SBTi Corporate Net-Zero Standard V2: What's changing and what it means for companies

On June 11, 2026, the Science Based Targets initiative published Version 2.0 of its Corporate Net-Zero Standard. It replaces Version 1.3.1 and is the most comprehensive revision since the standard was established: 42 percent of the sections are entirely new, and the remaining 58 percent have been revised. This article outlines the specific changes.

As of August 2026. This article was originally published in March 2025 in response to the consultation draft at that time and was fully updated to reflect the current status following the publication of the final version. We address the operational deadlines for the version change separately in the article which version you must submit and when.

Key Points at a Glance

• Version 2.0 of the Corporate Net-Zero Standard was published on June 11, 2026, and will take effect on January 31, 2027.
• The separate track for small and medium-sized enterprises will be eliminated and replaced by a formal categorization into Categories A and B, with different obligations.
• Scope 1 and Scope 2 will have separate targets. The combined target for both scopes, which was allowed in version 1.3.1, no longer exists.
• For Scope 3, a materiality threshold of five percent replaces the previous fixed coverage rates.
• New features include a mandatory implementation hierarchy for measures, governance and transition plan requirements, and a formalized audit model.
• The mandatory five-year review is no longer required because, going forward, all goals will be set on a five-year basis.

What Version 2.0 Changes Fundamentally

The revision shifts the focus from target setting to implementation. Version 1.3.1 essentially defined how a target is calculated. Version 2.0 additionally specifies the measures that may be used to achieve it, how progress is monitored, and the governance framework that must be in place. The SBTi revised the standard between April 2024 and May 2026.

The scope is considerable. According to the SBTi’s amendment document, 42 percent of the sections are entirely new, while 58 percent have been modified from the previous version. It is therefore not possible to map the criteria one-to-one between the two versions; the criteria have been completely restructured and organized into main criteria with subcriteria.

The process included two public consultations—from March through June 2025 and from November through December 2025—as well as a pilot test. The independent Technical Council approved the version on May 8, 2026, and the Board of Trustees adopted it on May 21, 2026.

How the New Business Categorization Works

Version 2.0 replaces the previous special track for small and medium-sized enterprises with a formal categorization. All companies are assigned to one of two categories, each of which entails different obligations. According to the SBTi amendment document, the determining factors are revenue, geographic location, emissions, and number of employees.

This distinction has significant implications because it determines which companies are subject to the most stringent requirements. Only Category A companies are required to identify and quantify emission-intensive activities, provide a limited assurance report on their balance sheet and key performance indicators, and have their progress assessment audited externally at the end of the cycle.

Category A and Category B: Version 2.0 classifies companies into two categories with tiered obligations based on revenue, geography, emission levels, and number of employees. Category A includes larger and more emissions-intensive companies and is subject to more stringent requirements: mandatory third-party verification, identification of emissions-intensive activities, and, starting in 2035, a mandatory responsibility for carbon removals. Category B includes all other companies, which are subject to reduced requirements. This categorization replaces the separate target-setting pathway for small and medium-sized enterprises from Version 1.3.1.

What's Changing for Scope 1 and Scope 2 Targets

The most notable change in practice: Scope 1 and Scope 2 now have separate targets. Version 1.3.1 allowed for a combined target covering both scopes, but Version 2.0 no longer does. Both targets must cover 100 percent of the respective areas: for Scope 1, direct emissions; for Scope 2, the total consumption of electricity, heat, steam, and cooling.

For Scope 1, absolute reduction targets and intensity targets remain an option. A new option is available for asset transformation in sectors with long-lived fixed assets where a linear reduction path is not appropriate. Long-term targets are now mandatory only for companies that set short-term intensity or asset transformation targets.

For Scope 2, the changes are technical in nature but far-reaching. Alignment targets no longer refer to renewable electricity but to low-carbon electricity. The option for intensity targets has been completely eliminated. Going forward, Scope 2 emissions targets will be based exclusively on physical, i.e., site-based, accounting. Category A companies whose electricity demand grows by more than 20 percent per year are required to set emissions targets. We explain the differences between market-based and site-based accounting in our article on Scope 2 emissions.

How Scope 3 targets will be defined in the future

For Scope 3, Version 2.0 replaces the fixed coverage thresholds with a materiality-based approach. All Scope 3 categories that account for at least five percent of the emissions from Categories 1 through 14 must be covered. This means that the scope of the reporting is determined by the actual distribution of emissions rather than by a flat threshold.

