SBTi Emphasizes Near-Term Carbon Removal in Revised Corporate Standard Draft

Key Takeaways

• On January 30, 2026, the Greenhouse Gas Protocol (GHG Protocol) released its long-awaited Land Sector and Removals (LSR) Standard v1.0 following a 5-year consultation process. The LSR Standard is set to take effect on January 1, 2027. 
• The release of the LSR Standard represents a notable development for companies in the food and agriculture sector looking to report on land-based GHG emissions in their annual GHG inventory, as well as companies that plan to report on carbon dioxide removals (both land-based and technological).
• The accompanying Land Sector and Removals Guidance, which will provide further direction on operationalizing and implementing the LSR Standard, is expected in Q2 of 2026. However, companies with significant land-based activities may want to begin assessing the impacts of the LSR Standard on their emissions accounting procedures and decarbonization strategies today.

Why the Land Sector and Removals Standard Matters Now

Emissions from agriculture and land use change account for roughly a quarter of global emissions. Yet, for years, food, fiber, and fuel companies have lacked a clear framework for accounting and reporting on GHG emissions and carbon dioxide removals from land use. This has significantly limited their ability to demonstrate progress toward climate targets within their operations and value chain. The GHG Protocol’s Land Sector and Removals (LSR) Standard, which was released on January 30, 2026, changes that, and in doing so raises a new set of questions. 

The LSR Standard provides greater clarity on what is required of companies to transparently track and report against their emissions reduction and removal targets, and opens new pathways to report on supply chain decarbonization interventions. It also represents an important advancement for companies seeking to report on carbon dioxide removals within their emissions inventory, including both land management removals and technological removals with geologic storage.

While the LSR Standard contains notable new requirements compared to the draft released in 2022, companies still face a number of open questions related to implementation and the implications for their decarbonization strategies. 

The GHG Protocol’s accompanying Land Sector and Removals Guidance, scheduled for Q2 2026, is expected to offer more practical direction for implementing the LSR Standard. However, companies with significant land-based activities that require sufficient lead time to prepare should consider assessing the impacts today. 

Below, we provide an overview of the LSR Standard, key changes from the 2022 draft, and actionable next steps for food, fiber, and fuel companies considering the impacts on their target-setting and emissions reporting.

What Is the Land Sector and Removals Standard? 

The LSR Standard, taking effect on January 1, 2027, sets requirements and recommendations for corporate GHG accounting that cover emissions and carbon removals from agricultural and land use activities. It builds on existing GHG Protocol standards for corporate carbon accounting. Notably, the LSR Standard does not cover the forestry sector, a key break from the 2022 draft. Forest carbon accounting guidance remains under development and will be the subject of a stakeholder consultation/request for information process expected later in 2026.

Land Sector and Removals Standard vs Land Sector and Removals Guidance

The LSR Standard establishes the core requirements companies must follow, while the accompanying Land Sector and Removals Guidance, expected in Q2 of 2026, will provide more detailed implementation support. In short, the LSR Standard sets the "what" while the Land Sector and Removals Guidance will explain the "how," helping companies put those requirements into practice.

Who Should Be Using the Land Sector and Removals Standard?

The LSR Standard applies to two groups of companies:

1. Any company with significant¹ land-sector activities within its own operations or value chain (most notably the food, feed, fiber, biofuel, and advanced biomaterials sector).
2. Any company looking to report on carbon dioxide removals within their scope 1 and scope 3 inventories (including both land management removals or technological removals).

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What Changed From the 2022 Draft?

Among other provisions, the LSR Standard contains notable breaks from the 2022 draft, including specific changes related to traceability, carbon dioxide removals, leakage, and land use change.  

Traceability: A New Approach

Under the LSR Standard, companies that account for scope 3 emissions, removals, and other metrics must apply a spatial boundary. This boundary is determined by the level of traceability they can establish to known lands or regions (from least to most granular): global, jurisdictional (e.g., country), sourcing region (e.g., supply shed), land management unit (LMU) (e.g., farm), or harvested area. For more granular spatial boundaries, such as sourcing region and LMU, companies are required to establish physical traceability, which can be demonstrated through various chain of custody models.

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Alongside higher integrity chain of custody models such as identity preserved, segregated, and controlled blending, the LSR Standard opens to mass balance as a chain of custody model that can be used to demonstrate physical traceability at the sourcing region-level with appropriate safeguards. 

This is notable because mass balance is the most common chain of custody model for large volume agricultural commodities, and physical traceability is required to report removals according to the LSR standard. While challenges for reporting removals at sourcing region spatial boundaries still exist, this change unlocks new opportunities to decarbonize commodities and report removals within non-segregated supply chains through insetting programs. 

Carbon Dioxide Removals: Clarity on Spatial Boundaries

The draft LSR Standard introduces key principles for companies choosing to report land management carbon dioxide removals, including traceability, data quality, and permanence. Translating those principles into practice remains challenging given the dynamic nature of agricultural supply chains and limited farm-level traceability.

Among other requirements, the LSR Standard maintains that companies electing to report on removals must do so as a separate accounting category from emissions. They must also identify the specific lands where carbon is stored, and conduct ongoing storage monitoring to detect and report on reversals if and when they occur.

The LSR Standard does, however, resolve one of the more consequential open questions left by the 2022 draft: where companies are to draw the spatial boundary for reporting land management carbon dioxide removals. By formalizing and permitting traceability at the sourcing-region level (with appropriate safeguards), it offers a workable middle ground between farm-level precision and the broader supply chain realities that most food and agricultural companies face. 

