The Science Based Targets initiative (SBTi) has published v2.0 of its Corporate Net Zero Standard, the first major overhaul since launching the framework in 2021. In the second of two posts exploring the impact and detail of the changes, TBL’s Head of Technical Delivery, Danny Crewe, looks at the technical updates in the new standard and asks what’s changed.
Want to understand what the changes mean for you if you’re setting or renewing targets? Go to part one of Danny’s post, here.
As with the v1.3.1 standard, the goal of SBTi’s Corporate Net Zero Standard is still to help companies set emissions targets that enable them to reach net zero by 2050. But thanks to a raft of changes, it now has more to say about implementation, transition planning, and progress assessment. Here’s a breakdown of the key changes:
Differentiated requirements based on company size
A stated aim of this new version of the SBTi is to increase accessibility of the standards to a wider range of companies. That’s the reason for the introduction of tiered organisational status. Category A companies are large, or medium-sized in high-income geographies. Category B are small, or medium-sized in low-income geographies.
Transition plans and other disclosure requirements
Under the final standard, Category A companies (large companies globally and medium-sized companies in high-income countries) are required to publish a credible transition plan within 15 months of target validation. This is a softening of the November 2025 draft but still a significant step up from the v1.3.1 standard.
These plans must outline specific actions, timelines, and performance indicators that demonstrate how the company will achieve its net-zero objectives.
Scope 1 and 2 targets are now separated
Under v1.3.1, companies could set combined Scope 1 and 2 targets. The new v2.0 moves toward separate Scope 1 and Scope 2 target-setting.
Scope 1 targets may use different approaches depending on the nature of the company’s emissions, including:
- Absolute emissions reduction
- Emissions intensity
- Asset transition targets
Scope 2 targets must cover 100% of Scope 2 emissions. Companies can set targets using either low-carbon electricity (LCE) alignment or absolute Scope 2 emissions reduction. Low-carbon electricity is broader than renewable electricity and may also include nuclear power and electricity generation with carbon capture and storage.
Significant Scope 2 changes – but no hourly matched certificates
The November 2025 draft proposal for a mandatory phase-in of hourly-matched electricity certificates for the largest consumers has been dropped. This was generally regarded as one of the more potentially burdensome requirements – but also the most impactful.
Hourly matching has not disappeared however, and large consumers (defined as 10GWh or more p.a.) will still be required to report the percentage of electricity consumption matched with low-carbon electricity on an hourly basis.
Other requirements have also increased the scrutiny of energy procurement, market instruments, and the age of generation assets. An earlier proposal for 100% sourcing of low carbon electricity by 2040 has also been removed.
Scope 3 target boundary
Previously, companies were required to ensure that a minimum of 67% of the total Scope 3 inventory was covered by the near-term target. Under the new rules, target setting is refined to focus on priority emissions sources only (i.e. emissions categories >5% of the Scope 3 total).
There are also some significant exclusions:
- Second-hand goods
- Fuel- and energy-related activities (where mitigated through Scope 1 and 2 energy reductions)
- Employee commuting
- Upstream leased assets where influence is limited
- Downstream transportation and distribution where influence is limited
- Processing of sold products where processing steps are unknown or no contractual relationship exists
- Franchises meeting specific independence and operational control criteria
This leaves a target-setting approach much more focused on the most material emissions-intensive activities (EIAs). EIAs with specific target-setting approaches include priority commodities (e.g. steel, cement, ammonia), transport activities, and the use of sold products.
Flexibility in Scope 3 target methods
The new standard has confirmed the final range of Scope 3 target-setting options. These comprise:
- Overarching absolute reduction: The classic linear decarbonisation target, this is now even more straightforward to calculate – based on a straight line from base year emissions to target year residual emissions.
- Overarching stakeholder alignment target: Previously known as the ‘supplier engagement’ route, this recognises that Scope 3 emissions are often outside a company’s direct control, and that reducing the reported inventory is not the only meaningful indicator of progress. Targets are set based on the proportion of spend with suppliers or customers that are ‘net-zero aligned’ or ‘in transition’.
- Category- or activity-specific targets: Where sectoral or commodity pathways exist, companies may set targets for specific parts of their value chain e.g. EIAs such as aviation transport, or steel production.
In addition to this, emissions from the ‘use of sold products’ category have been carved out as an exception for which companies may target an equivalent emissions reduction elsewhere in their footprint, if it can be demonstrated that none of the above options will reasonably work for it.
