SBTi Corporate Net-Zero Standard V2.0: What Changed for Corporate Climate Targets?

The most consequential change in the Science Based Targets initiative's new standard is not a threshold or a methodology. It is that a validated target has stopped being a credential you obtain and become a cycle you stay inside.

Under Version 1, a company got its targets validated and the hard part was over until the next update. Version 2.0 introduces recurring assessment, mandatory assurance of the base year inventory for larger companies, annual public reporting of progress, and a formal end-of-cycle review. The bar has not simply risen. The nature of the obligation has changed.

The SBTi published the final Corporate Net-Zero Standard V2.0 on 11 June 2026, after a two-year revision and two rounds of public consultation. More than 11,000 companies and financial institutions hold validated targets, covering roughly 41 per cent of global market capitalisation, so this is a change with unusually broad reach.

Here is what actually changed, and what it means depending on where you sit.

Everything Now Depends On Your Category

V2.0 replaces the old split between small and medium enterprises and everyone else with a formal two-category classification, and this determines which requirements apply to you.

Category A covers large companies in all countries, plus medium-sized companies in high-income countries. Category B covers small companies in all countries, plus medium-sized companies in lower-income countries. Classification uses World Bank income categories together with consolidated group thresholds for turnover, employees and emissions, averaged over the two most recent financial years.

The distinction carries real weight. Several requirements that are mandatory for Category A are optional for Category B, including transition plan disclosure, base year assurance and Scope 3 target setting. A mid-sized company in a lower-income country faces a materially lighter obligation than a similar company in Western Europe.

The November 2025 draft proposed three categories. The final standard reduced it to two, which is one of several places where the published version is simpler than what was consulted on.

Scope 1 And Scope 2 Are No Longer One Target

Under previous versions, companies typically set a combined Scope 1 and 2 target. V2.0 separates them, and gives each its own logic.

Scope 1 now offers three routes: absolute contraction, sector-specific intensity, or a new asset transition target that allows asset-specific reduction plans. That last option is aimed squarely at companies with long-lived physical assets, where decarbonisation depends on replacement cycles rather than incremental efficiency. For heavy industry, it is the most useful addition in the standard.

Scope 2 gets stricter in one respect and clearer in another. The target must be based on the physical, location-based inventory. Market instruments including renewable energy certificates and power purchase agreements are still recognised, but they are now handled separately rather than bundled into the target itself. New quality criteria apply to energy attribute certificates.

That separation matters more than it appears. A company that has been meeting its Scope 2 target largely through certificate purchases will find that those purchases no longer flatter the target figure in the same way. The physical consumption number is what the target runs against.

Notably, the SBTi has kept hourly matching optional for now, which sits against the GHG Protocol's contested Scope 2 revision and gives companies breathing room while that process resolves.

Scope 3 Moves From Coverage To Significance

This is the change most companies will feel first.

The old rule required targets covering 67 per cent of Scope 3 emissions. V2.0 replaces that with a significance test: any category representing at least 5 per cent of total Scope 3 emissions must be addressed by a target.

The two approaches produce different outcomes. The 67 per cent rule let a company concentrate on its largest categories and ignore the tail. The 5 per cent threshold pulls in every material category regardless of whether the big ones already clear a coverage percentage. For companies with diversified value chains, that expands obligations and demands more granular data.

Against that, V2.0 offers more flexibility in how you set the target. Three approaches are available: an overarching absolute emissions reduction target, supplier and customer alignment targets, or category and activity-specific targets. The middle option gives formal recognition to supplier engagement as a decarbonisation strategy rather than treating emissions reduction as the only measurable outcome.

One important limit on scope: only Category A companies are required to set near-term Scope 3 targets. For Category B, it is optional.

Long-term targets have moved from required to recommended, which is a genuine relaxation and one that has drawn criticism from analysts who see long-term commitments as the anchor of a net-zero claim.

Ongoing Emissions Responsibility Replaces Beyond Value Chain Mitigation

The most structurally novel part of V2.0 is a new framework for the emissions a company continues to produce while working toward its targets.

Ongoing Emissions Responsibility replaces the previous Beyond Value Chain Mitigation guidance, and it operates in three phases.

Now to 2035, it is a voluntary recognition programme. Companies choose a contribution level, make a public declaration, and are recognised on the SBTi dashboard. Three tiers exist. Engaged is the entry point, addressing at least 1 per cent of ongoing emissions through verified mitigation outcomes on a tonne-for-tonne basis or by applying a carbon price with a recommended minimum of 20 US dollars per tonne. Advanced covers 10 per cent of total ongoing emissions on the same basis. Leadership applies a carbon price of at least 80 US dollars per tonne to 100 per cent of ongoing emissions.

Category A companies must declare whether they intend to participate, or submit a rationale for opting out, with that intent displayed on the dashboard within six months.

From 2035, it becomes mandatory for Category A. Those companies must support eligible carbon removals covering at least 1 per cent of ongoing Scope 1, 2 and 3 emissions, rising linearly to 100 per cent by their net-zero target year.

From the net-zero target year, all companies must neutralise 100 per cent of residual emissions with eligible removals.

There is a further shift in what counts. Between 2027 and 2034, high-integrity reduction credits and removal credits both count toward ongoing emissions. From 2035, only removal credits qualify, and they must be durability-matched to the emissions they address.

The SBTi has been explicit that this sits outside targets and complements rather than substitutes for reduction. The principle that companies reduce first and neutralise only what cannot be eliminated is unchanged. But the framework does give carbon removals a formal, timetabled role in a corporate climate standard for the first time, with a price benchmark attached, which is a significant development for the removals market.

The three-tier design is another change from the November draft, which proposed two.