The LSR Standard also opens to using alternative approaches to traceability, such as impact traceability, which allows companies to trace removals back to the LMU through a pathway that is separate from the physical GHG inventory. This is notable as it provides companies with optionality for recognition of farm-level supply chain investments even when physical traceability cannot be established, and inventory recognition is therefore not feasible. 

Land Use and Leakage: Stronger Requirements

Finally, the LSR Standard significantly strengthens land use and economic leakage requirements compared to the 2022 draft. While the draft gave companies flexibility to choose among land-tracking metrics, the LSR Standard mandates that all companies report land occupation for both scope 1 and scope 3 in hectares and quantify land carbon leakage whenever “high leakage risk activities”² displace food or feed production. This includes companies developing crop-based biofuels and bio-based feedstocks. 

Leakage must be quantified using the Carbon Opportunity Cost, a calculation aimed at capturing how much carbon could have been stored in the absence of land management activities.

What Should Companies Do Now?

For entities reporting in accordance with the GHG Protocol’s Corporate Standard and Scope 3 Standard, the new LSR Standard goes into effect on January 1, 2027. However, the GHG Protocol’s Land Sector and Removal Guidance is not set for publication until Q2 2026, leaving many open questions related to implementation amid a short data collection and reporting cycle 

In the interim, companies may consider a continuous improvement approach, evolving and improving their internal measurement and reporting mechanisms to enable more granular accounting over time. Companies may also consider running analyses to assess the impact of new requirements on the design and cost of decarbonization strategies, with a specific focus on data collection and monitoring approaches.

Ultimately, while implementation of the LSR Standard may evolve over time, it need not delay action on value chain intervention. Companies that continue investing in supply chain decarbonization are building the data infrastructure, supplier relationships, and operational resilience that yield greater visibility into supply chain risk and drive long-term value, independent of reporting standards. 

As the LSR Standard's requirements develop, companies that have already begun assessing their emissions footprint and strengthening supply chain traceability and data quality are likely to be better positioned to align their reporting procedures accordingly.

Coming Soon

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Key Takeaways

• Emissions cuts alone are not happening fast enough to meet global climate goals. Direct air capture (DAC) removes carbon dioxide (CO₂) that is already in the atmosphere. It has become one of the fastest-growing carbon removal approaches even as it stays capital-intensive.
• DAC's core advantage is flexibility. Because the atmosphere fully mixes within about two weeks, a DAC facility can be sited almost anywhere with clean power and CO₂ storage and still deliver the same climate benefit.
• DAC investment has grown to roughly US$2.2 billion across 37 specialized companies since 2021. Per-tonne costs (currently US$500–1,000 or more) remain the technology's central barrier to scale.
• US federal support for DAC is still unsettled. The US Department of Energy cut its regional DAC hub program from a planned US$3.5 billion to roughly US$1.2 billion between October 2025 and April 2026. This is a signal that deployment funding, not the underlying science, is DAC's biggest near-term risk.

What Is Direct Air Capture?

Direct air capture (DAC) works by sucking in air, filtering it to remove CO₂ that has built up over time and still sits in the atmosphere. To be effective, DAC must draw a lot of air into separating equipment like filter banks or cooling towers. This is similar to the small-scale systems that have scrubbed CO₂ from air in spacecraft and submarines for decades. From there, CO₂ filtering typically involves a chemical process that binds the CO₂ for release later. While the most commonly used chemical compounds in this process are liquid solvents or solid sorbents, other chemical, electrical, and physical processes could also work.

After the filtering process, the captured CO₂ is usually stored in one of two ways. The most important is geological storage, which keeps CO₂ out of the air and oceans indefinitely in deep geological formations (typically a mile down or more) and offers the clearest climate benefits. The second is storing the CO₂ in products like concrete, which offers clearer commercial benefits. A new generation of mineralization projects is expanding this second pathway, turning captured CO₂ into building materials rather than only storing it underground. In addition, CO₂ can be recycled into fuels and chemicals, which prevents net-new CO₂ from being released but does not count as a carbon removal solution since these materials are eventually used, releasing the captured CO₂ back to the atmosphere.

The Advantages of Direct Air Capture

DAC has many advantages as a CO₂ removal approach. First and foremost, it's scalable. In effect, there are no practical limits to our ability to scrub CO₂ from the sky or store it in deep geological formations around the world. This means scaling can be fast and removals profound.

It's straightforward. The devices remove CO₂ from the air, a meter measures it, and operators store and monitor that CO₂. It's clearly additional (meaning it only happens with financial and human intervention), easily verified, and durable (stored for many hundreds of years or more), meeting the bar set by our own Criteria for High-Quality Carbon Dioxide Removal.

It has a small physical footprint. Typical DACe systems do the carbon removal work of trees with 1,000–2,000 times less space. This leaves more room for conservation, agriculture, rewilding, and other important work.

It can be done anywhere with low-carbon energy and CO₂ storage options. Globally, our atmosphere mixes fully every two weeks, meaning that CO₂ released in China or Australia arrives over the US (and vice versa) in this amount of time. Because of this, DAC facilities can be sited anywhere and still have a climate benefit—as long as there is sufficient clean energy available and options for CO₂ storage or use are nearby. This reduces competition for land and provides opportunities for economic development in regions with the right resources.