Exceptions are possible within certain categories. For categories 3, 7, 8, 9, 10, and 14, companies may exclude items if they have no practical effect on the result. Each exclusion must be reported and justified.

The target-setting options have been expanded. The previous targets for supplier and customer engagement have been replaced by broader alignment pathways that measure the proportion of suppliers or customers who are undergoing transformation or are already net-zero-aligned. In addition, methods for volume, product use, and end-of-life have been added. The economic and physical intensity methods, which called for a 7 percent annual reduction, have been removed because there are no robust, science-based reference pathways for these metrics.

Regulatory Scope Version 1.3.1 Version 2.0 Scope 1 and Scope 2 Combined target possible Separate targets, each with 100 percent coverage Scope 2 alignment Reference to renewable electricity Reference to low-carbon electricity, Intensity targets omittedScope 3 definitionFixed percentage coverage thresholdsAll categories starting at 5 percent of Categories 1 through 14Scope-3 Intensity Methods: 7 percent annual reduction permitted; Deleted without replacement; Long-term Scope 3 targets: Mandatory; Optional; Small and medium-sized enterprises: Separate target-setting pathway; Formal categorization A and B; Target verification: Mandatory five-year review; Not applicable; continuous evaluation; Third-party verification: Not mandatory; Limited assurance for Category A

What the implementation hierarchy means for measures

A new concept that is crucial for action planning is the implementation hierarchy. It determines the means by which a goal may be achieved. Direct emission reductions at the activity level take priority. Only when structural barriers exist are measures in shared systems or at the sector level permitted.

At the same time, Version 2.0 introduces comprehensive integrity criteria for measures, projects, and market-based instruments. Projects must result in measurable reductions or removals, be additional, address displacement effects, and be reflected in the physical inventory for Scope 1 and 2. Market-based mechanisms and allowances are recognized provided they accurately reflect emission characteristics, are allocated in appropriate quantities, and are managed through transparent, secure registries.

Electricity has its own specific framework. Permitted measures include physical and financial electricity purchase agreements, contracts for low-carbon electricity with utilities, and the acquisition of unbundled certificates of origin. For these measures to count toward the activity pool, certain conditions apply, such as geographic matching and an age limit of 15 years for the generation facility. Significant electricity consumers must also measure and disclose their consumption at hourly intervals when purchasing low-carbon electricity. To classify guarantees of origin, we have described the significance of Energy Attribute Certificates separately.

In addition, there is a requirement regarding bio-based raw materials: If they are used to achieve the targets, they must meet recognized sustainability criteria. Any link to deforestation or the conversion of natural ecosystems is prohibited.

What New Requirements Exist Regarding Governance, Auditing, and Progress

Version 2.0 establishes governance as a standalone criterion for the first time. It requires clearly defined responsibilities at the management level, a transition plan, and appropriate disclosure. In Version 1.3.1, these were not explicit requirements but, at best, recommendations. As a result, responsibility for this objective shifts from the functional department to corporate management.

The verification model has been formalized. Target validations and end-of-cycle assessments are conducted by accredited verification bodies. For Category A companies, limited assurance regarding financial statements and key performance indicators is mandatory. In addition, they must identify and quantify emission-intensive activities and report those that account for at least five percent of Scope 3 emissions.

Annual reporting will become significantly more detailed. Structured information on progress toward targets, a description of the measures taken, and the obstacles encountered will be required. At the end of each target cycle, a new assessment will be added, based on complete greenhouse gas inventories and a separate presentation of measures and instruments. In return, the previously mandatory five-year review is being eliminated, since all targets will be set on a five-year basis going forward. It is being replaced by an ongoing review for significant changes. Our article on re-baselining explains when an inventory must be recalculated.

How Residual Emissions and Carbon Removals Are Regulated

The previous recommendation on mitigation outside one’s own value chain is being transformed into a structured framework for accountability for ongoing emissions. It is initially designed as a voluntary recognition program: Companies that make contributions to climate action are recognized for doing so, without this resulting in any immediate obligation.

However, it will become mandatory starting in 2035. From that point on, Category A companies will be required to remove carbon. The previous recommendation regarding carbon neutrality milestones will thus become a requirement with a fixed start date.

The offsetting criteria themselves have been expanded. The regulations now cover the expected duration of removal activities, responsibility for offsetting direct and indirect emissions, the conditions for avoiding double counting, and reporting requirements. This provides a more precise definition of which removals may be counted at all.

