SBTi Corporate Net Zero Standard: version 2.0 published

The Science Based Targets Initiative’s (“SBTi”) Corporate Net-Zero Standard (the “Standard”) is generally viewed by companies, investors, and civil society as a benchmark for what constitutes a “credible” corporate net-zero commitment. After several rounds of consultation, on 11 June 2026, the SBTi published version 2.0 of the Standard (the “New Standard”). 

The revisions to the Standard are of key importance both for organisations that already have SBTi-validated targets, but also those preparing for re-validation of targets or considering aligning internal transition plans with SBTi guidance. The New Standard introduces increased accountability and transparency for companies when setting and implementing targets, intending both to improve investor and stakeholder confidence, and also strengthen a company’s decision-making and actions towards net-zero. Below, we consider some of the main changes in the New Standard.  

Company categorisation

The New Standard introduces “Category A” and “Category B” companies which have differentiated requirements based on geographical as well as revenue thresholds, marking a departure from the previous approach of treating large companies and SMEs differently. Category A comprises large companies from all countries and medium-sized companies from high-income countries, while Category B comprises small companies from all countries and medium-sized companies from lower-income countries, defined by revenue and other criteria. This aims to address imbalances in resources available to, and barriers faced by, equally sized companies across different economies.

Shifting focus away from 1.5°C but retaining net zero

The Standard previously required companies to set both near-term and long-term targets consistent with reaching net-zero emissions by 2050 and keeping global warming to 1.5°C. However, the New Standard removes the wording around limiting warming to 1.5°C and instead requires all companies to set near-term (5-year) targets for reducing Scope 1 and 2 emissions, with near-term targets for reducing Scope 3 emissions also required for Category A companies. Companies may also set long-term targets to reach residual emissions levels for all emissions by 2050. 

This change is likely intended to account for the fact that economies and policies globally are diverging from a pathway which limits warming to 1.5°C. It allows for some flexibility in how a company achieves net-zero, as they will no longer need to strictly align their plan with a trajectory that limits warming to 1.5°C in order to set SBTi-validated targets. Companies should think about how this impacts on any existing targets they have set, and whether (or what) changes will be appropriate.

Despite this new flexibility, the New Standard does require all companies to develop and maintain a transition plan that describes the actions needed and corresponding timeframes to implement the company’s targets in a manner consistent with reaching net-zero by 2050. 

More robust transition plan requirements 

Category A companies are further required to publicly disclose their transition plans within 15 months of completing validation. The New Standard sets out what should be included in a transition plan, with specific reference to the SBTi Sector Standards, the phase out of fossil fuels and a description of the types of actions required to reach the company’s near-term targets. The recommendations also suggest applying international standards, such as the Transition Planning Taskforce’s Disclosure Framework or the requirements set out in the European Sustainability Reporting Standards.

While the requirement for a transition plan is specific to the targets being validated under the New Standard, the obligation for Category A companies to publish their transition plans presents a shift from voluntary development and publication under current legislation to a mandatory requirement under a voluntary, but highly regarded, framework. 

Introduction of an Implementation Hierarchy

The requirement for all companies to set Scope 1 and 2 targets is supported by the introduction of an implementation hierarchy which prioritises reducing emissions as close as possible to the source. Companies are required to focus on activity-level actions in their operations and value chains before pursuing more indirect action to address emissions that relate to shared systems or exist at a sector-level. This reflects the focus of the New Standard on actions which underpin the emissions reduction pathway and will support a company as they develop their targets and frameworks.

While this appears to shift responsibility away from companies in sectors where their value chains are the greatest source of their emissions (Scope 3), it also acknowledges the challenges in addressing Scope 3 emissions by refocusing target-setting on the highest-priority value chain emission sources. Moreover, a company with lower Scope 1 and 2 emissions should be able to reduce these emissions more easily, allowing it to shift its focus to those further down the chain while complying with the hierarchy.

Treatment of carbon credits

The New Standard draws a clearer distinction between a) mitigation of emissions within a company’s own operations and value chain and b) the neutralisation of residual emissions through carbon removal and storage. Carbon credits and other market instruments cannot be used as a substitute for reducing a company’s physical greenhouse gas inventory, which remains the sole basis on which targets are set and progress is assessed. 

Within the new implementation hierarchy, carbon removal credits can be used for the counterbalancing of residual emissions, which is required on a phased, increasing basis under the prospective post-2035 responsibility requirement, and in full from the net-zero target year, with residual emissions of long-lived greenhouse gases required to be matched by durable, long-lived removals. Additionally, market instruments such as energy attribution and commodity certificates may support activity-pool or sector-level action where direct reductions are not yet feasible. This is subject to integrity guardrails, and only can be used in support of “system contribution” claims, rather than emissions reduction claims.

The New Standard further introduces a voluntary Ongoing Emissions Responsibility programme for high-integrity credits and climate contributions, as a complement to decarbonisation. From 2035, a mandatory requirement applies to companies to support eligible carbon removals equal to at least 1% of their ongoing emissions, rising linearly to 100% by the net-zero target year, with an increasing share of long-lived removals.

Requirement for internal approval 

Companies will now be required to obtain internal approval at the highest level of governance to set and submit SBTi targets, and ensure oversight of target implementation at that level. This introduces a new layer of accountability for boards compared to the previous Standard, and expects companies to have structures in place to oversee implementation, report on progress and periodically review and adjust the targets. 

Introduction of SBTi Assurance Model

Previously, targets were validated at the time they were set and then every five years thereafter. The New Standard introduces the SBTi Assurance Model, a cyclical model involving third-party assurance of information reported by Category A companies (it is optional for Category B companies). 

The validation cycle comprises two main assessments: Target Validation – an SBTI-recognised validation body assesses a company’s conformance with target validation criteria when a company registers with SBTi; and End-of-cycle Assessment – an SBTi-recognised validation body assesses a company’s conformance with applicable end-of-cycle validation criteria at the end of the target cycle. The End-of-cycle Assessment is a more in-depth process than the previous 5-year reviews. Companies must assess and report progress at the end of the target cycle separately for each target, requiring in-depth reporting and assessment, including an assessment of greenhouse gas emissions and separate reporting of actions and instruments.

Companies must resolve material instances of non-conformance with the standard before the Target Validation can be approved, and must assess and report progress for each target at the end of the target cycle under the End-of-cycle Assessment. This requires in-depth reporting and assessment, which may increase the time and cost burden on companies. However, it introduces continuous accountability over targets and gives greater credibility to net-zero claims and commitments. 

Transition to the New Standard

For companies that have net-zero targets in place, these can remain in place until the end of their cycle (2030). When companies look to set or renew targets for the next cycle (2030-2035), they will need to be set against a new baseline and comply with the more stringent provisions created by the New Standard, such as the cyclical validation process and transition plan requirement, and companies will need to plan accordingly to ensure compliance.

Conclusions

The New Standard introduces new layers of accountability and transparency required from companies when setting and implementing net-zero targets. Whilst the removal of the 1.5°C requirement and requirement for formal long-term net-zero targets introduces some flexibility in how companies approach their transition to net-zero, the requirement for transition plans, cyclical validation process and board oversight significantly increases the ongoing burden on companies to monitor progress against targets. However, these changes may also present opportunities: more robust governance, clearer transition planning and enhanced validation may strengthen the credibility of corporate climate claims, while the Ongoing Emissions Responsibility programme and specific allowances for the use of carbon credits to neutralise ongoing emissions indicates a clear supportive direction of travel for the development of the market for carbon credits.