Edition #7 | Your Sustainability Team’s Weekly Briefing
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SBTi 2.0 · AB1305 California · Voluntary Carbon Market Analysis
Welcome to your weekly sustainability briefing. This week, we’re covering three developments that matter for businesses operating in an environment where climate accountability is moving faster than most corporate strategy can keep up with. SBTi’s Corporate Net-Zero Standard V2.0 is now final, and the changes are substantial enough that companies with existing targets need to act before their mandatory review window closes. California’s AB 1305 is past its compliance deadline, and the penalties for unsubstantiated carbon claims are real, immediate, and scaling by the day. And CarbonBetter’s latest VCM analysis draws on four years of retirement data to show that the market hasn’t shrunk, it has become more selective in ways that make today’s credit portfolio decisions materially different from those made two years ago.
Story #1: SBTi Corporate Net-Zero Standard V2.0
The most significant change of corporate climate target-setting since 2021
The Science Based Targets initiative published its Corporate Net-Zero Standard Version 2.0 on June 11, 2026, marking an evolution in corporate climate action and highlighting the SBTi’s strategic shift as an implementation partner and the changes are substantive. It opens more flexible pathways for target creation, separates Scope 1 and 2 target ambition, and clarifies reporting and assurance requirements. It also recognizes a “best efforts” basis, meaning companies that don’t meet targets while demonstrating good faith action can continue on the net-zero trajectory. 42% of sections are entirely new, and the rest have been materially revised, this is not an incremental update, but a fundamental rethinking of how corporate net-zero commitments are structured, validated, and held to account.
The driving force behind the revision was honest feedback from five years of implementation: targets were being set, but progress was slow, and the gap between ambition and action was widening. V2.0 responds to that reality by embedding science-based targets into core decision-making across operations, value chains, and capital allocation.
| Business Impact 42% of sections in V2.0 are entirely new and the rest have been materially revised; this is not a minor update companies can address passively. The standard separates Scope 1 and 2 target ambition, clarifies reporting and assurance requirements, and introduces a tiered system for how companies take responsibility for ongoing emissions through verified mitigation measures. For companies with existing validated targets, the immediate risk is being caught off-guard by mandatory review triggers. Companies that have not yet set an SBTi commitment can continue to do so and validate to the existing standard until January 31, 2027; all companies committing after that date will need to validate their targets to V2.0. For companies already in the SBTi framework, the five-year mandatory review clock determines when V2.0 becomes their reality. What Businesses Can Do: • Identify the date for your mandatory five-year review to determine when you will need to update your targets, and assess feasibility for Scope 1, Scope 2, and relevant categories of Scope 3 under the new standard. • Identify which category your business is and what are your requirements; categories are defined by revenue, employee, or emissions thresholds. Based on that you must prepare for mandatory assurance, a Climate Transition Plan requirement, and different Scope 3 obligations. • SBTi's new Scope 3 guidance places more emphasis on supplier engagement approaches, you can begin assessing your value chain readiness now, since perfect data is not a prerequisite for starting. • If you are planning to submit or renew targets in the next 12–18 months, decide now whether to proceed under V1.3.1 or prepare for V2.0, both paths have strategic tradeoffs worth evaluating with your sustainability advisor. |
Story #2: AB 1305 - California's Carbon Disclosure Law
The Voluntary Carbon Market Disclosures Act is in effect and enforceable
California passed the Voluntary Carbon Market Disclosures Act (AB 1305) on October 7, 2023, with first disclosures intended from January 1, 2025. The law covers three distinct groups: companies that market or sell voluntary carbon credits in California, entities that make claims like "net zero" or similar, and companies that buy credits in support of those claims. For each group, disclosure obligations are specific and ongoing, companies must publish detailed information about the offset projects they sell or purchase, the protocols used to estimate emissions reductions, whether third-party verification is in place, and what accountability measures exist if a project fails to deliver. Reporting entities must update their disclosures at least annually, and noncompliance may result in civil penalties of $2,500 per day, up to a maximum of $500,000 per violation. For companies that have been making carbon neutrality or net-zero claims without rigorous documentation behind them, the law creates real legal and reputational exposure.
Enforcement lies with the California Attorney General and district attorneys, there is no private right of action, but the penalty structure is significant enough that the risk of inaction outweighs the cost of compliance. Companies operating in California that haven't yet audited their climate claims and carbon credit disclosures should treat this as an immediate priority.