Finally, and most critically, DAC is a backstop technology. While reducing emissions remains the top priority, there are certain types of emissions that are either very hard or very expensive to abate. The last fraction of hard-to-abate emissions can be managed through DAC, effectively capping global costs to reach net-zero emissions. In fact, the more rapidly DAC scales and deploys, the less total energy and cost are needed to achieve key climate goals.

Challenges and Concerns of Direct Air Capture

Like all climate mitigation approaches, DAC has challenges. The primary challenge today is cost. Today's large-scale systems cost roughly US$500–1,000 or more per tonne of CO₂ removed, depending on the technology and site, though several developers are targeting US$100–150 per tonne over the next 10 years. Although the costs will come down over time through deployment and wider adoption, today's high costs are a barrier to investment and deployment.

Another challenge is around the energy requirements associated with DAC. Pulling one million tonnes per year of CO₂ out of the air requires roughly 200–300 megawatts of zero-carbon energy (a combination of heat and electricity). Given the limited supply of zero-carbon energy available today, there is a valid question about whether this is the best use of that resource today.

Finally, there is the question of environmental risks and community burdens of DAC. Experience to date suggests that the total environmental burdens and consequences of this pathway are among the lowest of any clean energy and climate technology. But since DAC systems involve heavy equipment and chemicals, questions about the full environmental risks and burdens to communities remain, especially given its limited commercial deployment. Although most DAC systems will be sited in remote locations, not near communities, and pose no serious environmental risks, reasonable concerns must be addressed before permitting and building future DAC projects.

Why the Excitement Now?

Although current climate science and added urgency from organizations like the Intergovernmental Panel on Climate Change (IPCC) have driven interest in DAC, other important advances have fed broad interest and excitement about its potential. Since 2017, DAC technology has matured greatly, including the deployment and operation of many projects around the world. Costs have dropped, new pathways have opened, and private investment in DAC-specific companies has reached roughly US$2.2 billion across 37 companies since 2021. 

Two large facilities illustrate where deployment stands today. Climeworks' Mammoth plant in Iceland has been operating since May 2024, although not at full capacity. Occidental's Stratos plant in Texas remains delayed past its most recent 2026 second quarter target due to a component issue, with no confirmed new startup date as of this writing. Both facilities carry substantial commercial offtake agreements from aviation, energy, insurance, and tech companies, agreements that continue to hold even as construction timelines have slipped.

In part, interest results from new policy advancements. In the US, the Inflation Reduction Act's 45Q tax credit, maintained under the 2025 One Big Beautiful Bill Act, currently provides US$180 per tonne for DAC paired with dedicated geologic storage, with added parity for utilized CO₂. The Department of Energy's Regional Direct Air Capture Hubs program, originally planned at US$3.5 billion, was cut back sharply in an October 2025 review. It was then partially restored in April 2026 when the Department of Energy confirmed its two flagship projects, Project Cypress in Louisiana and the South Texas DAC Hub, would proceed. The program's total is now expected to be near US$1.2 billion. In addition, California has amended its Low-Carbon Fuel Standard to allow DAC as a compliance mechanism, and the US Department of Energy has explored a pilot program to purchase valid, durable carbon dioxide removal, including DAC. Recently, the Carbon Dioxide Removal Leadership Act was introduced to Congress, which would require the Secretary of Energy to remove CO₂ directly from ambient air or seawater.

Other programs around the world reflect this growing interest. In the UK and EU, governments have promised CO₂ removal purchases this decade, which will likely include DAC. Research programs have begun in Canada, the UK, Germany, Japan, and China. Developing nations increasingly see DAC as a potential new industry and hope to take advantage of their natural resources to expand energy access while being paid to remove CO₂ from the air and oceans.

The Future of Direct Air Capture

I'm pleased to have played a small role in DAC's new prominence. I've had the good fortune of being at DAC project groundbreakings and ribbon cuttings, led the first-ever government grants program for DAC, worked with scientists to develop new DAC technologies, published analysis over a decade ago on the need for DAC, and testified before the US Congress on the benefits and needs of DAC on three separate occasions. Based on my experience in DAC over the last 16 years, I believe that smart investment, policy, deployment, and community engagement will convert the promise of DAC into thousands of projects. These projects will help avoid the worst outcomes of climate change and restore some natural balance to the world. With federal support now concentrated on fewer, better-resourced flagship projects, rather than spread across two dozen early-stage hubs, the DAC field is being pushed toward fewer high-profile delays and more repeatable, bankable deployments.

Frequently Asked Questions

How does direct air capture differ from capturing carbon at an industrial site? 

Industrial, or point-source, capture removes CO₂ at a smokestack, where concentrations are high. Direct air capture removes CO₂ that is already spread throughout the open atmosphere. DAC facilities can operate almost anywhere with available clean power and storage, not only next to a specific emitter.

Is direct air capture actually operating today, or is it still experimental? 

Direct air capture is operating today; it is not just experimental. Climeworks' Mammoth plant in Iceland has been running since May 2024, and dozens of smaller facilities are active worldwide. However, the largest US projects, including Occidental's Stratos plant in Texas, are still working through startup delays. Once it begins operating, DAC will be fully commercial, although limited in deployment.

How much does it cost to remove one tonne of CO₂ with direct air capture? 

