Five standards now require companies to set and report on near-term targets.
With several dozen net zero guidance documents published in the last five years, many sustainability leaders feel like they must decipher multiple codes for “net zero” in order to determine which framework is the right fit for their business.
A recent analysis from Net Zero Tracker provides welcome news: Net zero standards are increasingly converging on fundamental definitions.
Right now, five net zero guidance documents stand out as the most widely recognized:
Where the 5 primary net zero standards align
2050 or before: All five frameworks agree that companies must achieve net zero by 2050 or sooner.
Scope 3 is (mostly) in: There’s unanimous consensus that net zero must cover all three emission scopes, but the standards differ slightly when it comes to how companies should measure Scope 3.
The International Standards Organization’s guidelines require measurement and abatement of all “relevant” Scope 3 emissions, although they do not clarify the definition of “relevant.” That may be cleared up in the final net zero standard set for publication in late 2025. SBTi’s Net Zero Standard requires accounting of 90 percent of all material Scope 3 emissions for long-term net zero targets, although it only requires near-term Scope 3 targets for companies whose Scope 3 emissions make up more than 40 percent of their total footprint.
Emission reduction thresholds: Three of the big five standards — ISO, New Climate, and SBTi — agree that to achieve net zero, companies in most sectors need to reduce emissions by 90 percent or more compared with their baseline years; SBTi and ISO set a 72 percent reduction threshold for companies in land-intensive sectors. These three standards also provide sector-specific guidelines detailing near-term reduction pathways for a few verticals.
The other two standards do not specify reduction thresholds, but encourage reliance on other third-party methodologies.
Interim reduction targets: All five standards require companies to set and report on near-term reduction targets, typically within two to five years. SBTi and Race to Zero provide the most flexibility here, with requirements that companies set their first interim target within the next decade.
Offsets don’t count toward interim targets: All five frameworks agree that companies cannot use carbon credits toward achievement of interim targets.
Some less well recognized frameworks propose more flexibility on this point. VCMI (Voluntary Carbon Market Initiative), a non-profit whose mission is to provide best practice guidance on climate claims based on carbon credits, has proposed a Scope 3 flexibility claim. This would verify targets that use high-quality carbon credits to meet a portion of near-term Scope 3 targets. This provision would phase out by 2035.
Remove residual emissions at net-zero year: All five frameworks require companies to retire carbon credits from durable removal projects to neutralize all residual emissions ongoing at the net-zero year and going forward. The standards differ on the definition of “residual emissions,” and some do not include a definition at all; but all agree that for most sectors, residual emissions should make up no more than 5-10 percent of total emissions from the baseline year.
The standards also provide varying levels of specificity on what constitutes durable carbon removal. While all standards note that the carbon removal and storage be “permanent,” only ISO and New Climate Institute provide some definition of this term.
No requirements to mitigate unabated emissions: Ongoing or unabated emissions are those that will continue during the decades-long journey to net zero, but must ultimately be eliminated to achieve net zero. This is in contrast to residual emissions, which will remain even when a company achieves net zero status.
Of the 70 percent of G2000 companies that report emissions data, just 16 percent are on track to reach net zero by 2050.
While nearly all standards recommend that companies mitigate their unabated emissions by supporting climate action outside of their value chains, none require action. Beyond value chain mitigation can take a variety of forms, including purchase and retirement of carbon credits or investment into research or value chain engagement to support the global net-zero transition.
Is anyone on track?
While it’s not clear that the welter of net zero standards will clear up anytime soon, the good news is that as they increasingly align, more companies are signing up. Recent research from Accenture found that one in three of the world’s largest 2000 companies (G2000) have set net zero goals across Scopes 1, 2 and 3.
But, the fact remains that only a tiny sliver of companies are on track to reach net zero targets. Of the 70 percent of G2000 companies that report emissions data, just 16 percent are on track to reach net zero by 2050. That’s down from 18 percent in 2023.
As two of the most well-recognized frameworks, SBTi and ISO, prepare 2025 updates, it may be time to look for additional ways to speed global progress on decarbonization.
This article originally appeared on Trellis Group (formerly GreenBiz), a media and events company that accelerates the just transition to a clean economy.
