04 April 2025 2 minute read

Navigating the New SBTi Corporate Net-Zero Standard: Scope 3 instruments

The Science Based Targets initiative (SBTi) is updating its Corporate Net-Zero Standard and these changes will significantly impact how companies approach their climate strategies.

In the first of our three-part webinar series on this update, our experts dove into the concepts behind some of the emerging approaches—like supply shed and book-and-claim systems—to enable companies to evaluate how these instruments can support scope 3 decarbonisation within SBTi's new draft guidance.

In case you missed it, we've put together a quick recap of the key terms. If you're looking to dive deeper, jump down and watch a recording of the full webinar.

Scope 3 emissions: where to focus

Scope 3 emissions are often the most challenging to address, but the new standard provides guidance on where companies should prioritise their efforts:

Focus on significant categories: Start by tackling scope 3 categories that contribute to 5% or more of your total scope 3 emissions.
Prioritize high-impact areas: Identify areas within your value chain where you have the greatest influence and can drive significant change, such as your Tier 1 suppliers.
Target emission hotspots: Look for the most emission-intensive activities within your value chain and focus on decarbonizing those areas.

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Insetting: a closer look

Insetting refers to emission reduction or removal projects that are directly linked to a company's supply chain. The SBTi emphasizes insetting within the supply chain as a way to address scope 3 emissions. These projects can count towards near-term and long-term Science-Based Targets.

Market-based solutions: supply shed and book & claim

The updated standard also introduces new market-based mechanisms for scope 3 emissions reduction:

Supply shed approach: This approach focuses on reducing emissions or sequestering carbon within a defined geographical area where a company sources materials. It is useful when direct traceability to specific emission sources is not feasible.
Book-and-claim: This mechanism allows companies to purchase certificates for verified emission reductions, even without a direct supply chain link and claim the environmental benefits for their net zero strategy.. However, it is considered an interim solution, and the SBTi will be consulting on traceability and reporting guidelines for both instruments.

What's next: engaging with suppliers

The new standard may require companies to set supplier engagement targets with the goal of increasing the number of Tier 1 suppliers transitioning to net zero compatible performance. Engaging with suppliers now will be crucial for future collaborative impact.