SBTi Releases Corporate Net-Zero Standard Version 2.0 Shifting from Ambition to Action Framework for 11,000 Companies

The Science Based Targets initiative has released Version 2.0 of its Corporate Net-Zero Standard, representing the most significant update to the framework since its original launch in 2021 and reflecting a decade of experience with over 11,000 companies that have validated targets globally. The revised standard introduces a fundamental shift from a target-setting exercise to an action framework designed to connect climate ambition directly to the business decisions that actually determine emissions, including capital allocation, technology investment, procurement decisions, supplier engagement and the management of long-lived assets. Version 2.0 takes effect from February 2027, with Version 1 remaining open for target submissions until the end of 2027 to allow companies that have been planning against the existing standard to submit without disruption.

 

The Core Shift to a Best-Efforts Action Framework

 

The most important innovation in Version 2.0 is its explicit acknowledgement that companies do not control everything in their emissions reduction journeys and that pretending otherwise does not serve either companies or the climate transition. The updated standard is built on a best-efforts framework that expects companies to set targets accompanied by reasonable implementation plans, deploy every lever within their control, be transparent about where barriers have limited progress and demonstrate what they are doing to address those barriers over time. Companies that follow this process can continue progressing toward net-zero within the SBTi framework even when targets are not fully met, provided they demonstrate genuine effort and transparency about constraints.

Francesco Starace, Chair of the Science Based Targets initiative, said in the standard's foreword that commitment is not the hardest part and that delivery is, and that company after company has reported navigating supply chains about which they had limited information, technologies not yet available at scale, investment cycles misaligned with target periods and Scope 3 emissions dependent on thousands of suppliers and customers at different stages of their own journeys. The acknowledgement of these real barriers represents a maturation of the SBTi's approach, moving from a framework that set ambitious targets without fully reckoning with implementation complexity to one that provides guidance on navigating that complexity while maintaining scientific integrity. Version 2.0 is designed to sit inside businesses rather than alongside them, integrated into how boards, CFOs, operations teams and procurement functions make decisions.

 

Read more: The Quiet Engine of Building Decarbonization

 

Key Technical Changes Across Scope 1, 2 and 3

 

Version 2.0 introduces differentiated company categories based on size and geography, with Category A comprising large companies from all countries and medium-sized companies from high-income countries, and Category B comprising smaller companies and medium-sized companies from lower-income countries, with some requirements mandatory for Category A but optional for Category B. All companies must set five-year near-term Scope 1 and Scope 2 targets, while Category A companies must also set Scope 3 near-term targets for significant categories representing 5 percent or more of Scope 3 emissions. Three Scope 1 target-setting options are available: absolute emissions reduction following a straight-line trajectory to net-zero by 2050, sector-specific emissions intensity reduction, and an asset transition approach for companies whose capital stock turnover does not follow a linear pathway.

For Scope 2, the standard introduces geographic matching requirements based on deliverability regions and raises the bar on temporal matching, with Category A companies with significant electricity use required to report hourly matching percentages and an optional recognition programme for companies achieving defined hourly matching thresholds. For Scope 3, three target options are available: overarching absolute emissions reduction targets, overarching supplier and customer alignment targets to increase the share of aligned partners, and category or activity-specific targets for companies with concentrated emissions in particular scope 3 categories such as steel, cement, transport and agricultural commodities. The standard also introduces a new implementation hierarchy that prioritises direct activity-level emissions reductions over activity pool-level or sector-level actions and market instruments.

 

The Implementation Hierarchy and Market Instruments

 

A central innovation of Version 2.0 is the structured implementation hierarchy that guides how companies prioritise their decarbonisation actions. Direct activity-level actions that reduce emissions at source within company operations and value chains take priority over actions within shared systems such as electricity grids, supply sheds and logistics networks, which in turn take priority over sector-level actions where structural constraints prevent activity or pool-level action. This hierarchy is designed to prevent companies from using market instruments as a substitute for genuine operational decarbonisation while still recognising the legitimate role of certificates, book-and-claim systems and sector contributions as complementary mechanisms where direct action is not feasible within the target timeframe.

Market instruments including energy attribute certificates and commodity certificates based on mass balance or book-and-claim chain-of-custody models are permitted within the implementation hierarchy subject to defined integrity criteria, including activity matching, system association, quantification transparency, verifiability, temporal alignment, unique attribution and double counting prevention. The standard clarifies that actions at the activity pool or sector level that are not reflected in a company's physical GHG inventory can only support system contribution claims rather than company-level emissions reduction claims, maintaining the primacy of the physical GHG inventory as the basis for net-zero progress assessment. This distinction between emissions reduction claims and system contribution claims addresses one of the most persistent credibility challenges in corporate climate accounting.

 

Explore OneStop ESG Marketplace: ESG reporting

 

The Ongoing Emissions Responsibility Programme and Post-2035 Obligations

 

Version 2.0 introduces an optional voluntary Ongoing Emissions Responsibility recognition programme that encourages companies to take responsibility for a defined share of their ongoing emissions through climate contributions supporting verified mitigation outcomes and other eligible climate actions. The programme offers three recognition levels on the SBTi Dashboard: Engaged, covering at least 1 percent of total ongoing emissions; Advanced, covering at least 10 percent of ongoing emissions including 100 percent of Scope 1 and 2; and Leadership, covering 100 percent of total ongoing emissions for Category A companies with a contribution budget of $80 per tonne of carbon dioxide equivalent. The programme is explicitly positioned as a complement to rather than a substitute for companies reducing their own emissions, with recognition awarded only to companies making genuine progress against their validated targets.

The standard signals that from 2035 Category A companies will be required to support eligible carbon removals equal to at least 1 percent of ongoing emissions, rising linearly to 100 percent by the company's net-zero target year. At the net-zero target year and thereafter, all companies with net-zero targets must reduce emissions to zero or residual levels and neutralise all residual emissions using eligible carbon removals, with long-lived greenhouse gases required to be neutralised with long-lived removals. This phased mandatory transition from voluntary to required ongoing emissions responsibility is designed to give companies adequate lead time to build carbon removal procurement programmes while establishing clear long-term expectations for the role of carbon finance in the net-zero framework.

 

Outlook for Version 2.0 Adoption and Corporate Climate Action

 

The release of Version 2.0 represents a pivotal moment for the corporate net zero movement, as the SBTi evolves from a target validation organisation into what it describes as a transition partner providing guidance on implementation, gathering data on what is working across its network, surfacing systemic barriers to governments and regulators and creating pre-competitive spaces where companies can learn from each other. Whether Version 2.0 can successfully bridge the gap between the ambition of 11,000 company target commitments and the delivery gap that the SBTi's own experience has documented will depend on the quality of the implementation guidance that follows the standard itself, the effectiveness of the end-of-cycle assessment process in holding companies accountable for best-efforts delivery and the degree to which the standard's flexibility on barriers is balanced by genuine transparency requirements.

The February 2027 effective date provides companies with approximately eight months to assess the implications of Version 2.0 for their existing and planned targets and transition plans. For the thousands of companies with existing 2030 near-term targets, the most immediate practical question is how to align their next target cycle from 2030 to 2035 with the Version 2.0 framework, including the new implementation hierarchy, emissions-intensive activity identification requirements and ongoing emissions responsibility programme. The convergence of Version 2.0's action orientation with the mandatory climate disclosure frameworks now operating in the EU, UK, Australia and other jurisdictions creates conditions in which science-based target setting is increasingly becoming a baseline expectation for large companies rather than a differentiating voluntary commitment.

 

Source: SBTi