SBTi Corporate Net-Zero Standard V2.0: What Companies Need to Know
The Science Based Targets initiative (SBTi) has published its Corporate Net-Zero Standard V2.0, introducing important changes to how companies set, implement and assess science-based climate targets.
V2.0 will be available for target setting from 1 February 2027. Between the 1st of February 2027 and 31st of January 2028, companies can use either V1.3.1 or V2.0. From the 1st of February 2028, V2.0 becomes mandatory for new target submissions. Companies that already have 2030 targets should begin setting their next-cycle targets for 2030–2035 under V2.0 from 2028.
What stays the same, and what changes?
The overall direction remains the same: companies are expected to reduce emissions in line with science-based pathways and work towards -zero emissions by 2050 at the latest.
What changes is the framework around those targets. V2.0 puts greater emphasis on implementation, transparency, and continuous progress, while introducing more differentiated approaches for companies and their value chains.
The 6 main changes are:
- Two company categories: Category A and Category B, with different mandatory requirements.
Category A Category B Scope 3 near-term targets Required Optional Transition plan disclosure Required Optional Base-year assurance Required Recommended Hourly scope 2 matching Required for companies with significant electricity use Not required - Scope 2: new approaches to low-carbon electricity and greater transparency around electricity matching.
- Scope 3: a new 5% significance threshold and three target-setting options.
- Implementation: companies must develop a transition plan and prioritise emissions reductions as close to the source as possible.
- Progress: companies are expected to demonstrate ongoing progress and address barriers to implementation.
- Ongoing emissions responsibility: V2.0 introduces an optional recognition programme linked to climate contributions and progress against targets.
The steps you should take:
1. First, know which company category you are in
V2.0 divides companies into Category A and Category B.
Category A includes large companies from all countries and medium-sized companies from high-income countries. Category B includes small companies from all countries and medium-sized companies from lower-income countries, according to the criteria in the Standard.
The distinction matters because some requirements that are mandatory for Category A are optional for Category B. These include transition-plan disclosure, assurance of target base-year data and Scope 3 target setting. SBTi encourages Category B companies to go beyond these minimum requirements.
V2.0 readiness check
- Determine your Category A or B status
- Identify which requirements apply to your category
- If Category A, prepare for the additional assurance, transition-plan and Scope 3 requirements
2. Scope 2: review how you manage electricity
Scope 2 is changing from the perspective of both target setting and implementation.
V2.0 provides different approaches, including a low-carbon electricity (LCE) alignment target, a location-based absolute Scope 2 target, or both, depending on the applicable requirements.
The Standard also introduces greater transparency around electricity matching. Companies with significant electricity use must report the percentage of Scope 2 electricity consumption that is contracted or matched with low-carbon electricity on an hourly basis. SBTi defines significant electricity use as an activity pool consuming 10 GWh or more per year.
Geographical matching is also required, based on deliverability regions, with specific provisions for interconnected regions. Hourly matching is encouraged by SBTi, while recognition for achieving specified hourly-matching levels is optional.
V2.0 readiness check
- Separate Scope 1 and Scope 2 data
- Review your electricity sourcing and matching arrangements
- Check geographical matching requirements
- If you have significant electricity use, prepare to report hourly matching
- Determine which Scope 2 target approach applies
3. Scope 3: a new 5% test and three ways to set targets
Scope 3 is one of the biggest changes in V2.0. Category A companies must set near-term Scope 3 targets covering significant Scope 3 categories. A category is significant when it represents 5% or more of total Scope 3 emissions in categories 1-14. For the Corporate Net-Zero Standard, the 5% significance test applies to Scope 3 Categories 1–14. Category 15, which covers investments, is addressed through the SBTi Financial Institutions Net-Zero Standard where applicable. Limited exclusions are possible where the conditions in the Standard are met, but they must be reported and justified.
Companies can choose between three approaches:
Option 1: Overarching emissions reduction
Reduce Scope 3 emissions along a linear trajectory towards residual emissions consistent with an eligible net-zero pathway.
Option 2: Supplier and/or customer alignment
Increase the share of relevant Tier 1 suppliers and/or customers that are in transition or net-zero aligned. Under V2.0, an in-transition entity has near-term science-based targets covering Scope 1, Scope 2 and material Scope 3 emissions, consistent with reaching net-zero by 2050, or generates more than 90% of its revenue from transitional or transition-enabling activities under recognised sustainable finance taxonomies. A net-zero-aligned entity has zero or residual emissions across Scopes 1-3 or generates more than 90% of its revenue from activities classified as net-zero aligned under recognised sustainable finance taxonomies.
Option 3: Category- or activity-specific targets
This option is for companies with concentrated emissions in certain Scope 3 categories or from high-emitting activities. It allows companies to use tailored target-setting approaches that reflect the mitigation options available. It is designed to encourage the procurement of lower-carbon commodities and a gradual transition towards lower-carbon products and services.
The approach differentiates between upstream emissions where sector or commodity pathways exist, such as steel, cement and transport; other upstream emissions; and downstream emissions. Depending on the emissions source, companies can use approaches such as emissions-reduction targets, increasing the share of lower-carbon or net-zero-aligned commodities or transport, supplier alignment, product-use alignment, product end-of-life alignment, or customer alignment.
In practice, companies first identify where their concentrated Scope 3 emissions come from and then select the target approach that matches the available mitigation lever. For example, a company with significant emissions from purchased steel could use an applicable sector or commodity pathway or increase the share of lower-carbon or net-zero-aligned steel it purchases. A company with significant downstream emissions could instead focus on product-use, product end-of-life or customer alignment
V2.0 readiness check
- Map Scope 3 categories 1-14
- Identify categories representing 5% or more of Scope 3 emissions
- Review permitted exclusions
- Choose one of the three target-setting approaches
- Prepare the relevant supplier, customer or activity data
4. From setting a target to showing how you will deliver it
V2.0 places greater emphasis on implementation. All companies must develop and maintain a transition plan explaining how their science-based targets will be implemented. The plan must cover relevant actions and timeframes, as well as key assumptions and dependencies. Category A companies must disclose their transition plan.
The Standard also introduces an implementation hierarchy. Companies should prioritise direct actions that reduce emissions at source. Where this is not sufficiently feasible because of structural constraints, action can take place within relevant shared systems or, where appropriate, at sector level.
What does “best efforts” mean?
Best efforts does not mean that companies can simply ignore missed targets.
V2.0 recognises that companies may face barriers or dependencies that affect implementation. Companies are expected to demonstrate progress, identify these barriers and take action to manage them.
The Standard also introduces an optional recognition programme for ongoing emissions responsibility. Eligibility is assessed at the End-of-cycle Assessment and considers progress against validated targets together with eligible climate contributions.
The takeaway
SBTi V2.0 is not simply a new version of the same target-setting exercise. It puts more emphasis on how companies implement, report and demonstrate progress against their targets. For companies preparing for the transition, the starting point is straightforward: know your category, review your data, reassess Scope 2 and Scope 3, understand which requirements apply to you, and prepare your implementation plan before V2.0 becomes mandatory for new submissions in 2028.
Has this blog sparked your interest? Do you want to know more about what this means for your company? Feel free to contact Jonah Link at jonah@2Impact.nl. To discuss how 2Impact can help your organisation. Or check out our webpage on Climate services.
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