by Clara Merlino | December 10, 2025
The Science Based Targets initiative (SBTi) has released the second draft of its revised Corporate Net-Zero Standard (CNZS) V2 for public consultation. As we mentioned in our recent SBTi Takeaways Blog, the newest draft has positive updates that build on the momentum from the first public consultation.
As a hard-to-abate sector, the construction industry will be greatly impacted by the latest draft. The main changes impacting the industry include updates to alignment targets, carbon offsets, and market-based mechanisms.
Major SBTi Updates Impacting the Construction Industry
Alignment Targets
Alignment-based targets are a welcome addition as an alternative to emissions reduction targets, as they give companies access to new pathways to address operational emissions. The term “alignment” here refers broadly to aligning corporate activities, procurement, production, or value-chain decisions with pathways that are consistent with the global 1.5°C goal.
Companies buying cement or other high-carbon building materials could consider the following:
- Shifting towards purchasing products from suppliers that align with net-zero, such as manufacturers that offer credible low-carbon options or ones that have set a science-based target and plan to decarbonize their operations
- Defining metrics and setting related time-bound goals around the portion of spend going to low-carbon materials suppliers or to net-zero aligned suppliers
- Accounting for the embodied emissions from high-emissions materials used in construction projects and setting volume-based procurement targets for lower-carbon alternatives
Companies producing cement or other high-carbon building materials could consider:
- Using SCMs or recycled materials in their products
- Identifying downstream companies with net-zero goals as potential target partners
Carbon Offsets
In the latest draft, SBTi expands its previous “Beyond Value Chain Mitigation” guidance into a new set of criteria that requires companies to take responsibility for their ongoing emissions. This involves actions taken by companies to decarbonize that are not directly tied to business efforts – for example, a U.S. construction company purchasing carbon credits that support seagrass restoration projects in Tanzania.
The draft standard proposes recognizing and incentivizing these actions through a Recognition Program. Companies cannot count these efforts towards their science-based targets, but can opt-in and aim for one of two label tiers in the Recognition Program: “Recognized” or “Leadership,” by taking responsibility for 1% or 100% of their emissions, respectively. While purchasing carbon credits is a common pathway for achieving recognition, other pathways exist as well.
Provided that SBTi’s new draft is accepted, construction companies can consider the following:
- On the development side, the Recognition Program should encourage companies to pursue low carbon projects that generate credits. These can be bought and used by others to achieve Recognized or Leadership status.
- On the buyer side, the Recognition Program is a great way for construction companies with climate targets to assume responsibility for emissions that are not yet abated, during their transition to a comprehensive low-carbon business model.
Market-Based Mechanisms
The ability to use Environmental Attribute Certificates (EACs) has expanded to Scopes 1 and 3, which opens exciting opportunities for hard-to-abate industries, including cement and construction. EACs are used to track and claim ownership of environmental outcomes and can be separate from the physical product or service that produced them.
For construction companies, this enables decarbonization opportunities when sourcing low-carbon products directly is difficult. For example, if low-carbon cement is produced in Florida but a construction company is in Colorado, shipping the product across that distance is prohibitively difficult and expensive. By using EACs, the construction company can claim the environmental attribute without physically shipping the cement.
It is important to note that not all EACs are automatically acceptable; they must meet specific conditions such as traceability to the company’s value chain (including via supply sheds) and be used within a 24-month window. It is also important to work with a supply-chain mitigation expert like ClimeCo that can provide a third-party stamp of approval to ensure that all emissions reductions are accurate, verified, traceable, and not double-counted with other entities.
The construction industry can take advantage of this change in the following ways:
- On the development side, low-carbon cement or low-carbon material producers can consider developing EACs for their product. By selling the EAC separately from the product, the product can be sold in existing supply chains, and additional revenue can be generated through the EAC. The low-carbon producer can reduce Scope 1 emissions.
- On the buyer side, construction companies or building developers should consider purchasing EACs. This will reduce Scope 3 emissions whitout disrupting existing product flows into the supply chain.
SBTi’s Hierarchy
While the latest CNZS V2 draft introduces new mitigation activities, SBTi reiterates that these activities have a hierarchy. Companies need to first abate emissions directly within their operations, then use market-based mechanisms, and finally address any remaining unmitigated emissions through offsets. Critical for maintaining integrity in these strategies is the accuracy of accounting, alignment with SBTi guardrails, and partnerships with value-chain suppliers.
The latest SBTi draft update provides new opportunities for the construction industry to participate in reducing emissions. These include supporting or meeting alignment-based targets as an alternative to emissions reduction targets, having the ability to take responsibility for ongoing emissions with carbon offsets, and using Environmental Attribute Certificates to decarbonize. Reach out to our team at ClimeCo to capitalize on the exciting opportunities presented in the new draft.
About the Author
Clara Merlino is Manager of Industrial Innovations at ClimeCo, specializing in hard-to-abate sectors such as cement and nitric acid production. She designs tailored project portfolios and industry-specific diligence strategies to meet partner needs. Previously, Clara worked as a program manager and strategic consultant for Fortune 100 companies. She brings expertise in research, strategy, and stakeholder collaboration to her role.
