Key Updates in the SBTi Guidance

The Science Based Targets initiative (SBTi) remains one of the most credible frameworks for aligning corporate emissions reductions with global climate goals. With a major update to its Net-Zero Standard now in draft form, companies have a window to understand what’s changing, why it matters, and how to stay ahead.

Image via SBTi

As we approach Climate Week NYC this September — a key moment for corporate sustainability visibility — pressure is mounting for brands to demonstrate not just ambition, but credible action. The recent SBTi updates include changes to its guidance to enhance the clarity, ambition, and practicality of corporate climate targets. It’s a signal that the expectations for climate alignment are rising — and the roadmap for achieving it is becoming more demanding.

Below is an overview of the key differences between the updated guidance and the previous version:

1. Separation of Scope 1 and 2 Targets: Previously, companies could combine Scope 1 (direct emissions) and Scope 2 (indirect emissions from purchased energy) into a single target. The updated guidance now requires companies to set separate targets for Scope 1 and Scope 2 emissions. This change aims to address the unique challenges in decarbonizing each category and to enhance transparency in reporting.

2. Enhanced Approach to Scope 3 Emissions: Scope 3 emissions, which encompass indirect emissions throughout a company's value chain, have been a significant challenge for many organizations. The updated guidance introduces more flexible options for addressing Scope 3 emissions, such as setting targets for green procurement and focusing on high-emission suppliers. Additionally, large companies in higher-income countries are now required to set Scope 3 targets, regardless of the proportion these emissions represent in their total emissions. ​

3. Clarification on the Use of Carbon Credits: The SBTi maintains its position that carbon credits should not be the primary strategy for achieving emission reduction targets. Companies are encouraged to focus on direct emissions reductions within their operations and value chains. However, the updated guidance allows for the use of carbon credits to address residual emissions that are difficult to eliminate, provided these removals are durable and verifiable. 

4. Increased Ambition for Financial Institutions: Financial institutions are now expected to align their Scope 1 and 2 emissions targets with a 1.5°C pathway, an increase in ambition from the previous "well-below 2°C" requirement. Additionally, new criteria have been introduced for fossil fuel financing activities, requiring institutions to develop policies to phase out thermal coal and disclose their fossil fuel investments. ​

5. Improved Usability and Clarity: To enhance the usability of its resources, the SBTi has made several technical updates, including:

• Updating target value formatting to maintain minimum target ambition when values are rounded.

• Adding user guides to the Net-Zero Tool tabs.

• Updating references to SBTi resources and documentation.
  Retiring the Corporate Manual and consolidating its contents into the Corporate Net-Zero Standard and related guidance. 

What This Means for Leadership

With climate risk rising and regulatory expectations tightening, companies that want to lead will need to translate ambition into action with transparency, accountability, and speed. But for many teams already stretched thin, integrating these new requirements can feel overwhelming, and organizations may lack the ability to hire a full time sustainability team. 

Fractional sustainability leadership can play a powerful role. Whether scaling brand or an enterprise organization navigating complex reporting, fractional Chief Sustainability Officers (CSOs) offer a flexible, expert-driven model to:

• Interpret and operationalize SBTi updates

• Build credible, science-aligned strategies

• Align internal stakeholders and internal functions 

• Keep 2030 climate goals on track (even amid bandwidth gaps)

While the final SBTi standard won’t be released until 2026, now is the time for companies to get familiar with the proposed changes and begin evaluating how they might adapt their strategies. For organizations aiming to lead in climate action, this update is more than a compliance shift, it’s an opportunity to build trust, future-proof operations, and demonstrate real climate leadership.