The Science Based Targets initiative (SBTi), a leading authority in corporate climate goal-setting, has made headlines in 2025 with its revised guidelines that signal a pragmatic shift in the role of voluntary carbon credits for achieving net-zero targets. Announced as part of the draft Corporate Net-Zero Standard Version 2.0, released on March 18, 2025, these guidelines encourage companies to integrate high-quality carbon credits, particularly carbon dioxide removal (CDR) credits, to address residual emissions, especially in Scope 3. This move, which follows heated debates and internal restructuring within SBTi, aims to bolster corporate climate action by providing flexibility while maintaining a focus on direct decarbonization. This article explores the nuances of SBTi’s updated guidelines, the role of voluntary carbon credits, their implications for businesses, and the broader impact on the voluntary carbon market (VCM) in 2025.

The Evolution of SBTi’s Stance on Carbon Credits

Since its inception in 2015, SBTi has been a cornerstone for companies aiming to align their climate strategies with the Paris Agreement’s 1.5°C target. Its Corporate Net-Zero Standard, first published in 2021, emphasized deep emissions reductions across all scopes (1, 2, and 3) as the primary pathway to net-zero, with carbon credits limited to neutralizing residual emissions (typically 10% or less) via permanent carbon removal after achieving long-term targets. This strict stance reflected concerns about the effectiveness of carbon credits, with studies suggesting that only 12–33% of credits deliver their stated climate benefits due to issues like over-crediting and carbon leakage.

However, in April 2024, SBTi’s Board of Trustees sparked controversy by announcing plans to allow environmental attribute certificates (EACs), including carbon credits, for Scope 3 abatement, bypassing the initiative’s technical council. This unilateral decision led to internal dissent, the resignation of CEO Luiz Amaral, and criticism from NGOs like NewClimate Institute, which argued it risked undermining genuine climate action. In response, SBTi delayed its revised standard’s release, originally slated for July 2024, to conduct extensive consultations with stakeholders, including NGOs, academics, and businesses.

The draft Corporate Net-Zero Standard Version 2.0, released in March 2025, reflects a more balanced approach. It maintains SBTi’s commitment to prioritizing direct emissions reductions but introduces flexibility for companies to use high-quality carbon credits, particularly CDR, to address residual emissions during the transition to net-zero. The guidelines propose three options for handling residual emissions: mandatory CDR targets, optional CDR targets with recognition, or a flexible approach combining abatement and removals. This shift acknowledges the challenges of decarbonizing Scope 3 emissions, which average 11 times higher than direct emissions and are often beyond a company’s direct control.

Understanding the Role of Voluntary Carbon Credits

Voluntary carbon credits represent a ton of carbon dioxide equivalent (tCO2e) either removed from the atmosphere or prevented from being emitted through projects like reforestation, renewable energy, or direct air capture (DAC). Unlike compliance markets, the voluntary carbon market (VCM) allows companies to purchase credits to support climate action beyond their value chain, often as part of “beyond value chain mitigation” (BVCM). SBTi’s revised guidelines emphasize that carbon credits are not a substitute for direct reductions but a complementary tool for addressing hard-to-abate emissions, particularly in Scope 3, which includes supply chain and product use emissions.

The guidelines highlight two key types of credits:

1. Emission Reduction Credits: These fund projects that prevent emissions, such as clean cookstoves or methane capture. While valuable, their effectiveness is debated due to issues like additionality (whether the project would have happened anyway) and permanence (ensuring emissions stay reduced).
2. Carbon Removal Credits: These involve permanent removal of CO2 from the atmosphere, such as through DAC or bioenergy with carbon capture and storage (BECCS). SBTi prioritizes CDR for neutralizing residual emissions, aligning with the “like-for-like” principle, where removals match the permanence of emitted CO2.

SBTi’s draft standard proposes that companies can use CDR credits to address up to 100% of projected residual Scope 1 emissions in their net-zero target year, with a gradual increase in CDR purchases over time. For Scope 3, larger companies (“Category A”) must ensure residual emissions are neutralized, either by value chain partners or through company-supported CDR. The guidelines also encourage BVCM, where companies invest in high-quality credits to support global decarbonization, earning recognition for these efforts without counting them toward reduction targets.

