Net Zero Emissions Standards on Pause for Oil and Gas Industry
The Science Based Targets initiative (SBTi) is a leading organization providing gold-standard validation for corporate climate targets. Its approval of a company’s climate goals is often crucial for attracting investors, satisfying regulators, and demonstrating alignment with ESG standards. While participation is voluntary, companies aiming to show genuine alignment with the Paris Agreement are generally expected to engage with SBTi.
In particular, European companies rely on such validation to prove compliance with EU regulations such as the Corporate Sustainability Reporting Directive (CSRD) and the Sustainable Finance Disclosure Regulation (SFDR).
Shell was an early supporter and a founding member of SBTi’s Technical Working Group for the oil and gas sector. However, as reported by the Financial Times ‘Net zero’ emissions standard paused as Shell quits, it has now exited the group alongside Norway’s Aker BP and Canada’s Enbridge. The departures came in response to draft standards being circulated that would require companies to end developing new oil and gas fields once they submit a climate plan to SBTi or by the end of 2027, whichever comes first. These draft rules also call for a significant decline in oil and gas production.
In reaction, SBTi has paused work on its oil and gas standards, though it denies any link between this decision and the exit of the major fossil fuel companies. According to FT, the implementation deadline for the standards has now been pushed to 2030.
Shell has reaffirmed its net-zero by 2050 commitment, but these targets are not validated or endorsed by SBTi. Moreover, the company weakened its mid-term climate goals last year. Shell’s leadership has acknowledged that the feasibility of its long-term targets is increasingly dependent on global emissions trends trajectories beyond the company’s control.
SBTi, which previously identified oil and gas standard-setting as a top priority, has now stated it will deprioritize this work. This shift reveals the organization’s strategic dilemma. Departures of large industry players reinforce perceptions of industry resistance to rigorous, science-aligned standards. SBTi now faces a critical choice to maintain scientific integrity and strict criteria, even if it results in reduced participation by high-emitting industries or compromise its standards to re-engage the fossil fuel sector, which could risk its credibility.
The broader concern is how these developments will impact progress toward global climate goals and the credibility of corporate frameworks designed to demonstrate alignment with those targets. Even if companies continue to claim confidence in their long-term net-zero commitments, their increasing references to the dependency on global trajectories cast further doubt on the achievability of the Paris Agreement goals such as limiting global temperature rise to 1.5°C and reaching net-zero greenhouse gas emissions by around 2050.
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