In a surprising turn of events, over 200 global companies are either delaying, revising, or withdrawing their participation in the Science Based Targets initiative (SBTi) as of 2025. The SBTi—once a gold standard for corporate climate ambition—has faced a quiet but noticeable deceleration in corporate uptake and compliance renewals. While these companies publicly maintain a commitment to sustainability, many are reevaluating the feasibility of SBTi-aligned net-zero trajectories amid mounting operational complexity and escalating litigation risks.
The SBTi framework, launched in 2015, provides a science-based pathway to align corporate carbon targets with the goals of the Paris Agreement. To date, more than 4,000 companies globally have joined, spanning industries from manufacturing to financial services. However, the recent hesitancy, marked by "greenhushing"—the intentional silence on sustainability achievements—suggests growing discomfort. For companies operating across different jurisdictions, particularly in the US and EU, the shifting policy landscape and fragmented ESG disclosure mandates are amplifying uncertainty.
One key driver behind this pullback is legal exposure. Corporate climate claims, once seen as goodwill statements, are now treated as potentially binding commitments. In the United States, greenwashing lawsuits have surged, especially targeting vague or unverifiable environmental marketing claims. In 2023 alone, over 20 major corporations faced litigation related to sustainability representations, ranging from misleading carbon neutrality claims to overstatements of renewable energy usage.
For instance, companies such as Delta Airlines and KLM have encountered legal scrutiny for using carbon offsets to claim net-zero flight services. The legal community increasingly views ambitious but ambiguous climate pledges as material representations under consumer protection laws. As the SBTi requirements become more stringent—particularly in scope 3 coverage—companies fear that failing to meet interim targets could expose them to reputational damage or shareholder activism.
To mitigate these risks, several corporations are choosing to "stay silent" on climate targets or reframe them in softer language such as “aspirational goals” rather than “science-based commitments.” Legal departments now play a central role in ESG strategy, advocating for defensible, auditable language that minimizes liability.
Scope 3 emissions—those resulting from upstream and downstream activities not owned or directly controlled by the reporting company—have emerged as the most complex element of SBTi alignment. For many firms, these emissions represent over 80% of their total carbon footprint. Yet calculating and managing scope 3 remains daunting due to supply chain opacity, data inconsistency, and limited supplier engagement.
According to CDP, fewer than 30% of companies have comprehensive scope 3 data systems in place. The SBTi's 2023 revision made scope 3 inclusion mandatory for most companies, intensifying the challenge. Compliance now demands a high-resolution, end-to-end understanding of suppliers’ and distributors’ emissions—a task few have fully achieved.
Moreover, scope 3 strategies often clash with cost and procurement pressures. As inflation, supply chain disruptions, and geopolitical tensions raise the cost of sustainable alternatives, procurement leaders are forced to balance emissions goals with cost competitiveness. This operational tension is driving a more cautious, phased approach to target setting—one that emphasizes scope 1 and 2 control first, and only gradually builds toward scope 3 integration.
Another catalyst for this SBTi slowdown is the diverging regulatory frameworks between major economies. The European Union is forging ahead with its Corporate Sustainability Reporting Directive (CSRD), which mandates standardized ESG disclosures and scope 3 reporting for large and listed companies. Meanwhile, the U.S. Securities and Exchange Commission (SEC) recently passed a scaled-back version of its climate disclosure rule, omitting scope 3 requirements altogether after industry pushback.
This asymmetry places multinational firms in a difficult position. Companies operating in both regions face either duplicative efforts or the risk of non-compliance in one jurisdiction. This regulatory dissonance contributes to what is now termed “disclosure fatigue”—where organizations are overwhelmed by conflicting ESG requirements and opt to deprioritize voluntary initiatives like the SBTi.
Furthermore, the SBTi itself has been criticized for lagging in clarity on how its framework aligns with evolving regulatory standards. Without clear interoperability between SBTi protocols and binding disclosure regimes, companies are rethinking the cost-benefit balance of committing to a voluntary framework with increasingly mandatory consequences.
The 2025 SBTi reassessment appears less a wholesale retreat and more a pivot toward auditability and defensibility in ESG commitments. Companies are not necessarily abandoning climate ambition but are demanding greater rigor and control in how targets are set, tracked, and reported.
Third-party verification, audit-grade data, and cross-functional ESG governance are rising in importance. Financial institutions, rating agencies, and insurers are also applying more scrutiny to ESG claims, pushing companies to invest in robust data infrastructure and climate risk management tools.
This shift is echoed in emerging ESG assurance standards. The International Sustainability Standards Board (ISSB) and the European Financial Reporting Advisory Group (EFRAG) are developing frameworks that will require integrated, financial-grade ESG disclosures. In this context, many companies see 2025 as a “pause-and-recalibrate” moment—stepping back from aspirational targets in favor of what they can verifiably achieve.
Notably, some firms are adopting internal carbon pricing, shadow pricing models, and emissions reduction ROI metrics to better link sustainability with business performance. While these may not meet SBTi standards outright, they reflect a growing maturity in how climate goals are embedded in enterprise strategy.
The reconsideration of SBTi commitments by over 200 companies is not necessarily a retreat from climate responsibility—it may instead be a recognition that credibility and capability must catch up with ambition. As ESG enters a new era defined by legal accountability, investor scrutiny, and operational realism, the corporate climate agenda is evolving from slogan-driven to system-driven.
This trend suggests the dawn of a more audit-driven ESG ecosystem, where “saying less but doing more” becomes the new norm. Greenhushing, while problematic for transparency, reflects the growing seriousness with which companies view their sustainability narratives. It also calls for stronger coordination between voluntary initiatives like SBTi and formal regulatory frameworks to rebuild trust and ensure continued climate progress.
In the end, the question is not whether companies will act on climate—but how. The year 2025 may prove to be a watershed moment where the rules of engagement in corporate climate action are rewritten to favor substance over symbolism. And that may be exactly what is needed.
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