The Science Based Targets initiative (SBTi) has become the gold standard for corporate climate commitments, but its stance on carbon credits remains one of the most misunderstood—and debated—aspects of net-zero strategy. If you’re leading sustainability efforts at your company, understanding what the SBTi actually allows (and forbids) when it comes to carbon credits is critical to avoiding costly missteps.
The confusion is understandable. The SBTi’s guidance has evolved significantly over the past two years, especially around Scope 3 emissions and residual emissions neutralization. Many companies are still operating with outdated assumptions, believing they can offset their way to net-zero. Others are overly cautious, unsure whether carbon credits play any legitimate role in their climate strategy.
Here’s the reality: carbon credits are not a shortcut to meeting your SBTi targets. But they’re also not forbidden. The key is understanding the precise boundaries of where they fit—and where they absolutely don’t.
The Core Rule: Reduction First, Credits Second
Let’s start with the non-negotiable principle. To achieve net-zero under SBTi guidance, your company must first reduce emissions by at least 90% from your baseline (SBTi Corporate Net-Zero Standard). This applies to all scopes of your emissions.
This is not a suggestion. It’s a requirement.
Carbon credits—whether voluntary offsets or environmental attribute certificates—cannot be used to count toward this reduction target. Period. If you’re thinking about using credits to bridge the gap between where your emissions are now and where your SBTi target demands, stop. The SBTi explicitly states that carbon credits cannot substitute for direct emission reductions in meeting near-term or long-term science-based targets.
What does this mean practically? If your SBTi commitment requires you to cut Scope 1 and 2 emissions by 50% by 2030, you must achieve that through operational changes—electrification, energy efficiency, renewable energy procurement, and process optimization. Credits are not a tool for this phase.
Understanding this distinction is essential, especially if you’re new to sustainability roles. For teams just getting started, our guide on carbon management 101 breaks down how to build the foundational strategy that will inform your entire approach to credits.
Where Carbon Credits Are Actually Permitted: Residual Emissions
So where do credits fit? The answer is residual emissions—the emissions that remain after you’ve done everything reasonably possible to reduce them.
Under the SBTi framework, once you’ve achieved your long-term science-based target (that 90%+ reduction), your company must permanently neutralize any remaining emissions. This is where carbon removal and durable carbon credits come in. These credits must represent genuine, permanent removal of carbon from the atmosphere and its storage—not avoidance of future emissions (SBTi Corporate Net-Zero Standard).
Think of it this way: if after all your emission reduction efforts, you’re still emitting 10% of your baseline, you need to counterbalance that 10% through verified carbon removal. This is neutralization, and it’s mandatory for net-zero claims.
The critical detail here is permanence. The SBTi requires that any removal credits must demonstrate long-term storage of carbon (typically measured in centuries or longer). This rules out most voluntary carbon offsets, which typically fund emission avoidance rather than permanent removal.
Your company must also be transparent about this. You need to disclose your planned milestones and near-term investments showing how you’ll neutralize residual emissions. This isn’t just best practice—it’s part of the SBTi validation process (SBTi Corporate Net-Zero Standard).
The Scope 3 Exception: A Recent Shift
In April 2024, the SBTi made a significant policy shift that has generated ongoing debate. The organization announced it would allow the use of environmental attribute certificates, including carbon credits, for Scope 3 emissions abatement.
This is where things get complicated.
Under this new guidance, companies can potentially use high-quality carbon credits to address certain Scope 3 emissions—primarily in supply chains where direct reductions are difficult or currently infeasible. However, this comes with strict guardrails. The credits must be traceable to your company’s value chain, meaning they need to be directly linked to activities within your supply chain or sourcing decisions.
Additionally, companies are not permitted to use credits for unlimited Scope 3 abatement. The SBTi’s proposed pathways suggest credits can address up to 33% of Scope 3 emissions, though specific rules continue to evolve. This is a pragmatic compromise, acknowledging that some supply chain emissions are genuinely difficult to reduce directly, while maintaining pressure for real decarbonization (Sylvera).
But here’s the critical nuance: this does not mean you can use offsets freely. The credits must meet quality standards set by third-party organizations—the SBTi itself does not validate credit quality. This responsibility falls to entities like the Voluntary Carbon Markets Integrity Initiative (VCMI) and other standard-setters (ESG Dive).
For roles focused on supply chain emissions, this shift creates new opportunities but also new responsibilities. You need expertise in evaluating credit quality, understanding carbon accounting methodologies, and managing insetting projects. If you’re building a team or looking to develop this capability, understanding how your SBTi commitment will shape your carbon management strategy is your starting point.
What the SBTi Absolutely Does Not Allow
Let’s be clear about what is explicitly forbidden.
You cannot use carbon credits or offsets to meet your near-term SBTi targets. If your company has committed to a 2030 target with the SBTi, credits are not a tool for achieving it. Period.