Current large-scale direct air capture systems cost roughly US$500–1,000 or more per tonne of CO₂ removed, depending on the technology and facility site. Several developers are targeting costs of US$100–150 per tonne later this decade, though that has not yet been demonstrated at commercial scale and is likely to take 10 years or more to achieve

Does using direct air capture reduce the need to cut emissions? 

No. Direct air capture is a backstop for emissions that are difficult or costly to eliminate outright, not a substitute for cutting emissions in the first place. Reducing emissions remains a priority; DAC addresses both what is left over (residual emissions) and what’s already in the air and oceans.

Key Takeaways

• Improved forest management (IFM) increases measurable long-term carbon storage in living trees and durable wood products.
• At the same time, it can provide strong social and ecological co-benefits.
• IFM projects like the ones developed by Weyerhaeuser and the Indigenous community of Petcacab in collaboration with Relae (formerly Carbon Direct) show how IFM practices can align climate goals with social and environmental benefits.

Forests Are Climate Solutions If We Manage Them Wisely

Forests remove carbon dioxide from the atmosphere, but they need to be thoughtfully managed to keep doing so. As buyers look to scale carbon removal, improved forest management (IFM) is gaining traction in the voluntary carbon market (VCM).

IFM focuses on enhancing how existing forests are managed to increase carbon storage over time. It’s a nature-based solution that supports climate outcomes, community livelihoods, and environmental benefits when done well.

This piece explains how IFM works, what makes a project high-quality, and how real-world IFM projects like those developed by Weyerhaeuser and Petcacab in collaboration with Relae (formerly Carbon Direct) are delivering credible results for buyers and local communities alike.

What Is Improved Forest Management?

Improved forest management is a catch-all phrase that describes management techniques that decrease emissions from forests or increase carbon removal and storage. Some management techniques, like transitioning a working forest to a conserved status, decrease emissions from forest harvest and primarily create credits for avoided emissions. Other management techniques, like harvesting forests less frequently, can lead to greater carbon removal and storage over time and create credits for additional carbon removal. 

Examples of IFM Practices Include:

• Extending harvest rotations to allow more carbon accumulation
• Reducing the impact of logging on soil and surrounding trees
• Managing fire and pest risks to enhance forest health
• Transitioning some of a forest to conservation status

These strategies help forest carbon stocks grow beyond business-as-usual baselines. In carbon markets, IFM can generate carbon removal or avoided emissions credits, depending on the project's design and carbon accounting methodology.

What Makes a High-Quality IFM Carbon Removal Credit?

Buyers today face increased scrutiny around carbon credit quality. In this context, IFM projects must go beyond basic registry standards to demonstrate climate integrity and social and environmental benefits. 

Relae developed the Criteria for High-Quality Carbon Dioxide Removal, an annual report published in collaboration with Microsoft to establish science-backed quality standards. This includes six core principles that define high-quality carbon removal, all of which apply to IFM projects: 

• Social harms, benefits, and environmental justice - The extent to which the project prevents new social harms to people and communities, reduces existing harms, and provides meaningful benefits distribution. Since IFM projects take place in communities around the world, benefits will naturally vary from project to project.  
• Environmental harms and benefits - The extent to which the project minimizes and mitigates environmental harms, as well as provides environmental benefits. Because IFM projects enhance management practices, environmental co-benefits of high-quality IFM projects are usually substantial.
• Additionality and baselines – Evidence that the project’s carbon removal would not have occurred without carbon finance. Many IFM projects fail to present compelling additionality data and narratives. High-quality projects will be able to identify the actions the project took to increase carbon storage that would not have happened without carbon finance. 
• Measurement, monitoring, reporting, and verification (MMRV) – The ability to accurately quantify carbon removal in a repeatable and verifiable way, and to develop a plan for long-term monitoring of the project. IFM projects must have robust forest inventory, growth modeling, and occasional remeasurement to verify the additional carbon storage. 
• Durability – The likelihood that removed carbon remains stored over time, with mechanisms in place to mitigate reversal risk. Enhanced management of fire, pests, and disease in IFM projects can enhance forest carbon durability. 
• Leakage – Evaluation of whether project activities cause increased emissions elsewhere. If an IFM project substantially reduces timber supply, market demand can drive increased harvesting in other forests, undermining some of the project’s climate benefits. High-quality IFM projects minimize this risk by limiting harvest reductions, and account for any remaining leakage by issuing fewer credits.

Relae uses these criteria as part of our diligence framework when advising buyers evaluating projects and co-developing our own projects.

IFM Projects Delivering Real Impact

Weyerhaeuser: Applying Science at Scale

Weyerhaeuser, one of the largest forest owners in North America, is applying improved forest management practices across over 200,000 acres of working forests.

The IFM projects led by Weyerhaeuser are located in rural areas in the US, with low wildfire risk. These IFM projects sequester carbon by extending harvest rotations and forgoing harvest in established streamside management zones. 

Relae supported Weyerhaeuser with hands-on scientific collaboration to confirm that every IFM project met the Criteria for High-Quality Carbon Dioxide Removal. 

Why it matters to buyers:

• High-quality climate impact at large scale
• Transition of working forests from traditional management techniques to maximize climate impact
• Responsible forestry practices aligned with SFI® standards
• Rigorous carbon accounting and high-quality project baseline established using historical harvest records

The IFM projects led by Weyerhaeuser are some of the largest in the US today and a model for scaling science-backed forest carbon solutions.