Key Features of the Revised Guidelines

The SBTi draft Corporate Net-Zero Standard Version 2.0 introduces several critical updates to guide companies in leveraging carbon credits effectively:

• Prioritization of Direct Reductions: Companies must achieve at least 90% emissions reductions across all scopes before using credits for residual emissions. Near-term targets require halving emissions by 2030, ensuring decarbonization remains the focus.
• Focus on Carbon Removal: The standard emphasizes CDR for neutralizing residual emissions, with a “gradual shift” approach requiring companies to transition to durable removal methods over time. Temporary storage is allowed for short-lived greenhouse gases, but long-term storage is mandated for CO2.
• Scope 3 Flexibility: Recognizing the complexity of Scope 3, the guidelines allow companies to use CDR credits to address residual emissions, with optional recognition for voluntary CDR targets. This is particularly relevant for sectors like aviation or cement, where low-carbon alternatives are limited.
• High-Integrity Standards: SBTi will not validate credit quality itself but is collaborating with the Integrity Council for the Voluntary Carbon Market (IC-VCM) and the Voluntary Carbon Markets Integrity Initiative (VCMI) to ensure credits meet stringent criteria, such as additionality, permanence, and social safeguards.
• Beyond Value Chain Mitigation (BVCM): Companies are encouraged to invest in credits for BVCM, supporting projects like ecosystem protection or renewable energy in developing countries. These efforts are reported separately to enhance transparency.
• Public Consultation and Timeline: The draft is open for consultation until June 1, 2025, with a second round planned, followed by testing with select companies. The final standard is expected in 2026, providing clarity for businesses.

These features aim to balance flexibility with rigor, addressing criticisms that earlier proposals risked greenwashing while enabling companies to act swiftly in hard-to-abate sectors.

Implications for Businesses

SBTi’s revised guidelines have significant implications for companies committed to science-based targets, particularly those with complex supply chains or high Scope 3 emissions. Key impacts include:

1. Enhanced Flexibility for Scope 3: By allowing CDR credits for residual Scope 3 emissions, SBTi provides a practical solution for industries like retail, technology, or aviation, where supply chain decarbonization is challenging. For example, companies investing in sustainable aviation fuel (SAF) certificates can now align these efforts with their climate goals.
2. Increased Demand for High-Quality Credits: The emphasis on high-integrity CDR credits is expected to drive demand in the VCM, potentially injecting $19 billion in the near term and $65 billion by 2030, according to MSCI. This could scale technologies like DAC and BECCS, though supply constraints for high-quality credits remain a concern.
3. Strategic Climate Planning: Companies must integrate CDR into their strategies now, forecasting residual emissions and developing procurement processes for high-quality credits. Early investment in CDR projects can secure supply and demonstrate climate leadership.
4. Reputation and Transparency: The guidelines’ focus on BVCM and separate reporting for credit use enhances transparency, helping companies avoid greenwashing accusations. Recognition for voluntary CDR targets incentivizes proactive action.
5. Challenges for Smaller Companies: While SBTi proposes optional Scope 3 targets for smaller firms, the complexity of forecasting residual emissions and sourcing high-quality credits may pose barriers, necessitating simplified guidance.

Businesses aligning with SBTi’s framework, including over half of G7-listed companies by 2024, will need to adapt their strategies to incorporate CDR while maintaining aggressive reduction targets.

Impact on the Voluntary Carbon Market

The VCM, valued at $2 billion in 2024 with projections of $7–$35 billion by 2030, stands to benefit significantly from SBTi’s guidelines. Key impacts include:

• Boosted Demand: Allowing CDR credits for Scope 3 residual emissions could expand the VCM into new sectors, such as construction or logistics, where low-carbon alternatives are scarce.
• Focus on Quality: Collaboration with IC-VCM and VCMI ensures credits meet high-integrity standards, reducing risks like over-crediting or human rights violations in projects. MSCI reports that A- or AA-rated credits doubled between 2022 and 2024, reflecting a shift toward quality.
• Scaling CDR Technologies: Increased demand for CDR credits could accelerate investment in nascent technologies like DAC, though financing and scalability remain challenges. Removal credits, priced at $11/tCO2e in 2024, are seeing rising demand due to their permanence.
• Alignment with Global Standards: SBTi’s guidelines align with broader trends, such as the EU’s Carbon Removal and Carbon Farming framework and U.S. guidelines for VCM integrity, fostering harmonized standards.

