SBTi’s Net Zero Standard Gets a Mid-Market Makeover: What It Means for Your Business
Gary Gao, CEM, PMP, SEA
Senior Manager
Gary has over 10 years of experience in the energy and sustainability space. He excels in developing holistic energy and sustainability strategy, engaging stakeholders and guiding clients through their sustainability journey. His breadth of experience is diverse and expansive from working with many Fortune 500 clients to being educated in multidisciplinary fields of engineering, environmental policies, and business.
In 2025, large customers are embedding emissions criteria into RFPs, onboarding, and renewal processes. Incorporating a net zero strategy, along with a credible GHG reduction plan, can now be the deciding factor in competitive bids and long-term supplier relationships.
If you’re a mid-market company—especially in manufacturing or other industrial sectors—feeling pressure from customers to measure and reduce your greenhouse gas (GHG) emissions, you’re not alone.
The Science Based Targets initiative (SBTi) released a draft update to itsCorporate Net-Zero Standard (Version 2.0) in March 2025. The new standard introduces more flexibility for smaller businesses, making a realistic net zero strategy more achievable. Below, we break down what’s changing and why SBTi is no longer out of reach for mid-market businesses.
Key Takeaways
SBTi’s new standard makes net zero more accessible for mid-market companies.
Customers are prioritizing suppliers with clear GHG targets.
Strong climate plans help win contracts and improve financing options.
Mid-market success now requires progress, not perfection, on emissions.
Why Mid-Market Companies Are Under Pressure to Set GHG Targets
Mid-sized businesses—particularly those in manufacturing and industrial sectors—are being asked more often by OEMs, retailers, global brands, and even public sector buyers to provide emissions data and set science-aligned climate goals. Why? Because their customers are under pressure too.
Supply Chain Emissions Matter: Scope 3 emissions, which include supplier emissions, often make up the majority of a large company’s carbon footprint. That puts suppliers—especially manufacturers—under the microscope.
Procurement Requirements: Increasingly, procurement teams are embedding sustainability requirements into supplier scorecards and RFPs. Companies that can show progress on GHG goals stand out.
Regulatory Readiness: CSRD in Europe and new climate disclosure laws from states like California are requiring top-tier companies to track and report emissions across their value chains. That data requirement is passed upstream—right to you.
Brand & Reputation: Larger companies don’t want sustainability risks buried in their supply chain. Being able to point to SBTi-aligned goals demonstrates that you’re a partner who takes climate related risks seriously.
Operational Transparency: Climate disclosures are increasingly part of supplier onboarding and annual reviews. If you’re not tracking and improving, you could be left out.
Why Net Zero Strategy Matters for Mid-Market Businesses: The Case for Acting Now
SBTi-aligned targets—or any net zero strategy—are no longer just about doing the right thing. They’re about staying in the game. As more companies adopt SBTi Net Zero frameworks, suppliers that fail to adapt risk losing business to more forward-thinking competitors.
Recent data backs this up:According to PwC’s 2025 State of Sustainability report, over 4,000 companies reported climate commitments through CDP in 2024 alone—a ninefold increase over five years. And this shift isn’t just for the big guys: the median revenue of companies making climate commitments dropped from $3.6B in 2020 to $1.3B in 2024, showing that small and mid-sized businesses are stepping up. Even more telling, 83% of companies are investing in low-carbon R&D—and those products are delivering results, driving revenue gains between 6% and 25% over products without sustainability attributes.
With over 10,000 companies already committed to the SBTi, sustainability is the new standard—not a differentiator. Being left out could mean lost RFPs or fewer partnership opportunities. So, whether you’re trying to retain a key customer, secure financing, or differentiate from your competitors, a net zero strategy is no longer optional—it’s a smart business move.
Respond to Procurement Pressures: Many large buyers are screening vendors based on their sustainability performance. Companies with a clear GHG reduction plan move to the top of the list and build trust with key customers.
Secure Long-Term Contracts: Buyers want suppliers whose climate goals align with their own net zero timelines. If you’re not making measurable progress, you risk being replaced by competitors who are.
Attract Investors & Improve Financing Terms: Demonstrating strong sustainability performance and managing climate risks can open doors to more favorable financing terms and attract capital from ESG-minded investors.
This is a pivotal moment for mid-market companies across sectors—especially those operating in carbon-intensive value chains. The SBTi’s new framework gives you flexibility. Now’s the time to create a smart, right-sized plan—before your customers demand it.