Petcacab: Indigenous-Led Conservation in the Yucatán Peninsula

Located in the communal lands of Petcacab, Mexico, this IFM project is led by Indigenous Mayan ejidatarios—community members who have legal rights to manage the land.

Historically, forests in the ejido have been degraded through unsustainable harvesting and extensive damage from hurricanes. Through carbon finance, they are developing new forest management plans and sustainable forestry models, with revenue reinvested in health, education, and job creation.

“The rainforest for me represents my home, my work, my present, my future. We have a very daring challenge: to transform how we manage our forest, shifting from harvesting and selling timber to conserving it through the sale of carbon credits that support the development of our community.”
— Celso Chan Rivas, Carbon Project General Manager

What makes Petcacab stand out:

• Equitable benefit-sharing and strong Indigenous governance
• Critical habitat protection for endangered species
• Increased additional carbon storage through forest management and reduced land use conversion 
• Transparent reporting and verified outcomes

Petcacab is recognized by Relae as a high-quality community IFM project in Mexico, with clear social, environmental, and climate outcomes.

Investing in Forests That Deliver More Than Carbon

Improved forest management is more than a carbon strategy, it’s an investment in ecosystems, communities, and long-term impact. For buyers seeking high-integrity carbon removal with social and environmental co-benefits, IFM projects offer a compelling opportunity.

IFM projects like the ones developed by Weyerhaeuser and Petcacab in collaboration with Relae show what’s possible when forests are managed with science and care. They also reflect what the voluntary carbon market needs more of: quality, transparency, and impact beyond the metric ton.

Key Takeaways

• Near-term role for carbon removals: The revised Science-Based Targets Initiative (SBTi) Corporate Net Zero Standard (CNZS) v2.0 proposes requiring or recognizing interim carbon dioxide removal (CDR) targets before companies reach net zero. This shift aims to scale up the CDR industry in line with climate science and ensure companies address residual emissions earlier rather than deferring action until their net-zero target year.‍
• Revised target frameworks and increased accountability: The draft standard introduces key changes, including separate targets for scope 1 and 2 emissions, enhanced scope 3 target-setting guidelines, and the recognition of market-based mechanisms for indirect mitigation of scope 3 emissions. It also requires companies to publicly disclose transition plans and assess implementation progress against targets.‍
• Potential for stronger action on removals: While the proposed updates are a step forward, the final standard should make near-term CDR targets mandatory rather than optional and should expand to include those for projected scope 3 residual emissions, not just scope 1. Without these stronger mandates, demand for early-stage CDR investments may remain limited, potentially slowing progress toward net-zero goals.‍
• Companies should prepare now: Businesses should start integrating CDR into their climate strategies now so they are equipped to navigate procurement of high-quality removal credits in the voluntary carbon market. Preparing ahead of the final CNZS v2.0 release will help companies align with science-based decarbonization pathways and demonstrate climate leadership.

What the Latest SBTi Update Means for Corporate Climate Action

On 18 March, 2025, the Science Based Targets Initiative (SBTi) released its draft Corporate Net Zero Standard (CNZS) v2.0, significantly updating its framework for corporate net-zero target setting for the first time since 2021. The draft proposes new approaches for companies to support carbon dioxide removal (CDR) in the transition to net-zero emissions, a move that could help scale the nascent CDR industry.

This release is part of a broader revision, with key proposed updates including:

• Requiring public disclosure of transition plans after companies set targets.
• Separating targets for scope 1 and 2 emissions.
• Enhancing the scope 3 target-setting framework using an impact-based prioritization process.
• Recognizing indirect mitigation (e.g., book-and-claim commodity certificates) for hard-to-trace scope 3 emissions.
• Defining a role for emissions removals in the transition to net zero.
• Providing options to recognize company leadership in beyond value chain mitigation (BVCM).
• Assessing corporate progress against targets to bolster accountability.

While formal recognition of removals in the transition to net zero is a positive step, stronger incentives will be needed in the final CNZS to ensure companies take meaningful early action on CDR. The draft standard is open for the first of two public consultations until 1 June, 2025, with a finalized version expected to launch in 2026.

What Remains the Same From the Current Standard?

SBTi’s framework remains focused on three core requirements for companies:

• Reducing emissions year-on-year to reach an approved science-based target (SBT) by 2050 or earlier.
• Investing in beyond value chain mitigation (BVCM) in the transition to net zero to support near-term global decarbonization efforts.
• Neutralizing remaining emissions from the net-zero year (achieved after at least 90% emissions reductions) and onwards with high-quality, permanent carbon removal.

Carbon credits representing emissions reductions and removals remain ineligible for meeting reduction targets within a company’s value chain (SBTs).

What’s New in CNZS v2.0 for Carbon Removals?

Until now, the SBTi encouraged companies to invest in CDR through mechanisms such as BVCM, but has not proposed requiring removal before their target net-zero year. As a result, organizations had little clarity or incentive to invest in CDR ahead of their net-zero target date, dampening near-term demand for carbon removal and delaying the industry's growth.

The new draft changes this by proposing three options for the V2.0 Standard that address the impact of residual emissions during the transition to net zero:

• Option 1 (requirement): Companies are required to set near- and long-term removal targets, including interim CDR milestones,¹ to address projected residual emissions.
• Option 2 (optional with recognition): Companies can set and receive recognition for removal targets to address projected residual emissions.
• Option 3 (flexibility of mechanism): Companies have the flexibility to address expected residual emissions either entirely through additional emissions reductions within their value chain, entirely through removals, or via a combination of both.