One of the most significant change here is the in the definitions of ‘net-zero aligned’ and ‘in transition’ entities (see footnotes). Whereas under the previous v1.3.1 version of the standard it was expected that aligned partners achieved their own SBTi-validated targets, the new definitions reflect the diversity of recognised ‘science based’ net zero pathways.
Long-term ‘net-zero’ target setting
Long-term net-zero targets remain optional, reflecting both the hesitation among many businesses to make such long-term commitments and the SBTi’s new five-year validation and assurance cycle.
This is particularly relevant for companies and industries with highly uncertain decarbonisation pathways and strong dependencies on upstream value chain partners.
In some cases, a long-term target is still required. These edge cases include where a Scope 1 intensity or asset transition target has been set.
Note that companies do still need to commit to neutralise all residual emissions at the point of reaching net zero, and setting a near term Scope 3 target remains essential for Category A companies.
Market instruments playing a larger role
v1.3.1 was clear that market-based accounting was not permitted for Scope 3 target-setting. The final V2.0 standard moves in a different direction by creating a formal role for market instruments, energy attribute certificates, commodity certificates, mass-balance systems and book-and-claim models in certain circumstances.
This is particularly relevant for fuels, electricity, steel, cement and other shared systems where direct physical traceability may be difficult.
However, the distinction is important: v2.0 does not simply create a market-based Scope 1 or Scope 3 inventory equivalent to Scope 2. The physical GHG inventory remains the foundation for target boundaries, target ambition and progress assessment. Where actions or instruments are not reflected in the physical inventory, they must be reported separately.
The direction of travel is still significant. It suggests that the boundary between physical emissions accounting, market instruments and system-level contribution claims is likely to evolve over the next few years, particularly alongside ongoing GHG Protocol revisions.
Ongoing Emissions Responsibility (OER) framework
A new concept in v2.0 is the Ongoing Emissions Responsibility mechanism. While deep decarbonisation remains central, the draft encourages companies to take voluntary action on ongoing emissions. This is a marked difference from the original net-zero standard which had been criticised for not providing incentives for companies to engage in beyond value chain mitigation.
The entry-level “Engaged” tier covers at least 1% of total ongoing Scope 1, 2 and 3 emissions through climate contributions. These can be delivered through verified mitigation outcomes or a contribution budget.
The programme remains optional until 2035. After that, Category A companies will be required to support eligible carbon removals, while neutralisation of residual emissions remains required at the net-zero target year for companies with net-zero targets.
Assurance
Category A companies must achieve limited assurance for both base year and target performance data. Whereas in v1.3 assurance was deemed ‘best practice’, it is now a mandatory requirement, reflecting evolving expectations around corporate GHG inventories. Note that assurance is required for both initial validation and target revalidation.
For many companies, this may be one of the biggest practical implications of v2.0. Data quality, documentation, audit trails and methodological consistency will need to improve well before a target is submitted.
What should companies do now?
If you’re looking at 2028 as a distant issue, I’d urge against it. We have the final standard and the direction of travel is clear. So in the near term, companies should:
- Confirm whether they are likely to be Category A or Category B.
- Decide whether to submit under v1.3.1 during the transition period or prepare for v2.0.
- Review whether their current base year inventory would meet v2.0 expectations.
- Identify significant Scope 3 categories and emissions-intensive activities using the physical GHG inventory.
- Assess whether Scope 2 procurement meets emerging expectations on low-carbon electricity, deliverability, certificate quality, and asset age.
- Review whether transition planning is sufficiently integrated with governance, finance, and other operational decision-making.
- Assess whether data systems are robust enough for limited assurance.
- For existing targets, map when renewal, recalculation or revalidation could bring the company into the spotlight of v2.0.
A new era in corporate climate target setting
The updated Corporate Net Zero Standard v2.0 represents a significant development for corporate climate target setting.
The new standard is more flexible in some areas, particularly Scope 3 methods, long-term requirements, and treatment of shared systems. However, is it significantly more demanding in others. If they’re not already, companies will need to think long and hard about the resource involved in transition planning and assurance.
The companies best placed to satisfy the requirements of v2.0 will be those treating this as a framework for action, not just a disclosure. As Kirsten Schuijt, Director General of WWF International (one of the SBTi’s founding partners) noted, the new standard is designed to “help businesses move faster from ambition to delivery and drive the scale of change urgently needed”.
It follows that those businesses aiming to drive real change will find it easiest to harmonise with the standard’s requirements.
If you have questions about what this may mean for your own net-zero carbon targets, we’d love to answer them.
