The Science Based Targets Initiative (“SBTi”) Corporate Net-Zero Standard is “the world’s first framework for corporate net-zero target setting in line with climate science,” and provides “the guidance, criteria, and recommendations companies need to set science-based net-zero targets consistent with limiting global temperature rise to 1.5°C.”  It is intended for corporations with more than 500 employees.

Pursuant to the SBTi Net-Zero Standard, achieving corporate net-zero means:  (1) “[r]educing scope 1, 2, and 3 emissions to zero or to a residual level that is consistent with reaching net-zero emissions at the global or sector level in eligible 1.5°C-aligned pathways,” and (2) “neutralizing any residual emissions at the net-zero target year and any GHG emissions released into the atmosphere thereafter.”  The standard includes four key elements:

• a near-term science-based target;

• a long-term science-based target;

• mitigation beyond the value chain; and

• neutralization of any residual emissions.

SBTi provides detailed guidance and criteria for achieving each of these elements – including sector specific projects for financial institutions and several other sectors.  Additionally, SBTi has a number of tools to assist companies in fulfilling their goals, including a Commercial Real Estate and Residential Mortgage Tool, a Private Equity Sector Science-Based Target Guidance, and a finance tool for temperature scoring and portfolio coverage.

In addition to its Corporate standard (which has been completed), Science Based Targets is also in the process of developing a Financial Sector Net-Zero Standard to “enable financial institutions to use their influence to achieve economy-wide net-zero emissions by 2050.” In April 2022, SBT published a paper discussing the foundations for science based net-zero target setting for the financial sector. SBT expects to launch its Financial Sector Net-Zero Standard in the first quarter of 2023.