The Hidden Flaw in the World’s Biggest Corporate Climate Plan

Over 10,000 companies have signed up for Science-Based Targets, marking a huge win for climate action. But a deep-seated flaw in the rules could be setting the entire system up to fail

If you follow the world of corporate climate action, you’ve heard of the Science Based Targets initiative (SBTi). In just a few years, it’s evolved from a niche acronym to the undisputed global gold standard for any company that wants to be taken seriously on emissions.

The sheer scale is staggering. As of mid-2025, nearly 11,000 companies, representing over 40% of global market capitalisation, have committed to the framework. The fastest growth is happening right now.

On the surface, this looks like an unqualified victory. We’re finally moving from vague “green” promises to a world of rigorous, third-party-verified corporate accountability.

But as with any system that experiences explosive growth, we have to ask; Is it all it’s cracked up to be?

Beneath the celebratory headlines, a fierce debate is raging within the SBTi. It’s a fight that gets to the very heart of climate science, corporate responsibility, and technological optimism. And how it gets resolved will determine whether this entire movement is a powerful engine for change or just a very sophisticated, very expensive way to look busy.

 

From Niche Framework to Strategic Need

Let’s quickly set the table. The SBTi was formed in 2014 by a group of non-profits (like the World Wildlife Fund and UN Global Compact) to give companies a clear “pathway” to reduce emissions in line with the Paris Agreement. In short, it’s a stamp of approval that says a company’s climate goals are “aligned with science.”

For years, this was a compliance exercise. The sustainability team would work to get the badge, and the company would put it in its annual report.

Not anymore.

Today, having an SBTi-approved target is a strategic imperative. Investors use it as a filter for climate risk. Customers (especially other big companies) are making it a requirement for their suppliers. And in a tight labour market, talented people want to work for companies that aren’t actively setting the world on fire.

This shift has made SBTi incredibly powerful. It’s no longer just verifying action; it’s actively driving it. Which is why the internal mechanics of its rulebook are so critically important.

The Great Carbon Removal Debate

The current firestorm is over something called the Corporate Net-Zero Standard v2.0, which is due in 2026. The central conflict? What to do about carbon dioxide removal (CDR).

Here’s the problem, simplified:

To stop climate change, we have to stop emitting GHGs (this is called mitigation). But some sectors, like aviation, cement production, maritime shipping, are incredibly “hard-to-abate.” Even with massive investment, they will likely have some “residual emissions” for decades. The question is: What do we do about those leftovers?

This is where the fight starts.

On one side, you have the tech-pragmatists. They argue that we must invest heavily in technologies that can suck carbon out of the air, like Direct Air Capture (DAC) or Bioenergy with Carbon Capture (BECCS). They believe the SBTi rules should require companies to set targets for CDR, creating the market demand needed to scale these infant technologies before 2050, when we’ll desperately need them.

On the other side, you have a large contingent of climate scientists and civil society groups. They warn this is a catastrophically dangerous distraction. They point to the “mitigation hierarchy,” a core principle of climate science: reduce what you can, then remove what you absolutely cannot.

Their fear is that allowing companies to invest in unproven, expensive, and energy-intensive removal tech gives them a “license to continue polluting.” The track record for carbon capture is famously terrible, nearly 90% of proposed projects in the power sector have failed. Why, the critics ask, would we build our entire climate strategy around a technology that barely works, rather than forcing the one thing we know works, using less fossil fuel?

This is the debate everyone is watching. But it’s masking a much deeper, more structural problem.

The Real Flaw No One Is Talking About

Let’s get a little wonky. The real problem isn’t just if we should use CDR, but who is being asked to pay for it.

The current draft of the rules proposes that companies must set targets to remove their “residual emissions.” But, and this is the multi-trillion dollar caveat, they only have to do this for their Scope 1 emissions (the pollution from their own direct operations, like a factory furnace or a vehicle fleet).

This sounds logical, but it’s completely backward.

Think about the world’s biggest companies. By 2050, firms like Microsoft, Google, or JPMorgan Chase will have almost zero Scope 1 emissions. They will have electrified their buildings and their vehicles. Their entire, massive carbon footprint will sit in Scope 3: their supply chains, their investments, and the energy their products use.

So, who will have massive leftover Scope 1 emissions? Heavy industries. Cement manufacturers. Airlines. Utilities. Companies, in other words, that often have razor-thin profit margins and low purchasing power (relative to their emissions).

This is the perverse consequence: The SBTi rules are structurally set up to fail.

They are asking the companies with the least financial capacity to single-handedly build the entire, speculative, multi-trillion-dollar carbon removal industry.

Meanwhile, the companies with the most capital and purchasing power (Big Tech, Finance) will have no mandatory requirement to invest in removals at all, because their (massive) residual emissions are all in Scope 3.

This is a structural market failure written directly into the rulebook. Without a demand signal from the actors who can actually pay, the CDR market will never scale.

So What Happens Now?

This hidden flaw has massive implications for how this all plays out.

First, it means that for sophisticated companies, SBTi is a competitive moat. The serious players (like Microsoft, Google, and the Frontier buyers group, who are already buying CDR) know the current rules are inadequate. They are building their own strategies that go beyond the standard, using their Scope 3 purchasing power to pressure their entire global supply chains. They aren’t waiting for the rules to catch up.

Second, this explains the geographical explosion. The fastest SBTi growth is in Asia (China saw 228% growth recently). This isn’t just a sudden wave of altruism. It’s a direct result of Western companies with Scope 3 targets telling their Asian suppliers, “Get your emissions in order and get SBTi-certified, or we will find a new supplier.” This is where the real, gritty work of decarbonisation is happening, not in a press release, but in a procurement contract.

Finally, it puts sustainability professionals in a bind. The framework is flawed, but it’s the only one we’ve got. The smartest approach seems to be using SBTi as a floor, not a ceiling, a credible way to communicate commitment while simultaneously doing the harder, voluntary work that the science actually demands.

A Tool, Not a Target

The SBTi has achieved something remarkable. It’s channelled the chaotic energy of corporate climate pledges into a single, powerful current.

However, the upcoming 2026 standard will be a battleground. Will it fix the structural Scope 3 loophole and ensure the companies with the most resources are required to contribute? Or will it bow to pressure, avoid the hard questions, and legitimise a flawed system?

The climate crisis won’t be solved by targets alone. They are just tools. The real question is whether we’re using them to build a resilient, decarbonised economy, or just a very pretty, very flammable façade.

I’d love to hear your thoughts. Do you see this as a pragmatic, necessary step, or a dangerous distraction? What do you make of the Scope 3 loophole?

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