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Earlier this month, the Science-Based Target Initiative (SBTi) released the second draft of its revised Corporate Net-Zero Standard for consultation. This second draft followed on from the initial draft released back in March, with significant changes to ensure the standard is more “actionable and adaptable”.
We have done a deep dive into the changes in the revised standard regarding Scope 3 emissions reporting and target tracking, as this continues to be a challenge for many of our clients and partners working in complex agricultural supply chains.
It is worth highlighting that the SBTi Corporate Net-Zero Standard continues to align with the GHG Protocol Corporate Standard and Land Sector and Removals Guidance for FLAG-relevant sectors.
So what has changed?
Scope 3 target-setting.
A complete Scope 3 inventory will continue to be required in the revised standard, following the minimum boundaries of Table 5.4 in the Scope 3 GHG Protocol Standard. However, all companies are now required to set Scope 3 near-term targets (previously, this was only required for companies where Scope 3 emissions accounted for more than 40% of the total inventory).
Companies are now only required to set targets for significant Scope 3 categories (those categories that individually represent at least 5% of total Scope 3 emissions) and can exclude specific emission activities where influence is limited, as long as they transparently report what portion of their total Scope 3 inventory they are committing to address.
Re-definition of “beyond value chain”.
The delineation between what is included in the value chain (i.e., in Scope 3) and what is considered beyond the value chain is unclear for many supply chains, especially where they are long, complicated and with poor traceability. The revised Standard has proposed a new approach to address how emissions and emission reductions in value chains of poor traceability can be recognised. The concept of beyond value chain mitigation (BVCM) has been revised in the new draft and reframed into “supplementary climate contributions” that can be used only for neutralisation of ongoing (or residual) emissions. The concept of “indirect mitigation”, which had been proposed in the first draft of the revised Standard to address mitigation efforts in supply chains with poor traceability, has been removed; instead, mitigation actions in the value chain can be reported based on the level of traceability: to activity level, activity pool level or sector level.
Market-based accounting for Scope 3 emissions.
The first (v1.3) Net Zero Standard clearly stated that market-based Scope 3 accounting was not permissible due to its misalignment with the GHG Protocol. This has been revised in this second draft by allowing the use of purchased Environmental Attribute Certificates (EACs) for purchased energy or commodities (Scope 3 Category 1 and Category 2 emissions) at activity pool or sector level. While needing to be reported separately from the GHG inventory, they can be used on an interim basis to progress towards relevant Scope 3 targets.
EAS welcomes the opportunity for supply chain mitigation at various levels of traceability to be reported, as this makes target-setting more pertinent to companies and industries where traceability through the entire supply chain is not feasible or relevant due to continually changing suppliers. Furthermore, the proposed use of EACs for progressing Scope 3 Category 1 emission targets is another step towards science-based targets becoming more actionable and lifting barriers to value chain decarbonisation, while maintaining high integrity in emission reporting.
The details of the what and how have yet to be defined as SBTi seeks feedback from the public consultation regarding these aspects of Scope 3 target setting and intervention recognition.
We encourage industry groups and companies dealing with emission estimation and accounting in complex supply chains, and facing many of these challenges first-hand, to provide feedback on the draft guidance through the public consultation survey, open until December 8, 2025.
Photo by Ben Lockwood on Unsplash