At recent Scope 3 strategy events, industry leaders emphasized the need to move from planning to execution—delivering measurable emissions reductions, not just future goals. This moment calls for clarity, accountability, and progress—not perfection.
Key Updates in SBTi’s Net-Zero Standard Draft (V2.0)
The proposed changes in the SBTi Net-Zero Standard are designed to “remove barriers and make the standard more pragmatic and accessible”—especially for smaller and mid-sized companies. Here are the highlights and what they mean for you:
Public Net-Zero Commitments: Say goodbye to quietly submitting a letter and waiting. The new draft replaces the old commitment letter with a public commitment process. Companies will be expected to publicly pledge to reach net-zero by 2050, then set their science-based targets within a set time frame (12 months for big firms, 24 months for smaller ones).
“One Size Fits All”? Not Anymore: The updated standard introduces distinct rules based on company size and region. Category A companies (large and medium enterprises in high-income countries) face stricter requirements, while Category B companies (smaller firms or those in developing markets) get more leeway.
Separate Targets for Scope 1 and 2: Companies must now set separate targets for Scope 1 and Scope 2 emissions, with a focus on achieving 100% zero-carbon electricity by 2040.
Scope 3 Flexibility for Smaller Players: Scope 3 targets are now optional for smaller Category B companies, a significant shift that removes a major hurdle for many manufacturers.
Assurance Requirements (Only for the Big Guys): Third-party assurance of emissions data is required for Category A companies, reducing cost and complexity for mid-market players.
From “Renewable” to “Zero-Carbon” Electricity: The shift to “zero-carbon” electricity broadens the types of clean energy that count (e.g., nuclear), giving manufacturers more options.
Tracking Progress & Accountability: The new standard introduces guidance on implementation and performance tracking, helping companies stay on course and demonstrate transparency.
There’s reason for optimism. Large players like Unilever and PepsiCo are already seeing measurable supplier progress—and many mid-market businesses are getting ahead by embedding emissions goals into product design, procurement, and partnerships. These success stories show that Scope 3 transformation is not only possible—it’s profitable.
With these updates—especially the flexibility offered to smaller companies—it’s now more streamlined for mid-market businesses to commit to and set SBTi-aligned goals. The standard recognizes the realities of mid-market businesses and offers a pathway that’s credible, but not overwhelming.
With more than 10,000 companies committed to SBTi and over 7,000 with approved goals, the new Net Zero Standard is set to define how businesses approach climate action. And now—with clearer, more flexible rules—smaller companies will have an easier time jumping on board.
With this new net zero standard and less stringent rules for smaller companies, we may see more mid-market businesses setting SBTi-aligned goals—especially those looking to retain key customers, strengthen their market positioning, and stay ahead of climate regulations.
Strategic engagement – whether upstream or downstream – will be key to accelerating progress. Sectors like metals and mining and electronics manufacturing have large downstream emissions, but they have yet to fully tap into stakeholder engagement opportunities.
Companies that keep a finger on the pulse on evolving customer expectations can be ready to meet the evolving demand for more sustainable products, such as green steel or energy efficient electronics and equipment.
PwC’s Second Annual State of Decarbonization Report
If you want to have a say in these new rules, now’s the time – SBTi is welcoming feedback on the draft via a Public Comment Survey (open through June 1, 2025): Submit your feedback via the official survey.
What does this mean in practice? For mid-market companies, it’s now easier to take credible climate action without overextending resources. The SBTi’s updated Net-Zero Standard removes key hurdles for smaller companies—but translating that into action still takes the right tools and expertise.
That’s where Good.Lab comes in. Our GHG Target-Setting Solution is built specifically for mid-market businesses navigating customer pressure, new regulations, and resource constraints.
With a streamlined process—from emissions baseline and gap analysis to SBTi-aligned targets and implementation—we help you turn climate commitments into progress. Whether you’re just getting started or need to upgrade an existing approach, our team brings the structure and support to make it doable.
Ready to Build Your Net-Zero Strategy? Good.Lab Can Help
Good.Lab’s GHG Target-Setting Solution makes it easy to get started. Whether your goal is full SBTi alignment or a custom target that works for your business, we’ll help you:
Understand what your customers are asking for—and why
Conduct a GHG emissions baseline and gap assessment
Develop actionable GHG reduction targets
Align with SBTi or create your own roadmap
Track and report progress clearly and confidently
We offer a pragmatic, right-sized approach for mid-market companies that need to move quickly and efficiently—without over engineering their path to net zero. Don’t let the new standard pass you by. Let Good.Lab help you meet rising customer expectations, stay ahead of regulations, and build long-term business value through a smart, right-sized net zero strategy.