Notably, all three approaches apply only to residual scope 1 emissions.

On top of these approaches, SBTi has suggested two options for the minimum durability threshold of CDR purchases in their draft standard. Removals will either need to follow a ‘like for like’ approach,² where CDR storage must match the atmospheric lifetime of residual emissions, or a gradual transition approach, where carbon storage durability increases over time.

Why Mandating CDR Matters

Mandating near-term CDR reinforces the need for immediate climate action, ensuring that carbon removals complement emissions reductions rather than being deferred until the net-zero target year. The urgency of early CDR investment is clear:

• Limiting global warming to well below 2°C above pre-industrial levels requires removing billions of tonnes (gigatonnes) of carbon dioxide annually by mid-century.
• The CDR industry is in its early stages and requires sustained investment today to scale in time.
• If companies wait until their net-zero year to purchase CDR, the supply of high-quality removal credits is unlikely to be sufficient.

As part of the proposed removal targets in Option 1 (above), the CNZS v2.0 would require companies to gradually increase CDR purchases over time, ramping up to 100% of a company’s projected residual scope 1 emissions in the net-zero target year (<10% of baseline year emissions).³

What More Can Be Done?

The potential introduction of required removal targets would be a significant and welcomed step, reinforcing the importance of near-term CDR investment to support industry maturation and climate goals. However, mandatory near-term CDR targets represent only one of three potential pathways for the V2.0 standard. Moreover, neutralization of residual emissions on the path to net zero is only proposed for scope 1 emissions. While the SBTi provides clear rationale for this,⁴ SBTi should not let the complexity of projecting scope 3 emissions be a barrier to climate change mitigation. Scope 3 emissions represent the majority of emissions from SBTi-aligned companies. Furthermore, companies with high scope 3 emissions typically have a higher ability to pay compared to their industrial counterparts with high scope 1 emissions.

If interim removal targets are made optional, and scope 3 emissions remain excluded, the demand signal for near-term CDR will be limited. The public consultation (and advice of Expert Working Groups that SBTi is convening) will be essential in determining which proposed guidance matures into the final standard; consultation feedback can be provided here prior to June 1, 2025.

How Businesses Can Prepare for CNZS v2.0

Companies aligning with SBTi’s evolving guidance should begin to integrate CDR into their climate strategy now. This means:

• Understanding their residual emissions forecast and planning early investments.
• Developing a company-specific climate strategy to incorporate CDR into their sustainability roadmaps in tandem with plans to reduce value-chain emissions.
• Engaging early in the voluntary carbon market to implement these strategies and develop procurement processes to support high-quality removal projects.
• Ensuring credibility by selecting removal projects aligned with scientific best practices.

Conclusion: A Step in the Right Direction, But More Certainty Is Needed

The CNZS v2.0 draft represents a critical turning point for corporate climate action with options to formalize the role of early CDR investment through interim removal targets for signatories. However, SBTi must take a stronger stance in the final version of the revised standard by choosing to adopt requirements for near-term neutralization (rather than leaving this optional), including projected residual scope 3 emissions in near-term CDR targets, aligning durability requirements with climate science, and defining removal quality standards to ensure these efforts drive meaningful climate impact. Organizations seeking to align with this guidance should prepare by developing a comprehensive climate strategy that accounts for science-based decarbonization pathways and recognizes the role of early-stage investment in CDR solutions.

Key Takeaways

• Concrete and steel contribute 13% of global CO2 emissions. These materials represent substantial scope 3 emissions for companies that are building new infrastructure, including data centers.
• Low-emission alternatives and production technologies are nascent and not yet widely deployed.
• Environmental attribute certificates (EACs) are an innovative solution that can stimulate manufacturing of sustainable commodity materials and overcome market barriers to direct physical procurement.
• Relae (formerly Carbon Direct) and Microsoft developed criteria to guide Microsoft’s high-quality EAC procurement, accelerate decarbonization, and catalyze market expansion for decarbonized materials across supply chains. 
• These criteria cover seven key areas: qualifying conditions, social harms and benefits, environmental harms and benefits, additionality and baselines, catalytic impact, verifiability, and leakage.

A Vision for Low-Carbon Concrete and Steel

Concrete and steel are essential for modern construction, but are carbon-intensive. Combined, they account for approximately 13% of global carbon dioxide (CO2) emissions. ​As the demand for data centers and infrastructure development continues to grow, so do the embodied emissions from concrete and steel. There is an urgent need to decarbonize these sectors so that construction of new facilities remains consistent with climate commitments.​

However, the markets for low-carbon concrete and steel are still in their infancy. Market barriers such as low production volumes, contracting complexity, geographic concentration of supplies, and long-distance transportation limit buyers’ ability to directly procure low-carbon building materials. As buyers and sellers overcome these barriers, the market for low-carbon building materials will mature, giving producers the confidence to invest in new manufacturing facilities and giving buyers access to decarbonized materials directly in their supply chain.

Environmental attribute certificates (EACs) represent the sustainability attributes of a material commodity, unbundled and transacted separately from the physical commodity. EACs are transacted at a price that reflects the additional cost of sustainably producing the material. While barriers to direct procurement of low-carbon materials persist, EACs can serve as a powerful tool to signal demand for low-carbon concrete and steel, catalyze market expansion, and accelerate decarbonization.