Assurance And Transition Plans Become Mandatory

For Category A companies, two requirements move from good practice to obligation.

Third-party assurance of the base year inventory is now mandatory, at minimum limited assurance, covering Scope 1, 2 and 3. Companies must also publicly report their full Scope 1 to 3 inventory and progress annually.

Climate transition plan disclosure is mandatory for Category A.

Both are optional for Category B.

There is a useful overlap worth noting for European reporters. Validated SBTi targets substantially address several ESRS E1 requirements, including the transition plan, emissions reduction actions, mitigation and adaptation targets, gross Scope 1, 2 and 3 emissions, and removal actions. They do not discharge all CSRD obligations, but the work is not duplicated.

The Validation Cycle Changed

The November draft proposed a four-stage validation cycle. The final standard simplifies this to two stages: Target Validation and an End-of-cycle Assessment.

This is where the shift from credential to cycle becomes concrete. Recognition under the Ongoing Emissions Responsibility programme, for instance, is awarded at the assured end-of-cycle assessment and is conditional on progress against validated targets. Setting a target is no longer sufficient. Delivering against it is assessed, and recognition depends on it.

Which Version Applies, And When

The transition arrangements give companies a genuine choice for a limited window, and the dates matter.

Version 2.0 validations open on 1 February 2027. Version 1.3.1 remains open to new submissions until 31 January 2028. From 1 February 2028, Version 2.0 becomes mandatory for all new submissions.

That creates a twelve-month overlap during which a company can choose which version to submit under. Which version applies is determined by the date the SBTi receives the submission.

The strategic question this raises is real. A company close to submission now may prefer to lock in under Version 1, which is simpler and has no assurance requirement. A company with several years before it submits will be under Version 2 regardless and should build for it. A company in between has a genuine decision, and the answer depends largely on whether the base year assurance requirement and mandatory transition plan are achievable on its timeline.

Companies that already hold validated targets should not assume they are unaffected. Existing targets will need review against the new category system to establish whether revisions are required.

What To Do Now

Establish your category first. Everything else follows from it. Turnover, employee count and emissions across the consolidated group, averaged over two financial years, and the World Bank income classification of your country of domicile. A Category B classification removes several of the heaviest obligations.

Re-run your Scope 3 analysis against the 5 per cent threshold. If you set targets under the 67 per cent coverage rule, you almost certainly have categories that were previously outside your targets and now fall inside them. Identify them before deciding which version to submit under, because the answer may change your view.

Test whether base year assurance is achievable on your timeline. For Category A companies, this is the single hardest new requirement. Assurance requires traceable data, documented methodology and labelled estimates across all three scopes. If your inventory has never been examined, allow considerably longer than you expect, and note the capacity constraints affecting assurance providers globally.

Separate your Scope 2 thinking. Recalculate what your Scope 2 position looks like on a purely location-based basis, without certificates. That number is what your target will run against, and for some companies it is materially different from what they have been reporting.

Decide on Ongoing Emissions Responsibility deliberately. Participation is voluntary until 2035, but Category A companies must declare their intent or explain why not, and that declaration is public. Treat it as a communications and budget decision rather than a form to complete.

Model the version choice explicitly. The twelve-month overlap from February 2027 is a real option with real consequences. Work out which version suits your readiness rather than defaulting to whichever is current when you happen to submit.

The broader read is that V2.0 makes science-based targets harder to obtain and considerably harder to hold. Assurance, annual progress reporting and end-of-cycle assessment turn a one-time validation into an ongoing accountability relationship. For companies that have treated SBTi validation as a badge, that is an uncomfortable change. For those that have built genuine decarbonisation capability, it is the standard finally rewarding the difference.

Preparation Checklist

Note that V2.0 was published on 11 June 2026, with validations opening 1 February 2027 and the standard mandatory for new submissions from 1 February 2028.
Determine whether you are Category A or Category B, using consolidated group turnover, employees and emissions averaged over two financial years alongside World Bank income classification.
Review existing validated targets against the new category system to establish whether revisions are needed.
Set separate Scope 1 and Scope 2 targets, since the combined approach is no longer available.
For Scope 1, evaluate absolute contraction, sector-specific intensity and the new asset transition target, which suits long-lived physical assets.
Recalculate Scope 2 on a location-based basis, since the target runs against physical consumption with market instruments handled separately.
Re-run Scope 3 against the 5 per cent significance threshold, which replaces the 67 per cent coverage rule.
Choose among the three Scope 3 approaches: overarching absolute reduction, supplier and customer alignment, or category and activity-specific targets.
If Category A, plan third-party assurance of your Scope 1, 2 and 3 base year inventory, at minimum limited assurance.
If Category A, prepare a climate transition plan for disclosure and note the overlap with ESRS E1 requirements.
Decide your position on Ongoing Emissions Responsibility, noting the Engaged, Advanced and Leadership tiers and the mandatory phase from 2035.
Model whether to submit under Version 1.3.1 before 31 January 2028 or under Version 2.0, based on your assurance and transition plan readiness.

Position as of August 2026. Corporate Net-Zero Standard V2.0 was published on 11 June 2026 and transition arrangements run into 2028. Sector-specific SBTi standards and the Financial Institutions Net-Zero Standard apply separately. Confirm current requirements against the Science Based Targets initiative and take professional advice for your circumstances.

Sources

Science Based Targets initiative, Greenhouse Gas Protocol Corporate Standard and Scope 2 Guidance, European Sustainability Reporting Standard E1, NewClimate Institute, Watershed, ClimatePartner, Eco-Act, Sweep, Nexio Projects, ecoPRISM, Climeworks, Carbon Maps, Terrapass

This article is intended for general professional information and does not constitute legal, financial, or investment advice.