SBTi Unveils Updated Corporate Net-Zero Standard to Broaden Access and Strengthen Credibility

The Science Based Targets initiative (SBTi) has released the draft of its Corporate Net-Zero Standard V2, a proposed update to its flagship framework for validating and tracking corporate climate targets. The revised standard is designed to make science-based target setting more accessible to companies of all sizes, while tightening definitions and expectations around carbon reduction, offset use, and disclosure transparency. This marks the most comprehensive revision of the SBTi’s core guidance since the original Net-Zero Standard was launched in 2021. The new version introduces more flexibility for organizations in setting their decarbonization pathways, reflecting the lessons learned from more than 12,000 companies that have already adopted or committed to SBTi-aligned targets. The organization’s intent is to balance inclusivity with integrity making it easier for businesses to join the decarbonization movement without compromising scientific rigor. Can this more flexible framework accelerate global corporate climate action, or will the expanded range of options risk diluting consistency and comparability across industries?

 

Redefining Corporate Pathways to Net Zero

 

The updated draft introduces a new principle-based ambition statement, shifting from the original directive that companies “shall commit to reaching net zero by 2050” to a broader expectation that firms “set an ambition to transition their operations and value chains to align with the goal of net zero by no later than 2050.” This nuanced change reflects an evolving understanding of how organizations progress along decarbonization journeys acknowledging that credible ambition must be grounded in capability, evidence, and transitional planning rather than in declarative pledges alone. The SBTi notes that this change aims to eliminate confusion around the term “commitment,” which had created challenges for companies navigating long-term emissions trajectories while dealing with shifting regulatory and technological contexts. The new wording prioritizes strategic intent and transparency over symbolic declarations, reinforcing accountability through measurable milestones and verified reporting.

 

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Flexible Approaches for Direct and Indirect Emissions

 

One of the most significant additions in Version 2 is the introduction of multiple target-setting pathways for direct (Scope 1) emissions. Companies can now choose among three core methodologies: a linear emissions reduction trajectory, a model emphasizing the growth of low-carbon activities, or asset-level decarbonization plans that reflect the technological readiness of their facilities and operations. For Scope 2 emissions from purchased electricity, steam, heat, and cooling, the updated draft maintains mandatory near-term targets but offers more proportional flexibility for smaller firms. Long-term targets are now optional for non-major emitters, and companies can exclude limited quantities of electricity and heat from near-term goals under defined criteria. To maintain integrity, all near-term Scope 2 targets must still align with grid decarbonization trajectories, and companies must demonstrate credible procurement of low-carbon electricity. The new framework also clarifies the treatment of environmental attribute certificates (EACs) such as energy origin certificates and carbon credits. Under the revised rules, companies may use EACs to match electricity consumption only when the certificates originate in the same geographic market, preventing “paper-based” decarbonization claims disconnected from actual energy flows.

 

A Targeted Approach to Complex Value Chains

 

Scope 3 emissions often representing the largest share of a company’s carbon footprint—remain the most challenging to measure and mitigate. The updated standard provides a more nuanced methodology for addressing these value chain emissions, focusing on high-impact activities while allowing exclusions for areas with limited influence.

Three approaches are introduced to reflect the diversity of corporate value chains:

1. Emissions intensity targets, which reduce emissions per unit of activity or revenue;

2. Activity alignment targets, which evaluate whether suppliers’ and customers’ operations are consistent with a 1.5°C trajectory;

3. Counterparty alignment, which encourages companies to work collaboratively with suppliers and clients to ensure collective progress toward net-zero outcomes.

This framework acknowledges that different industries from manufacturing to finance require tailored approaches. The SBTi emphasizes that its goal is not to weaken accountability but to provide pragmatic pathways for companies struggling with data gaps or fragmented supplier networks.

 

Integrating Carbon Markets and Leadership Recognition

 

Another defining feature of the new draft is the formal inclusion of market-based mechanisms within science-based targets. For the first time, the SBTi explicitly integrates the use of environmental attribute certificates such as carbon credits or commodity-linked offsets, while imposing strict conditions on their application. Companies will be able to use these instruments only when direct abatement or traceable supplier engagement is not feasible, ensuring that removals complement, rather than replace, genuine decarbonization efforts. To further encourage leadership, the draft introduces a new recognition tier for companies taking proactive steps to neutralize ongoing emissions. The “Leadership” category will spotlight large firms that address 100 percent of their Scope 1–3 emissions through verified removals, as well as smaller firms covering all Scope 1 and 2 emissions. This recognition is meant to reward early adopters who go beyond compliance to demonstrate comprehensive climate accountability.

 

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Raising Expectations for Large and High-Income Companies

 

The SBTi has also proposed stricter disclosure and transition plan requirements for Category A companies defined as large corporations globally and medium-sized enterprises operating in high-income nations. Under the new draft, these companies must publish credible transition plans within 12 months of target validation and progressively address residual emissions through carbon removals from 2035 onward. These requirements align with broader developments in global climate disclosure, including frameworks established by the ISSB and the EU Corporate Sustainability Reporting Directive. By embedding transition planning into its standard, the SBTi ensures that companies move from goal-setting to execution, connecting near-term actions with long-term decarbonization commitments. 

 

SBTi Chief Executive Officer David Kennedy underscored the central role of business in the global energy transition, stating, “Businesses are driving decarbonization and will be key to achieving our climate objectives. Taking science-based action not only reduces emissions but also manages transition risks, maintaining competitiveness and offering growth opportunities in a carbon-constrained world.”

 

Toward a More Inclusive, Science-Driven Climate Framework

 

The proposed updates to the Corporate Net-Zero Standard illustrate a maturing global climate governance landscape, one that recognizes the diversity of business models, geographies, and industrial realities. By offering multiple routes to alignment with the Paris Agreement while tightening oversight of residual emissions and credits, the SBTi aims to preserve both flexibility and integrity. Public consultation on the draft standard will remain open until December 8, 2025, with the final version expected to be published in 2026. Once adopted, the updated framework will likely shape the next phase of corporate decarbonization, serving as a global benchmark for credible, science-based pathways to net zero. If successful, SBTi’s revised approach could expand participation in corporate climate action providing both rigor for investors and regulators, and accessibility for companies previously constrained by rigid compliance models. In doing so, it may define how science-based targets evolve in an era that demands speed, scale, and credibility in equal measure.

 

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