Our Assessment

Version 2.0 represents less of a tightening of requirements and more of a shift in focus. In some areas, the target framework actually becomes more flexible—for example, through the asset transformation option and the optional long-term Scope 3 targets. What comes after setting the targets, however, becomes more challenging: verification, auditing, governance, and the question of which measures are actually eligible for inclusion.

We consider the separation of Scope 1 and Scope 2 to be the single change with the most significant practical implications. Companies that previously set a combined target were able to offset weaknesses in one area with progress in the other. That is no longer the case. Companies that have previously used certificates of origin to artificially balance their electricity consumption will now see their actual status reflected in the location-based Scope 2 emissions inventory.

In our view, the significance-based Scope 3 approach is the correction that is long overdue. Fixed coverage thresholds have regularly led companies to include categories that were irrelevant to their emissions inventory, while relevant levers remained unaddressed. The 5 percent threshold directs efforts toward where the emissions actually lie. However, this requires a Scope 3 inventory that is robust enough to even determine the threshold in the first place. This is precisely where many projects fall short, and the new standard does nothing to change that.

We view the time constraints associated with the audit requirement for Category A with concern. Limited assurance on financial statements and key performance indicators requires documented processes that cannot be established in a single quarter. Companies that currently prepare their financial statements largely manually should use the remaining time for this purpose rather than devoting it to work on their targets. To establish a basis suitable for audit, a structured corporate-level carbon footprint assessment is the first step; our climate targets themselves are the basis for deriving the targets.

Conclusion

Version 2.0 of the Corporate Net-Zero Standard is not an update but a restructuring. It separates Scope 1 and Scope 2 targets, replaces fixed Scope 3 quotas with a 5 percent materiality threshold, introduces a categorization system with tiered obligations, and, for the first time, makes governance and third-party verification criteria.

The focus is thus shifting from target calculation to documentation. Those who currently compile their emissions data manually will not be able to meet the requirements for limited assurance and end-of-cycle assessment in the short term. Establishing verifiable processes is the key preparatory task.

At the same time, new opportunities are emerging that did not exist before: the asset transformation option for sectors with long-lived fixed assets, optional long-term Scope 3 targets, and the ability to focus the scope of targets on the emission categories that are actually material. Those who read the standard early can take advantage of these opportunities instead of missing out on them.

Sources

1. Science Based Targets initiative: Corporate Net-Zero Standard V2.0 Main Changes Document, Version 1 (June 2026) — https://files.sciencebasedtargets.org/production/files/Corporate-Net-Zero-Standard-V2-Main-Changes-Document.pdf
2. Science Based Targets initiative: Corporate Net-Zero Standard Version 2.0, Full Text (June 2026) — https://files.sciencebasedtargets.org/production/files/Corporate-Net-Zero-Standard-version-2.pdf
3. Science Based Targets initiative: The new Corporate Net-Zero Standard Version 2.0 (accessed in August 2026) — https://sciencebasedtargets.org/corporate-net-zero-standard-v2
4. Science Based Targets initiative: The SBTi releases Corporate Net-Zero Standard V2.0 to accelerate corporate climate action (June 11, 2026) — https://sciencebasedtargets.org/news/the-sbti-releases-corporate-net-zero-standard-v2-0-to-accelerate-corporate-climate-action
5. Science Based Targets initiative: Continued Use of the Corporate Net-Zero Standard Version 1.3.1 and Transition to Version 2.0 (June 2026) — https://files.sciencebasedtargets.org/production/files/Continuing-Use-of-Corporate-Net-Zero-Standard-Version-1.3.1-and-Transition-to-Corporate-Net-Zero-Standard-Version-2.pdf
6. Science Based Targets initiative: Preliminary Minimum Evidence Required for the Corporate Net-Zero Standard, Version 2.0 (June 2026) — https://files.sciencebasedtargets.org/production/files/Preliminary-Minimum-Evidence-Required-for-Corporate-Net-Zero-Standard-Version-2.0.pdf

About the Author

Kevin Möller is an SBTi-certified expert and Senior Climate Consultant at Five Glaciers Consulting. He assists companies in developing climate strategies and science-based targets, from greenhouse gas inventories and target-setting to implementation in day-to-day operations. If you have any questions about this article, you can reach him at florian.niedermeier@fiveglaciers.com.