1 May, 2026

Missed the latest SBTi update introducing a new method for calculating minimum carbon reduction ambition? Don’t worry, you are not alone. Framed as a ‘non-substantive’ update and published in the latest version of its Corporate Net-Zero Standard, the new dynamic rate adjustment method has slipped under many radars. Yet for companies setting or updating their near-term targets, it meaningfully changes how they calculate minimum emission reductions.

Under the previous absolute contraction approach, near-term targets were anchored to fixed minimum reduction thresholds aligned to a 1.5°C pathway. These thresholds were developed at a time when most companies were setting base years for calculation in the late 2010s or early 2020s. As companies began choosing more recent base years, they were still expected to deliver the same overall level of reduction, but over a much shorter period. In practice, this meant increasingly steep annual reduction rates. For some organisations, this made near-term targets feel unrealistic or difficult to deliver, even though the long-term requirement to reach net zero by 2050 remained unchanged.

The updated methodology shifts away from this fixed reduction logic. It introduces a dynamic rate adjustment that calibrates minimum reduction rates based on a company’s base year and the time remaining to 2050. This changes how reductions are paced across the net-zero pathway, lowering the minimum reductions required in the near term for companies with more recent base years across Scopes 1, 2 and 3, while keeping the long-term net-zero goal intact.

This update may make it easier for companies that have not yet set targets to engage with the SBTi framework, particularly where previous minimum requirements felt difficult to achieve in the near term. At the same time, greater flexibility carries risk and it highlights the difficult task SBTi faces in maintaining corporate momentum while operating within a rapidly shrinking carbon budget. If it results in slower action in the early years, cumulative emissions could increase, potentially undermining the 1.5°C goal the framework is designed to protect. With multiple SBTi updates underway, including the forthcoming revision to the Corporate Net-Zero Standard, whether these changes strike the right balance will only become clear over time, and it is something we will be watching closely.

By Tulika Agarwal