The Science Based Targets initiative (SBTi) has reported a 30% rise in corporate net-zero target submissions in 2025—driven notably by companies in high-emission industries like steel and chemicals.
Additionally, financial institutions showed impressive growth, with an 83% increase in those setting science-based targets last year, signaling the sector’s mounting influence.
SBTi's CEO, David Kennedy, emphasized that these companies are adopting a pragmatic, validated approach:
“Despite recent internal challenges … SBTi remains fully funded and ambitious for growth … expanding from 10,000 to 20,000 companies with validated targets by 2030.”
New Guidance for Financial Institutions
SBTi is rolling out a specialized net-zero standard for banks, insurers, and asset managers—aiming to leverage financial networks to catalyze systemic decarbonization.
Hard-to-Abate Sectors: Stepping Up
Hard-to-decarbonize industries are increasingly stepping forward. SBTi's updated Corporate Net‑Zero Standard V2 (draft) mandates:
Mandatory Scope 3 targets for companies >US$450 m in revenue;
Carbon removal pathways embedded alongside emissions cuts;
Tightened governance: one-year target setting, random audits, and annual baseline reviews.
These shifts mean firms in steel, chemicals, data centers, and aviation must now weave carbon removal into long-term strategy.
Permanent Carbon Removal vs Weak Offsets
Large players—including Microsoft, Google, and Stripe—are financing permanent carbon removal, buying high-integrity credits for direct air capture, enhanced rock weathering, and biochar. Notably, Google has secured around 800,000 tCO₂ removal, spending over $100 million in 2024 alone.
In contrast, the broader avoided emissions credit market is shrinking:
Transaction value dropped from $2.1 billion in 2021 to roughly $535 million in 2024.
Removal credits remain a small slice—about 5%—but trade at ~$350/tCO₂ vs. $4 for avoided emissions.
Why the Stagnation?
Market plagued by integrity issues—less than 16% of credits represent real cuts, per widespread analysis.
Complex, illiquid, and lacking standardization—corporates avoid reputational risk.
Governance and Market Revival
A new Coalition to Grow Carbon Markets, led by Kenya, Singapore, and the UK, aims to revive the sector by establishing unity around high-integrity principles.
Meanwhile, nonprofit initiatives like the Carbon Removal Standards Initiative (backed by Bill Gates) seek to define third-party frameworks to verify CDR effectiveness.
Experts call for:
Regulation and integration of credits into compliance schemes (e.g. Singapore-style tax rebates).
Robust standards and oversight to discourage greenwashing.
Insurance and liquidity tools—pilot solutions by startups like Oka and Kita are emerging.
Voices from the Field
“SBTi remains fully funded and ambitious … expanding from 10,000 to 20,000 companies with validated targets by 2030.” — David Kennedy, SBTi CEO.
“Credits from engineered removal … average price $350 / tCO₂ vs. $4 for avoided emissions.”
What’s Next
2025–26: Full launch of SBTi’s net-zero financial standard—watch for institutional targets across portfolios.
Governments: Could integrate high-quality credits into compliance regimes—Singapore is a pilot model.
Market infrastructure: Standard-setting, insurance, and market-making tools will be essential to unlock large-scale corporate demand.
Final Take
Corporate net-zero commitments are accelerating—from a 30% surge in SBTi pledges to rising financial-sector engagement. The real pivot lies in moving from cheap, avoided-emission credits to permanent carbon removal, underpinned by stricter governance and integrity frameworks.
With SBTi’s ramped-up standards, Big Tech's buying power, and emerging regulatory coalitions, we’re seeing the architecture of a credible, science-aligned carbon market taking shape—critical if global decarbonization goals are to be met.