Disclaimer: Good.Lab does not provide tax, legal, or accounting advice through this website. Our goal is to provide timely, research-informed material prepared by subject-matter experts and is for informational purposes only. All external references are linked directly in the text to trusted third-party sources.
Gary Gao, CEM, PMP, SEA
Senior Manager
Gary has over 10 years of experience in the energy and sustainability space. He excels in developing holistic energy and sustainability strategy, engaging stakeholders and guiding clients through their sustainability journey. His breadth of experience is diverse and expansive from working with many Fortune 500 clients to being educated in multidisciplinary fields of engineering, environmental policies, and business.
Ready to elevate your sustainability efforts?
Connect with our sustainability experts today!
From sustainability program development to target setting, data management, and reporting, our team can help you fast-track building a world-class sustainability program.
FAQ
What is the difference between science-based targets and net zero?
Science-based targets (SBTs) are specific near- to mid-term greenhouse gas reduction goals aligned with what climate science says is needed (typically the 1.5°C pathway). They focus on actual emissions cuts by set dates (for example, aiming to halve emissions by 2030). Net zero, on the other hand, is the end state where a company has balanced all its greenhouse gas emissions with removals, effectively bringing net emissions to zero (often by 2050). In practice, science-based targets provide the step-by-step roadmap of emissions reductions, while a net-zero target is the ultimate destination of eliminating or neutralizing any remaining emissions.
How many companies have committed to SBTi?
As of 2025, over 10,000 companies worldwide have committed to the Science Based Targets initiative. This means thousands of businesses – including many mid-market firms – have pledged to set (or already set) science-aligned climate targets. This widespread adoption reflects a broad corporate movement to align business strategies with the latest climate science.
What are the requirements for SBTi?
To meet SBTi’s requirements, a company must set a greenhouse gas reduction target in line with limiting global warming to 1.5°C. In practice this involves covering all major emission sources: Scope 1 and 2 (direct operations and electricity) and Scope 3 if those indirect value-chain emissions are significant. The targets should be ambitious (often aiming around a 50% emissions reduction within a decade) and time-bound, typically 5–10 years for near-term goals. Finally, the proposed target must be officially validated by the SBTi to ensure it meets their science-based criteria.
What is an example of a net zero target?
A typical example of a net-zero target would be a company committing to reach net-zero emissions by 2050. For instance, the company might plan to reduce its overall greenhouse gas emissions by about 90% from a 2020 baseline and then neutralize the small remaining portion through verified carbon removal projects. In essence, the company would drastically cut emissions across its operations and supply chain, and any residual emissions by 2050 would be offset or removed to achieve a balance of zero.
What is an example of an SBTi target?
An example of an SBTi-approved target could be: “Reduce Scope 1 and 2 greenhouse gas emissions 30% by 2040 from a 2021 baseline and reduce Scope 3 emissions 25% in the same timeframe.” This target demonstrates a company committing to reduce its direct and purchased emissions within two decades, while also substantially cutting value-chain emissions. Such a goal would be reviewed and validated by the SBTi to confirm if it aligns with the Paris Agreement’s 1.5°C climate pathway.
Does net zero include Scope 3 emissions?
Yes. Credible net-zero commitments do include Scope 3 emissions (the indirect emissions up and down a company’s value chain). In fact, most corporate net-zero standards – including the SBTi’s Net-Zero Standard – require companies to address Scope 3 if it forms a significant part of their carbon footprint. Achieving net zero means tackling emissions from all scopes (Scope 1, 2, and 3), ensuring that all major sources of greenhouse gases are reduced and any residual emissions are offset or removed.
How do you achieve net zero targets?
Achieving a net-zero target involves a few key steps:
Cut emissions deeply: Start by reducing direct (Scope 1) emissions and energy-related (Scope 2) emissions through efficiency improvements, cleaner processes, and a switch to renewable energy. Engage the value chain: Work with suppliers, distributors, and other partners to lower indirect (Scope 3) emissions, since these often constitute a large share of a company’s carbon footprint. Neutralize the remainder: For any emissions that cannot be eliminated internally, invest in high-quality carbon removal or offset projects to neutralize those remaining emissions, so that total emissions add up to “net zero” by the target date. Consistent monitoring and transparent reporting along the way ensure the company stays on track to its net-zero goal.
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