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Microsoft’s Approach to Emissions from Building Materials ​

To address embodied emissions and help achieve its ambitious 2030 carbon-negative goal, Microsoft aims to deeply reduce its scope 3 emissions, including from building materials, by more than half compared to a 2020 baseline. In 2023, scope 3 emissions made up over 96% of Microsoft’s total greenhouse gas footprint. To meet its 2030 target, Microsoft is focusing on addressing supply-chain emissions related to data center construction and the embodied carbon of the commodity materials used to build them. Microsoft is already working to decarbonize its building material supply chain using the following three tactics:

• Reduce the need for concrete and steel through innovative building design or the use of lower-carbon alternatives, such as sustainably sourced mass timber.
• Directly engage with suppliers to procure low-carbon alternatives to conventional concrete and steel.‍
• Invest in and help pilot new low-carbon production pathways.

EACs represent a fourth approach to decarbonization that can both reduce emissions and catalyze industry growth. Taken together with Microsoft’s design, procurement, and investment tactics, these actions underpin a comprehensive strategy for long-term decarbonization of the built environment.

High-Quality EACs Support Decarbonization

EACs offer a virtual, market-driven solution to decarbonize the built environment by allowing companies to support low-carbon material production when physical supply chain barriers impede direct procurement. ​EACs for concrete and steel function similarly to other market-based decarbonization mechanisms such as sustainable aviation fuel (SAF) certificates in the aviation sector and renewable energy certificates (RECs) in the energy sector.

These mechanisms work by decoupling the environmental benefits of low-carbon production from the physical materials themselves. EACs allow companies to claim the environmental benefits of physical low-carbon concrete or steel production, even if they do not directly or physically source those materials. EACs provide a verified claim that a purchaser has procured a product with lower emissions, enabling companies to meet climate targets and demonstrate their commitment to sustainability.

Due to their virtual nature, which limits physical oversight of the supply chain, EACs also exacerbate risks such as double counting, greenwashing, fraud, social harms, and environmental harms. Therefore, adhering to transparent, rigorous criteria is foundational to mitigating these risks.

New Criteria to Guide Procurement of High-Quality EACs

To support the integrity and effectiveness of EACs in these sectors, Relae and Microsoft have co-developed Criteria for High-Quality Environmental Attribute Certificates in the Concrete and Steel Sectors. These robust criteria serve as a public resource for companies seeking credible and impactful EAC procurement pathways for low-carbon concrete and steel.

The criteria address seven key areas:

1. Qualifying conditions: EACs must complement, not displace, direct procurement and represent significant emissions reductions. ​
2. Social harms and benefits: EACs must not further social harms and should promote community engagement and social benefits such as meaningful workforce development opportunities and community climate resilience.
3. Environmental harms and benefits: EACs must not perpetuate environmental harm, but instead should mitigate risks and, ideally, provide additional environmental benefits.
4. Additionality and baselines: Projects funded by EACs must drive real, meaningful emissions reductions ​in terms of financial, regulatory, and common practice additionality.
5. Catalytic impact: Prioritize transformative technologies with sector-wide decarbonization potential. ​
6. Verifiability: Set a high bar for documentation, transparency, and independent auditing. ​
7. Leakage: Address risks of emissions displacement to support net-positive outcomes. ​

These criteria provide a robust framework for companies and stakeholders to evaluate and implement commodity EACs effectively, supporting impactful change. ​They balance rigor with flexibility and acknowledge the nascent state of the markets for low-carbon concrete and steel. Sectoral decarbonization will advance over time, shifting the thresholds for what is considered significant, additional, and catalytic in EAC transactions. This science-driven framework can adapt to advancements in policy, industry practices, and technological readiness, ensuring EACs remain a relevant and impactful tool for years to come. ​

Sector-Specific Insights

In addition to providing overarching criteria and guidance on procuring EACs for the built environment, Criteria for High-Quality Environmental Attribute Certificates in the Concrete and Steel Sectors also provides insights into the unique challenges and opportunities of decarbonizing concrete and steel.

Decarbonizing Concrete

EACs can support innovative decarbonization strategies for concrete, such as producing alternatives to clinker and cement, adopting supplementary cementitious materials (SCMs), and reducing emissions from cement kilns through electrification or integrating carbon capture and storage (CCS). ​Performance-based standards and evolving building codes may also unlock new opportunities for low-carbon concrete. ​

The Global Cement and Concrete Association (GCCA) publishes a rating system, Low Carbon Concrete (or Cement) Ratings, which defines eight separate low-carbon grades (AA through G). These grades correspond to the depth of decarbonization and are based on a sliding scale related to the material’s compressive strength. When developing these criteria, Microsoft considered grades AA through D to be eligible for consideration in its EAC procurements.

Decarbonizing Steel

EACs can support transformative technologies for decarbonizing steel, like direct reduced iron (DRI) with electric arc furnaces (EAF) powered by green or blue hydrogen. This support can enable the steel sector to move beyond incremental improvements and focus on capital-intensive solutions that have the potential to reshape the industry. ​

ResponsibleSteel, an independent standards and certification organization with membership that is broadly representative of the steel industry, publishes decarbonization progress levels, with four separate grades (PL1–PL4). These grades correspond to the depth of decarbonization and are based on a sliding scale related to the fraction of recycled scrap use in the steel manufacturing process. When developing these criteria, Microsoft included levels PL2 through PL4 for consideration in its EAC procurements.