Business Impact AB 1305 is deceptively broad in scope. It covers companies that market or sell voluntary carbon credits in California, companies that make claims like "net zero," and companies that buy or use carbon credits in support of those claims. That means a company doesn't need to be in the carbon business to be caught by it, any sustainability claim tied to offset purchases triggers disclosure obligations. Disclosures must be posted and updated at least annually; noncompliance can result in civil penalties of $2,500 per day, up to a maximum of $500,000 per violation. Companies that made public carbon neutrality or net-zero claims in recent years without the documentation to back them are the most exposed. What Businesses Can Do: • Audit every public-facing sustainability claim: website, marketing materials, press releases, investor communications, and identify which ones reference carbon neutrality, net zero, or offset use. • For each voluntary carbon offset project connected to those claims, ensure your website discloses: the specific protocol used to estimate emissions reductions, the project location and timeline, the type of offset (removal vs. avoidance), and whether independent third-party verification is in place. • Keeping record of voluntary carbon offset purchases is adequately detailed and documented to meet AB 1305's disclosure requirements, and consider expanding the scope of independent third-party assurance to cover data underlying public claims. • If you are unsure whether your operations qualify as "within California," assume yes, the law's application is broad and legal clarity on edge cases is still developing. |
Story #3: Latest VCM Outlook - Trend Analysis
The Market Got More Selective, What Does This Mean for your Strategy?
CarbonBetter analyzed four years of retirement data from the Berkeley Voluntary Registry Offsets Database to understand what buyer behavior reveals about the direction of the VCM. Although retirement volumes have been broadly stable, what has shifted is not how much is being retired, it's what is being retired, and why. The analysis breaks down trends by project type, and the divergence across categories tells the real story. Renewable Energy has declined in absolute terms each of the past three years, as wind and solar became commercially viable without carbon finance, making additionality harder to defend. Forestry & Land Use remains the largest category but has seen its share edge downward, with REDD+ in particular consolidating around a smaller number of high-credibility projects following the 2023 credibility crisis.
Meanwhile, Household & Community is the only category that grew, nearly doubling from 2023 to 2024 and holding that level through 2025; driven by cookstove and clean water projects whose tangible co-benefits give buyers something concrete to communicate to customers, auditors, and the media. The analysis frames this last point as more than a preference for a particular project type: in a market where companies face growing scrutiny over what they can publicly defend, co-benefits are a real purchasing signal.
The credits gaining ground are the ones that can tell a story beyond the carbon number. That shift has real implications for any organization with carbon credits in its climate strategy, both in terms of which credits to prioritize going forward, and how to evaluate the legacy credits already sitting in a portfolio.
| Business Impact For companies with carbon credits in their climate strategy, a portfolio built on project types that are losing buyer confidence, particularly older REDD+ credits or renewable energy credits from markets where additionality is now in question, carries growing reputational and regulatory risk. The ICVCM ruled in August 2024 that eight renewable energy methodologies could not receive the Core Carbon Principles label due to weak additionality standards, affecting around 236 million unretired credits, roughly 32% of issued and unretired credits in the voluntary carbon market. Companies still holding or planning to retire those credits need to assess their exposure before those credits become publicly indefensible. What Businesses Can Do: • Review your existing carbon credit portfolio against current ICVCM Core Carbon Principles approvals, credits from unapproved methodologies are increasingly difficult to defend to auditors, investors, and the press. • Consider moving towards project types with stronger integrity narratives: Improved Forest Management, Household & Community projects with verified co-benefits, and Afforestation/Reforestation credits with robust baselines are gaining share for a reason. • Before retiring any credits publicly, assess whether you can tell a clear, defensible story about additionality, methodology, and third-party verification, in today's market, that story will be asked for. • Download CarbonBetter's full VCM Outlook report for project-level data, retirement trend analysis by category, and the findings on where buyer confidence is moving next. |
The developments in this edition reflect a market that is moving fast, and rewarding the businesses that move with it. If any of this week's stories raised questions about your organization's climate strategy, carbon commitments, or regulatory exposure, CarbonBetter is here to help you work through them. Get in touch with our team and let's talk about where you stand. And if you found this briefing useful, subscribe to our weekly newsletter with the same analysis, business impact guidance, and the sustainability insights your team needs to stay ahead, directly into your inbox.