SBTi Revises Net-Zero Methodology as Corporate Target-Setting Evolves

The Science Based Targets initiative (SBTi) has made a technical revision to the Absolute Contraction Approach (ACA), the method underpinning how companies calculate their near-term emissions reduction targets. The change brings the ACA into closer alignment with the methodology being developed for version two of SBTi's Corporate Net-Zero Standard.

A group of analysts reviewing carbon data as industrial activity and reforestation efforts are taking place outside the window. AI generated picture.

The ACA sets the annual reduction rate a company must achieve between its chosen base year and its net-zero target date. The revised method adjusts those rates in proportion to how much time a company has remaining, a shift from the fixed trajectory applied under the previous version.

The fundamental requirements are unchanged. The 2050 net-zero deadline remains in place, as does the minimum annual reduction rate floor of 4.2%.

'The refinement of the Absolute Contraction Approach is a targeted technical update to how near-term emissions reductions are calculated by adjusting the annual reduction rates based on the time a company has to reach net-zero from its chosen base year', SBTi said.

The revision addresses a practical problem that emerged as more companies began setting targets later in the decade. The original ACA was built for companies acting in the early 2020s. For those entering the process now, the compressed timeline to 2050 produced annual reduction rates that SBTi acknowledged had become 'increasingly prohibitive.' 'What has changed is how this ambition is calculated and phased over time', it said.

The revised approach had already been consulted and pilot-tested through the Corporate Net-Zero Standard version 2 development process, in line with SBTi's Standard Operating Procedure for the Development of Standards. Its application to version 1.3 was classified as an urgent revision. The SBTi Technical Council, the independent body responsible for approving normative technical decisions, formally approved the change. No criteria of the Standard have been altered.

For companies, the practical implications are straightforward. No new data or inputs are required, and the updated calculation is applied automatically through tools in the Validation Portal. Companies with previously validated targets need take no action, though they may choose to update if they wish. The revision defines a minimum level of ambition; SBTi notes that more ambitious targets are welcome.