Similarly, the SBTi maintains a conservative stance on “insetting”—emission reductions from projects wholly within your supply chain (SBTi Corporate Net-Zero Standard). While insetting might sound like a good solution (reducing emissions from suppliers you work with), the SBTi has concerns about standardization and accounting integrity. The organization may not approve insetting strategies during validation on a case-by-case basis until methodologies are further standardized.
The broader principle: carbon credits cannot substitute for direct decarbonization. They are a complement to deep emission reductions, not a replacement for them.
This is crucial context for understanding why the SBTi’s recent guidance has been controversial. Some scientists and environmental organizations argue that expanding carbon credit allowances—even for Scope 3—could incentivize greenwashing and reduce urgency around real decarbonization (edie). The SBTi’s response has been that strict guardrails and quality thresholds will prevent this, but the debate reflects genuine concerns about how credits are implemented in practice.
Beyond Value Chain Mitigation: A Different Category Altogether
There’s one more piece of this puzzle: Beyond Value Chain Mitigation (BVCM).
The SBTi strongly encourages companies to go beyond their own emissions reduction targets and invest in climate action outside their operations and supply chains. This might include funding renewable energy projects, forest protection, carbon capture technology, or other emission reduction activities (ClimateTrade). These efforts contribute to broader societal net-zero goals and can demonstrate climate leadership.
Here’s the key distinction: BVCM investments do not count toward your SBTi targets. They don’t reduce your reported emissions or help you meet your commitment. But the SBTi views them as valuable and actively encourages companies to pursue them as part of comprehensive climate strategies (SBTi Corporate Net-Zero Standard).
In some ways, BVCM is where carbon credits can play a more flexible role, as they’re not constrained by the same boundaries as credits used for residual emissions or Scope 3 abatement. However, companies should be transparent about what counts as BVCM versus what counts toward their actual targets—a distinction that matters for stakeholder trust.
The Practical Implications for Your Team
If you’re managing sustainability strategy or carbon accounting, this distinction between what is and isn’t permitted has real operational consequences.
First, your emissions reduction strategy must be rooted in operational decarbonization. This means energy efficiency programs, renewable energy procurement, process changes, and supply chain transformation. Credits cannot be the primary lever. Your team needs deep expertise in identifying and implementing these reductions, which is why understanding the 5 principles of carbon accounting matters so much.
Second, for residual emissions and Scope 3 abatement (where credits are permitted), you need rigorous quality assessment capabilities. You must evaluate whether credits meet standards for permanence, additionality, and integrity. This is not something to outsource entirely—your team needs to understand these concepts deeply.
Third, maintain clear separation in your accounting and reporting between emissions you’ve actually reduced, emissions you’re neutralizing through removals, and investments in BVCM. The SBTi requires transparency here, and stakeholders increasingly scrutinize companies that blur these lines.
If you’re looking to build or strengthen your sustainability team, the roles that matter most now are those with expertise in operational decarbonization (supply chain, energy, procurement) and carbon accounting rigor. The days of hiring someone to “manage offsets” as a primary climate strategy are over. When you’re ready to browse curated sustainability roles, you can explore opportunities on the CSR Jobs jobboard.
The Evolving Landscape
It’s worth noting that the SBTi’s guidance continues to evolve. The organization released the first draft of its Corporate Net-Zero Standard Version 2.0 in 2024, which includes updated guidance on carbon credits and introduces new models for integrating carbon removal into net-zero pathways. The final version will incorporate stakeholder feedback and further scientific evaluation.
This ongoing evolution reflects genuine scientific uncertainty and legitimate debate about how companies should balance immediate emission reductions with investment in long-term carbon removal technologies. The fact that the SBTi is refining its approach—rather than declaring it final—suggests the field will continue to develop.
For professionals in sustainability careers, this is actually an advantage. It means there’s opportunity to influence how best practices develop. Companies are actively building teams to navigate this complexity, and expertise in carbon accounting, credit evaluation, and net-zero strategy is in genuine demand.
Getting Your Strategy Right
The bottom line: carbon credits have a specific, limited role in SBTi-aligned net-zero strategies. They are essential for residual emissions neutralization and potentially useful for Scope 3 abatement under strict conditions. But they are absolutely not a tool for meeting your primary emissions reduction targets.
If your company has made an SBTi commitment, your carbon strategy should prioritize operational changes first, use credits conservatively and strategically second, and maintain transparent communication throughout. This requires expertise, rigor, and coordination across your organization.
For sustainability teams working through these challenges, having access to peers and resources who understand this nuance is invaluable. Consider building your network through CSR Jobs, where you can connect with other professionals navigating similar questions and stay informed on how the field is evolving.
The companies getting this right—understanding what credits can and cannot do—are the ones building credible, durable climate strategies. Those treating credits as a shortcut will eventually face credibility challenges. The difference comes down to understanding the SBTi’s actual framework, not the oversimplified version that circulates in many corporate boardrooms.