The SBTi Releases its New Corporate Standard
Read on to learn more about the Science-based Targets Initiative’s (SBTi’s) recent update.
Key takeaways
The SBTi’s updated Corporate Net-Zero Standard (v2.0) shifts toward a more practical and flexible approach, tailoring requirements by company size and location. It strengthens expectations on governance and delivery, with greater focus on implementation, clearer rules across scope 1, 2, and 3 emissions, and new guidance to drive real-world decarbonization across operations and value chains.
Key changes include:
A shift from one-size-fits all to tailored requirements:
Version 2.0 introduces Category A (typically larger and based in higher-income countries) and Category B companies (typically smaller and based in lower-income countries), with requirements differentiated by company size and geography. Larger companies and those in higher-income countries face more comprehensive requirements including assurance of base year data and required scope 3 targets.
Stronger governance and accountability:
Companies are now required to secure formal approval of targets at the highest level, ensuring accountability at the board or executive level. They must also develop and maintain credible transition plans, embedding climate targets into core business strategy and decision-making rather than treating them as standalone commitments.
Scope 1 targets:
Targets must now cover 100% of scope 1 emissions and be set separately from scope 2. Companies also have greater flexibility in how they reduce emissions, with options including absolute reductions, intensity-based targets, or asset transition approaches.
Scope 2 targets:
Targets must cover 100% of emissions, alongside stronger expectations to increase low-carbon electricity use. New criteria promote closer alignment between where electricity is generated and consumed, and encourage investment in newer renewable capacity. Companies can choose between low‑carbon electricity alignment targets or absolute reduction targets.
Scope 3 targets:
Scope 3 target-setting remains mandatory for Category A companies but optional for Category B, reflecting different levels of influence and capability across markets. Category A companies must set targets for all significant categories that account for 5% or more of total scope 3 categories. SBTi have also expanded the target types to include a variety of category- or activity-specific targets.
Ongoing Emissions Responsibility (OER):
Companies can opt into a tiered recognition program that rewards action beyond targets, by addressing a defined share of ongoing emissions through verified climate contributions; from 2035, large companies will be required to take responsibility for at least 1% of these emissions, with an increasing share coming from long‑term removals.
Greater focus on implementation:
The Standard introduces a “best efforts” approach and a clear hierarchy for action, prioritising direct emissions reductions, followed by engagement in shared systems like energy grids and supply chains, and then broader sector-level action where needed.
When and how this will affect companies
Companies with existing validated targets do not need to start again. Those targets remain valid through their target cycle, subject to the usual review provisions. Companies setting, updating or renewing targets can continue using the current Corporate Net-Zero Standard V1.3.1 during the transition period, with Version 2.0 available from 1 February 2027 and required for new target submissions from 1 February 2028. In practice, companies should begin preparing now by strengthening governance, improving emissions data quality, testing transition plans, clarifying scope 3 priorities, and understanding whether they are likely to fall into Category A or Category B.