However, critics warn that without robust verification, the VCM risks repeating past pitfalls, such as the 2023 Verra scandal, where 90% of rainforest credits were found ineffective. SBTi’s decision not to validate credit quality itself places the onus on external bodies, necessitating strong oversight.

Criticisms and Challenges

Despite the optimism surrounding SBTi’s guidelines, challenges remain:

• Ambiguity in Scope 3: The optional nature of Scope 3 CDR targets and the complexity of projecting residual emissions may deter action, particularly for smaller firms.
• Risk of Greenwashing: Critics, including over 80 NGOs, argue that allowing credits for Scope 3 could dilute ambition, echoing concerns from the 2024 controversy. Robust guardrails are essential to prevent misuse.
• Supply Constraints: The supply of high-quality CDR credits may not meet demand if companies wait until their net-zero year to purchase, underscoring the need for early investment.
• Governance Concerns: The 2024 internal row highlighted governance issues, with staff and advisors criticizing the Board’s unilateral actions. SBTi must strengthen its processes to rebuild trust.
• Delayed Clarity: With the final standard not expected until 2026, companies face uncertainty, potentially slowing climate action. Some, like CNaught, argue SBTi’s pace is too slow for the 2030 deadline.

These challenges underscore the need for clear, actionable guidance and collaboration with VCM stakeholders to ensure credits deliver real climate benefits.

The Broader Context in 2025

SBTi’s guidelines align with 2025’s global push for credible climate action. COP29’s advancements in Article 6 of the Paris Agreement, enabling carbon trading via Internationally Transferred Mitigation Outcomes (ITMOs), complement SBTi’s framework. The EU’s Green Claims Directive and U.S. VCM guidelines emphasize transparency, while VCMI’s Scope 3 Action Code of Practice, launched in April 2025, supports credit use until 2040, contrasting SBTi’s stricter timeline.

Social media sentiment reflects mixed views. A post by @sunnameri on X noted VCMI’s more permissive stance on Scope 3 credits, suggesting SBTi’s cautious approach may limit VCM growth, highlighting ongoing debates about credit efficacy. Meanwhile, corporate climate finance remains a bottleneck, with only a 5% increase from 2018 to 2023 despite a 500% rise in SBTi commitments, underscoring the need for tools like credits to close the gap.

Practical Steps for Companies

To align with SBTi’s guidelines, companies should:

1. Prioritize Reductions: Invest in decarbonizing operations and supply chains, targeting a 90% reduction by 2050.
2. Forecast Residual Emissions: Model Scope 1 and 3 residual emissions to plan CDR procurement, focusing on high-quality credits.
3. Engage in BVCM: Purchase credits for ecosystem protection or renewable energy projects, reporting these separately to earn recognition.
4. Partner with VCM Experts: Work with IC-VCM or VCMI-certified suppliers to ensure credit integrity, avoiding low-rated credits (B or below).
5. Participate in Consultations: Provide feedback during SBTi’s consultation to shape the final standard, ensuring it meets industry needs.

These steps can help companies demonstrate leadership while navigating the evolving VCM landscape.

Final Thoughts

SBTi’s draft Corporate Net-Zero Standard Version 2.0 marks a pivotal moment in corporate climate action, encouraging the strategic use of voluntary carbon credits to address residual emissions, particularly in Scope 3. By prioritizing high-quality CDR credits and BVCM, the guidelines offer flexibility for hard-to-abate sectors while maintaining a focus on direct decarbonization. This pragmatic shift, informed by extensive consultations, aims to scale the VCM, drive investment in CDR technologies, and close the climate finance gap.

However, challenges like supply constraints, governance concerns, and the risk of greenwashing require robust guardrails and collaboration with VCM stakeholders. As the standard undergoes consultation in 2025, companies must act now to integrate CDR into their strategies, leveraging SBTi’s framework to future-proof their businesses. In a world racing against the 2030 climate deadline, SBTi’s guidelines provide a science-based roadmap for meaningful action, proving that carbon credits, when used responsibly, can be a powerful tool in the fight for a net-zero future.