SBTi Has Raised the Bar. What Does Version 2.0 Mean for Your Business?

The Science Based Targets initiative (SBTi) has officially published Version 2.0 of its Corporate Net-Zero Standard - the most significant update to the framework since it launched.

The final standard largely confirms the direction set out in the consultation drafts, but publication gives businesses certainty on what science-based target setting will look like going forward.

The core principles of net zero have not changed. Companies are still expected to reduce emissions in line with climate science and neutralise residual emissions at the point they reach net zero. What has changed is how targets are set, delivered and assessed over time.

The first question: which set of rules applies to you?

One of the most significant changes in Version 2 is the introduction of Category A and Category B companies.

Category A covers large companies (net turnover ≥ €450m or 1,000+ employees) from any country, and companies in high-income countries that meet at least two of the following: balance sheet ≥ €25m, turnover ≥ €50m, or 250+ employees. Everyone else falls into Category B. If in doubt, the full criteria are set out in the standard.

This distinction matters because many of the headline requirements only apply to Category A. Scope 3 near-term targets, transition plan disclosure and assurance requirements are all mandatory for Category A but optional for Category B.

SBTi has been clear, however, that Category B companies are encouraged to adopt additional elements wherever feasible. The distinction is intended to make the framework more proportionate, not to limit ambition.

Net zero targets are no longer the starting point

One of the more striking aspects of Version 2 is that near-term targets take centre stage.

Near-term targets are mandatory for all companies, with the exception of Scope 3 where Category B companies can choose whether to set them. Long-term and net-zero targets are optional for all companies.

This might seem counterintuitive for a standard with "net zero" in the name. But it reflects a growing recognition that committing to net zero by 2050 means very little without a credible plan for the next five to ten years. The emphasis has shifted from where you are going to how you are going to get there, and whether you can demonstrate real progress along the way.

Having a target is no longer enough

The biggest shift in Version 2 is the increased focus on implementation.

All companies are required to have a transition plan setting out how targets will be achieved. For Category A, that plan must also be publicly disclosed within 15 months of validation. Category B companies are strongly encouraged to publish too, but it is not mandatory.

The standard also reflects an expectation that climate targets should be integrated into procurement, investment decisions, business strategy and governance, not managed solely by sustainability teams.

Companies have more options for decarbonising direct emissions

Version 2 expands the range of approaches available for Scope 1 target setting.

Under Version 1, companies could choose between absolute emissions reduction and emissions intensity reduction pathways. Version 2 adds a third option: the asset transition approach. Where Category A companies use either emissions intensity or asset transition approaches, they are also required to set a long-term Scope 1 target; for Category B companies this is optional.

The asset transition approach is particularly relevant for sectors that rely on long-lived infrastructure and equipment. Rather than assuming emissions decline steadily each year, companies can build targets around the planned replacement, retrofit or retirement of high-emitting assets, with carbon budgets used to demonstrate that cumulative emissions remain aligned with climate goals.

This creates greater flexibility for sectors where decarbonisation is driven by investment cycles and technology deployment rather than incremental annual reductions.

Electricity procurement becomes a strategic priority

Version 2 introduces a more structured approach to Scope 2 emissions.

Near-term Scope 2 targets are mandatory for all companies, covering either an increase in the proportion of low-carbon electricity (LCE) used or an absolute emissions reduction. It is worth noting that "low-carbon electricity" includes renewables, nuclear and electricity generation fitted with carbon capture and storage, not renewables alone.

Long-term Scope 2 targets, including reaching 100% low-carbon electricity by 2050 at the latest, are optional for all companies.

Version 2 also tightens expectations around how electricity procurement is matched and reported over time, with new requirements for temporal and geographic matching and additional reporting obligations for larger electricity users. For many organisations this represents a shift away from treating Scope 2 as an accounting exercise and towards developing a genuine long-term electricity procurement strategy.

Scope 3 is no longer one-size-fits-all

Version 2 introduces a more flexible approach to Scope 3 that focuses on material emissions sources and areas where companies can realistically exert influence.

For Category A companies, Scope 3 near-term targets are mandatory. Category B companies can choose whether to set them, though SBTi encourages this where material emissions exist.

The standard also introduces a wider range of target-setting approaches: emissions reduction targets, supplier and customer alignment targets, and activity-specific approaches. This reflects the reality that value chain emissions are often reduced through procurement decisions and supplier engagement rather than direct operational control.

Climate finance and offsetting are now part of the conversation

One of the most debated aspects of the final standard is the introduction of Ongoing Emissions Responsibility (OER).

The framework recognises that companies will continue to generate emissions while they decarbonise and creates a mechanism through which organisations can support climate action beyond their own value chains, through carbon credit purchases, carbon removals and broader climate finance. These activities complement emissions reductions; they cannot replace them.

For now, participation is voluntary. From 2035, however, Category A companies will face mandatory minimum responsibility requirements, starting at just 1% of ongoing scope 1, 2 and 3 emissions, but rising linearly to 100% by the company's net zero year. This is one of the most closely watched elements of the new framework.

This represents a significant shift in emphasis. Under Version 1, carbon removals were concentrated around the net zero date, while Beyond Value Chain Mitigation was encouraged but informal along the route. Version 2 formalises both much earlier in the transition journey, bringing them into a structured framework with defined requirements.

Validation is becoming a continuous process

Rather than treating validation as a one-off exercise, the framework introduces recurring five-year target cycles with end-of-cycle assessments.

At the end of each cycle, companies must demonstrate progress against their targets, update their base year to more recent data, and set new targets for the next cycle. This creates a stronger link between target setting and actual performance and means companies can no longer set a target and leave it untouched for a decade.

What should businesses do now?

Version 2 has now been published. First validations open in Q1 2027, with both versions running simultaneously throughout 2027 before Version 2 becomes mandatory from Q1 2028. In the meantime, companies can continue setting targets under Version 1 or begin preparing against Version 2 requirements ahead of validation opening.

Companies with existing validated targets should identify when their five-year review is due and start preparing well in advance, rather than waiting until that point to begin understanding what Version 2 will require of them.

Either way, the direction of travel is clear. Companies should be reviewing their governance arrangements, transition planning capabilities, Scope 3 data, electricity procurement strategies and internal ownership of decarbonisation activities.

Most importantly, businesses should determine whether they fall into Category A or Category B. That distinction will shape most of the requirements they face under the new framework.

The message from SBTi is clear: setting a target was never the finish line. Version 2 makes that harder to ignore.

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As an SBTi-certified expert, I support organisations with science-based target setting, transition planning and decarbonisation strategy. Whether you are considering validation under Version 1, preparing for Version 2, or reviewing an existing target, feel free to get in touch.

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