The SBTi updates the Absolute Contraction Approach to improve consistency and implementation, while maintaining net-zero ambition

The Science Based Targets initiative (SBTi) has updated the Absolute Contraction Approach (ACA)—the methodology companies use to set absolute emissions reduction targets under the Corporate Net-Zero Standard V1.3 and Corporate Near-Term Criteria V5.3. This brings the method into alignment with the methodological direction proposed under the forthcoming Corporate Net-Zero Standard V2.0, supporting a smoother transition for companies to move from Version 1.3 to Version 2.0 over time. The update was processed as an urgent revision, following approval by the SBTi’s independent Technical Council.

The refinement of the Absolute Contraction Approach (ACA) is a targeted technical update to how near-term emissions reductions are calculated by adjusting the annual reduction rates based on the time a company has to reach net-zero from its chosen base year. The requirement to reach net-zero by 2050 or earlier remains unchanged, as does the minimum annual reduction rate floor of 4.2% between the base year and target year. What has changed is how this ambition is calculated and phased over time.

By taking into account a company’s base year and its net-zero target year, the revised method provides a consistent approach across companies with different starting points, while maintaining full alignment with science-based net-zero pathways. 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 adjustment addresses an issue encountered with the previous method, originally designed to set targets in the early 2020s, but that, when setting targets in the second half of this decade, results in increasingly prohibitive reduction rates, given the compressed period this implies to achieve emissions reductions.

Targets previously validated under the earlier version of the method remain valid and aligned with SBTi requirements. This update better reflects the progress of companies who are reaching the end of their first SBTi target by incorporating progress to date into their next targets. Both old and new methods incentivize early action and ensure that delayed progress will have to be corrected by more ambitious future targets. 

As noted, this refinement also brings closer alignment with the methodological direction proposed under the forthcoming Corporate Net-Zero Standard V2.0 Standard to support a smoother transition for companies to move from Version 1.3 to Version 2.0 over time.

Who does this affect?

This update is relevant for companies setting targets in 2026 and 2027, including companies that are new to the SBTi and setting targets for the first time, as well as those who are renewing their targets, whether as part of their Mandatory Five Year Review or otherwise updating them. Companies that have commitments to set targets with Corporate Net-Zero Standard version 1.3 and Near-Term Criteria version 5.3 would have the new methodology automatically applied to their targets, when using this method. Companies to whom this applies have been informed directly.

The update is effective immediately for all companies setting targets for energy and industrial emissions, as well as forest, land, and agriculture (FLAG) targets using the Absolute Contraction Approach. For companies currently in the process of setting targets, no additional data or steps are required. Existing inputs remain valid, and updated tools within the Validation Portal apply the revised calculation method.

The update does not affect previously validated targets.

What does this mean for companies with validated targets?

Targets previously validated under the earlier version of the method remain aligned with SBTi requirements.

Both the old and new ACA methods incentivize early and sustained emissions reductions. The later a company sets targets, the shorter the time remaining to abate any remaining emissions, and therefore, the steeper the reduction rate.

Companies that set targets earlier have already made progress in reducing emissions, which is fully recognized in the updated method. It better reflects the progress of companies who are reaching the end of their first SBTi target by incorporating progress to date into their next targets. The method therefore incentivizes early action, and ensures that delayed progress will have to be corrected by more ambitious future targets.

By incorporating progress to date into target calculations, it ensures that companies that have not sufficiently reduced emissions in the past take stronger action to realign with net-zero pathways. Companies that have increased emissions before the most recent year are required to compensate for that increase, ensuring that the corrected ambition remains feasible in the near-term by distributing the required effort to remain aligned with net-zero pathways. 

Why now?

There are several reasons why the SBTi updated this methodology in the current timeframe. Firstly, this change introduces a similar approach to the linear contraction methodology proposed in Corporate Net Zero Standard version 2 to ensure greater alignment for those companies setting targets under Corporate Net-Zero Standard version 1 in 2026 and 2027. Secondly, it addresses an unintended issue with the previous method  designed to set targets in the early 2020s, but that results in increasingly prohibitive reduction rates for those setting targets now, given the compressed period this implies to achieve emissions reductions. 

How was the change made?

The new method, which informs this revision, has already been consulted and pilot-tested as part of Corporate Net Zero Standard version 2, which is being conducted according to the Standard Operating Procedure for the Development of Standards. The adjustment to enable this method for companies setting targets under Version 1.3 of the Corporate Net Zero Standard and Near-Term Criteria Version 5.3 was treated as an urgent revision, given the implications of the old method for companies setting targets from 2026 onwards. No criteria of the Standard have changed. The revision of the method has been approved by the SBTi Technical Council, an independent deliberation and technical decision-making body that reviews, approves, and recommends adoption of SBTi standards and other normative technical decisions, including methods and pathways.

What’s next?

The update is effective immediately for all companies using the Absolute Contraction Approach, including energy and industrial targets as well as forest, land and agriculture (FLAG) targets. No new data or inputs are required. Updated tools within the Validation Portal automatically apply the revised calculation. Companies may update their targets if they choose, but no action is required for those with already validated targets. These updates reflect the minimum required ambition - more ambitious targets are welcome and encouraged.

The update to the Absolute Contraction Approach for companies setting targets in 2026 and 2027 supports practical implementation and alignment with the Corporate Net Zero Standard version 2. View more technical information about the update.

Unsure if this applies to you?

Please contact info@sciencebasedtargets.org if you have further questions.