2, all companies would need to publicly disclose whether they intend to participate in OER — or explain why they are opting out. This adds a much-needed layer of transparency to ongoing emissions management.
As drafted:
- OER remains voluntary for most companies today but must be disclosed.
- For “large” or Category A companies, OER is intended to become mandatory by 2035, scaling toward full coverage by each company’s net-zero year.
SBTi’s design signals a broader expectation: taking responsibility for ongoing emissions will become increasingly standard practice for major corporates aligned with science-based pathways. While not universal yet, OER is positioned to become a mainstream norm in credible corporate climate action.
4. What changes after 2035
SBTi proposes a phased shift toward greater integrity and higher durability in credit use:
- Until 2035: both avoidance and removal credits remain eligible under OER.
- From 2035 onward: only removal credits would qualify.
This reflects long-term climate pathways and the need to accelerate investment into removal solutions with durable storage.
5. Durability expectations rise over time
The draft introduces durability thresholds to guide removal portfolios:
- By 2035: at least 17% of removal portfolios should consist of long-lived removals
- By 2050: that share should rise to 41%
These thresholds acknowledge how removal technologies will evolve and scale, allowing companies to gradually increase the share of high-durability options over time.
6. What this means for corporate climate and procurement teams
If adopted, CNZS v2 could bring meaningful clarity to net-zero planning by:
- Providing clearer guidance – Companies would have a consistent, widely recognised framework for integrating credits into credible net-zero strategies.
- Boosting demand for high-integrity removals – Especially durable removals, which remain limited and capital-intensive today.
- Strengthening the conditions for long-term project finance – Forward offtakes and early commitments become more important as buyers seek future access to high-quality supply.
- Improving alignment across standards – The draft reinforces what many leading companies are already doing:
- prioritising deep decarbonisation
- using high-quality credits supplementarily
- increasing durability over time
- being transparent about claims and methodologies
8. Consultation is closing soon
The SBTi draft is open for public consultation for one more week. Feedback from corporates, developers, investors, and market participants will help shape the final standard.
We will continue to monitor developments and share guidance as the process moves forward. If you’d like support interpreting the draft or planning your response, our team is here to help.