A Blueprint for EAC Market Development ​

Relae and Microsoft crafted Criteria for High-Quality Environmental Attribute Certificates in the Concrete and Steel Sectors as a public resource that can help shape the future of the commodity EAC market. ​

These criteria are designed to:

• Communicate intent: Communicate Microsoft's intent to support the decarbonization and scaling of physical commodity supply chains where they have been previously limited.‍
• Guide decision-making: Serve as a public guide for Microsoft's decision-making process, explaining the rationale behind pursuing or declining specific EAC pathways.‍
• Set high-integrity standards: Maintain high integrity for EACs at an early stage, ensuring they are used to enable future physical procurement by supporting market development.‍
• Stimulate partnership opportunities: Encourage potential partnerships and purchasing pipelines by clearly describing criteria for high-quality EACs.‍
• Publicly share detailed thinking: Build on previous work and publicly share detailed thinking, aiming to stimulate market development and guide procurement decisions.

Practical Recommendations for Implementing EACs

Whether you are a supplier, buyer, policymaker, or sustainability advocate, these new criteria offer actionable insights to help you navigate the complexities of EACs in the built environment. ​From setting significance thresholds to ensuring verifiability to avoiding double counting, the criteria provide clear guidance to maximize the impact of EAC-supported projects.

Beyond the technical aspects of EACs, these criteria aim to address their broader social and environmental implications. The criteria focus on the importance of community engagement, transparency, and equitable distribution of benefits in EAC project planning, ensuring that decarbonization efforts contribute to a more sustainable and just economy. ​The criteria are backed by extensive research, stakeholder consultations, and industry expertise.

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Meera Atreya, John Dees, David Madrid Garcia, Katherine Gomes, Grant Gutierrez, and A.J. Simon authored the Criteria for High-Quality Environmental Attribute Certificates in the Concrete and Steel Sectors. We appreciate Julio Friedmann and Colin McCormick for their valuable technical insights. Adrianna Sutton, Molly Tucker, and Britt Warthen provided essential editorial and production support.

We are especially grateful to Julia Fidler and Brian Sifton, previously at Microsoft, for commissioning this report, providing detailed input, and engaging deeply with the Relae Science Team every step along the way. Special thanks to Katie Ross at Microsoft, whose leadership and coordination made the report possible.

We also extend our appreciation to the teams at RMI and Environmental Resources Management for their time, thoughtful feedback, and prior publications, which helped inform and complement this work.

Frequently Asked Questions

What is an environmental attribute certificate (EAC), and how does it differ from buying low-carbon concrete or steel directly? 

An environmental attribute certificate represents the sustainability attributes of a commodity material such as concrete or steel, unbundled from the physical material and transacted separately from it. Direct procurement means a buyer purchases low-carbon concrete or steel and takes physical delivery of it for a specific project. An EAC purchase instead allows a buyer to fund and claim the environmental benefit of sustainably produced materials that are sold as typical commodities, and apply that benefit against conventional commodities in their own supply chain. EACs are priced to reflect the additional cost of producing the material sustainably, which sends a demand signal to producers. This makes EACs useful where market barriers—limited production volumes, geographic concentration of supply, or long-distance transportation—prevent buyers from sourcing low-carbon materials directly.

How do EACs for concrete and steel compare to renewable energy certificates (RECs) or sustainable aviation fuel (SAF) certificates?

Environmental attribute certificates for concrete and steel share a structure with renewable energy certificates and sustainable aviation fuel certificates: each decouples the environmental benefit of low-carbon production from the physical product, letting a buyer fund and claim that benefit without taking physical delivery. There are two key differences. First, conventional RECs represent electricity with a zero-emissions footprint, while every tonne of concrete or steel behind an EAC still carries embodied emissions — the certificate demonstrates reduction against a baseline, not a zero-emission product. Second, REC and SAF markets are established, while EACs for concrete and steel are nascent. Both differences are why rigorous criteria matter: quantifying the reduction credibly is harder, and the virtual structure carries risks of double counting, greenwashing, and fraud.

Will EACs let companies claim emissions reductions without actually reducing their built environment climate footprint?

An EAC purchase does not change the materials in a buyer's own buildings; it funds lower-emission production elsewhere in the market. Credible EAC frameworks therefore require that certificates complement rather than displace direct procurement, that they represent significant reductions against a defensible baseline, and that the funded project would not have proceeded without EAC revenue. The criteria published by Relae and Microsoft enable buyers to address these requirements directly in their procurement processes - addressing the climate and reputational risks of low-quality certificates. Used this way, EACs become an additional tool to address emissions from the built environment, supplementing design changes, direct procurement, and investment in new production pathways.

Who should use these criteria?

Criteria for High-Quality Environmental Attribute Certificates in the Concrete and Steel Sectors, co-developed by Relae and Microsoft, is a public resource intended for four audiences. Buyers pursuing scope 3 reductions can use it to evaluate whether a given certificate represents a credible, additional emissions reduction. Suppliers and project developers can use it to understand what purchasers of high-quality certificates look for before bringing a project to market. Policymakers and standards bodies can draw on it while shaping rules for an emerging market. Sustainability practitioners and advocates can use it as a reference point for assessing claims made about low-carbon concrete and steel. The criteria are designed to evolve as these sectors decarbonize, and users may adapt them to meet their own levels of capability and ambition.