The Science Based Targets initiative (SBTi) has announced an urgent revision to the Absolute Contraction Approach (ACA), the primary methodology used by corporations to set emissions reduction targets. Approved by the SBTi’s independent Technical Council, the update ensures that near-term targets remain scientifically robust and feasible for companies joining the initiative in the second half of this decade.
The refinement adjusts how annual reduction rates are calculated by factoring in the specific time a company has remaining to reach net-zero from its chosen base year. While the core requirement to achieve net-zero by 2050 remains unchanged—alongside the minimum annual reduction floor of 4.2%—the new calculation prevents the “prohibitive” reduction rates that were beginning to occur under the previous 2020-era model.
Smoothing the path to version 2.0
The update is strategically designed to align current standards (Corporate Net-Zero Standard V1.3 and Near-Term Criteria V5.3) with the forthcoming Corporate Net-Zero Standard V2.0. By introducing these changes now, the SBTi aims to provide a smoother transition for businesses as they move toward the more advanced Version 2.0 framework over the next two years.
“This ensures reductions are spread consistently across the full pathway to 2050, rather than being overly concentrated in a shorter near-term window for companies setting targets later,” the SBTi stated. The adjustment acknowledges that companies starting their journey in 2026 face a more compressed timeline than those that began in 2020.
Impact on new and existing targets
The revised methodology is effective immediately and primarily affects companies setting or renewing targets in 2026 and 2027. This includes:
- New joiners: Companies setting science-based targets for the first time.
- Renewing entities: Companies undergoing their Mandatory Five-Year Review or voluntarily updating their goals.
Crucially, the SBTi confirmed that targets previously validated under the old method remain valid and do not require immediate action. However, the new approach better recognises the progress made by early adopters; when these companies set their next round of targets, their past emissions reductions will be fully incorporated into the calculation.
Immediate implementation
The update applies to all companies using the ACA for energy and industrial emissions, as well as Forest, Land, and Agriculture (FLAG) targets. For firms currently in the validation process, no additional data or steps are required, as the updated tools within the SBTi Validation Portal will automatically apply the revised calculation.
By incorporating progress to date, the method continues to incentivise early action. Companies that have seen emissions increase before their most recent year will be required to compensate for that rise, ensuring they take stronger near-term action to realign with the global 1.5°C goal.
