The SBTi’s new Ongoing Emissions Responsibility program: what it means for your climate strategy 

The Landscape Has Shifted

In June 2026, the Science Based Targets initiative (SBTi) published its Corporate Net-Zero Standard Version 2.0 — the most significant update to the world’s leading corporate climate framework in a decade. For many Australian companies, the timing could not be more relevant.

Climate Active — the federal government’s carbon neutrality certification program — has been in reform limbo since 2023, leaving companies uncertain about where to direct their climate investment and how to frame their claims. The last federal budget brought no further clarity. At the same time, mandatory climate disclosure under Australia’s AASB S2 (the sustainability disclosure standard from the Australian Accounting Standards Board) has arrived: Group 2 entities — companies with revenue over $200 million, gross assets over $500 million, or more than 250 employees — begin their first mandatory reporting period on 1 July 2026.

The question “what do we align to?” just got answered. The SBTi Corporate Net-Zero Standard 2.0 is now the clearest articulation of best-practice corporate climate action available — and for the first time, it gives carbon credits a structured, defined, and ultimately mandatory role inside that framework.

The global uptake signals this too: from roughly 4,200 companies with validated SBTi targets in 2023 to over 10,000 by January 2026, representing more than 40% of global market capitalisation.

What the Standard Introduces: The Ongoing Emissions Responsibility Program

The headline addition in Version 2.0 is the Ongoing Emissions Responsibility (OER) program. It replaces the previous concept of Beyond Value Chain Mitigation (BVCM) — which pointed companies in the right direction but offered little practical structure. The OER is different: a tiered, accountable mechanism that sits alongside a company’s reduction targets, not instead of them.

Carbon credits cannot be used toward Scope 1, 2, or 3 reduction targets — the core decarbonisation requirement is unchanged. What the OER creates is a recognised channel for corporate climate finance directed outside a company’s own value chain, with three tiers calculated across your total ongoing emissions:

The operational detail — reporting mechanics and the SBTi Claims System — goes to public consultation in Q4 2026; the framework is locked, the plumbing is still being built.

Which OER Tier Is Right for Your Company?

The answer depends on where your emissions are concentrated.

For most Australian companies, emissions sit predominantly in Scope 3 — the indirect emissions across your value chain. For these companies, the Advanced or Leadership tiers are the appropriate choice for anyone serious about taking genuine responsibility. If you are, or have been, Climate Active certified, the Leadership tier gives robust recognition for that commitment; you’ll want to ensure your GHG (greenhouse gas) accounting boundaries align with the GHG Protocol over time – this has the potential to materially increase the total scope 3 emissions you have to consider, especially for sectors with sizable non-office related scope 3 emissions such as for example finance, property, or consumer goods.

The Engaged tier’s 1% entry point suits a narrower subset where even 1% represents a substantial volume: examples are data centres and electricity-intensive facilities where Scope 2 dominates, or financial institutions financing high-emitting sectors, resulting in significant scope 3 emissions.

For companies with material Scope 1 emissions: Australia’s 200-plus largest direct emitters are already bound by the Safeguard Mechanism’s declining baselines, which mandate reduction or the use of Australian Carbon Credit Units (ACCUs). For those companies, the OER could complement this existing compliance obligation.

Building Your Credit Portfolio Around the OER

The OER provides a useful architecture for thinking about your credit portfolio across time — near-term, medium-term, and at the net-zero year.

In the near term, avoidance and reduction credits play a major role — high integrity cookstoves projects, avoided deforestation and forest protection, and renewable energy where demonstrably additional or portfolios optimising for diversified impact or nature benefits. These serve the Engaged and Advanced tiers effectively and are available at scale today.

Nature-based removals — Human-Induced Regeneration (HIR), environmental plantings, reforestation, and forest plantations — are an excellent complement and a core ongoing position. They generate verifiable biological sequestration, support Australian biodiversity, and matter enormously for Australia’s decarbonisation trajectory. No credible 1.5°C pathway for this country is achievable without substantial investment in nature-based carbon removal, as detailed in Australia’s Net Zero Plan.

Looking further ahead, durable technology-based removals — biochar, direct air capture (DAC), enhanced weathering — become the requirement at the net-zero neutralization stage. The supply will not exist at scale unless investment flows now. Strategic, catalytic purchases in these technologies today are about building the industry in time, not about cost competitiveness. Think of it as seeding future supply while demonstrating genuine climate leadership.

The strategic portfolio: avoidance and reduction credits for near-term OER compliance; nature-based removals as a core ongoing position; targeted allocations to technology-based removals as a long-term investment.

But equally important is where you concentrate that investment across your emissions footprint. The most defensible approach is to concentrate carbon project spend on sectors where commercially viable decarbonisation alternatives simply don’t exist yet. This is where credits do their most legitimate work — not as a workaround for emissions you could reduce with existing technology, but as the only credible action available for emissions that can’t yet be eliminated any other way.

Business travel is the clearest example. Aviation has no commercially scalable zero-carbon alternative on the horizon — Sustainable Aviation Fuel is nascent, expensive, and constrained in supply. For most companies, flights represent one of the largest Scope 3 sources and the widest gap between ambition and available technology — making high-integrity carbon projects not a compromise, but the only choice. And the infrastructure to act is already there: TEM’s BlueHalo platform automates emissions calculation from travel data and connects directly to verified credit retirement, making it one of the easiest corners of Scope 3 to address well today.

Practical Steps to Take Now

1. Start scoping your contribution budget Apply the US$20 or US$80 per tonne benchmark against your ongoing emissions to understand the investment scale. Purchase verified credits to match your covered volume first, then consider where headroom could go in future years — adaptation partnerships, project finance, climate R&D.
2. Align your language Drop “carbon neutral” and “offsetting.” The credible framing under the OER is corporate climate finance, high-integrity carbon projects, and compensation for ongoing emissions — not substitution for reducing them. With ASIC enforcing multimillion dollar greenwashing penalties, this is not just a positioning question; it carries legal weight.
3. Mind credit quality The OER will recognize relevant third-party frameworks, standards, and programs where applicable as the integrity benchmark in due time. In the meanwhile, using the Australian Carbon Credit Units (ACCUs), ICVCM framework, compliance units with Article 6 labels, or other high integrity credits from third-party verified schemes are well positioned here — especially if they close financing gaps in lower-income countries in support of their national climate targets, deliver social and environmental co-benefits, and advance climate equity, including contributions to communities’ access to basic energy services.
4. Integrate SBTi alignment with your climate disclosure The standard is built to interoperate with AASB S2 disclosures, and how you use carbon credits within OER can be directly reflected in that same climate disclosure.

The Bottom Line

The SBTi Corporate Net-Zero Standard 2.0 has resolved the uncertainty that followed Climate Active’s stall. For the first time, Australian companies have a clear, globally recognised framework that defines best-practice corporate climate action — and gives carbon projects a structured, accountable, and ultimately mandatory role within it.

You don’t need to pursue full SBTi target validation on day one. But you can, and should, begin aligning your strategy, your credit portfolio, and your disclosure with these principles now. The companies that do will be better positioned — commercially, reputationally, and from a regulatory risk perspective — than those that wait.

We’re finalising a practical guide for aligning carbon credit procurement with the OER framework — tier selection, contribution budget sequencing, and portfolio design, working through real numbers rather than theory. Contact Rebecca via [email protected] for more information.