‍Introduction

The Science Based Targets Initiative (SBTi) has established itself as a global benchmark for science-based climate targets. With the publication of draft version 2.0 of the Corporate Net-Zero Standard in March 2025, the set of rules is taking on a new dimension: Companies must not only sharpen their climate targets, but also document their implementation and progress more transparently. The new requirements bring more rigor, but also greater flexibility - particularly with regard to Scope 3 emissions, progress reviews and the handling of residual emissions.

The changes affect companies of all sizes and in all sectors. Those who react early can not only minimize regulatory risks, but also gain strategic advantages in the market.

The main changes in SBTi version 2.0

1. extended focus on implementation and progress monitoring

Until now, the focus of SBTi has been on goal setting. However, version 2.0 requires a systematic review of the base year, the implementation of measures and clear progress tracking. Companies must regularly demonstrate that they are on the right path to decarbonization.

What is changing:

• Companies must revalue their underlying issues annually, especially after mergers or acquisitions.
• Large companies (category A) are checked by random audits and independent inspections.
• The deadline for target validation was shortened from two years to one year.
• Companies must now prove that interim targets have been achieved before they can make long-term net-zero pledges.
• Progress reports must use standardized metrics that enable comparability between companies.

2. revision of the Scope 3 requirements

Scope 3 emissions (supply chain, downstream emissions) are often the largest part of a company's carbon footprint, but also the most difficult to monitor. The new version sets more ambitious but more realistic requirements here.

The most important adjustments:

• Mandatory Scope 3 targets for all large companies, regardless of their share of total emissions.
• Prioritization of emission-intensive categories: Companies must specifically reduce the largest emission drivers.
• Direct influence on suppliers: Tier 1 suppliers must be persuaded to set their own net zero targets.
• More flexible targets: Instead of blanket reduction targets, companies can take specific measures for the most relevant categories (e.g. green procurement, changed production methods).

3. new options for handling residual emissions

While previous versions of SBTi relied solely on carbon capture to neutralize residual emissions, version 2.0 introduces three options:

• Carbon reduction as a step-by-step process: companies can set intermediate targets for carbon sequestration at an early stage.
• Recognize voluntary investments in carbon removals before the net zero target year.
• More flexible options for neutralizing residual emissions by enabling companies to use future-proof reduction strategies, for example through the integration of Direct Air Capture (DAC) or other innovative technologies.
• New incentives for "Beyond Value Chain Mitigation" (BVCM): companies that invest in climate protection measures over and above their own emissions receive recognition for their contribution to global emissions reduction.

4. introduction of the concept of "current emissions"

A new concept in version 2.0 is "ongoing emissions" - the emissions that companies continue to cause during their decarbonization pathway.

SBTi rewards companies that voluntarily take measures to reduce these emissions - for example by investing in Beyond Value Chain Mitigation (BVCM) or promoting emission-free technologies.

Companies can claim credit for these measures if they can prove that these investments result in genuine, additional emission reductions.

5. stricter transparency requirements to prevent greenwashing

To prevent misinformation or exaggerated climate promises, companies must demonstrate their progress with verifiable emissions reductions and standardized validation criteria. Net zero claims are subject to stricter verification requirements.

New requirements include:

• Prohibition of vague or misleading net-zero promises without reliable data.
• Companies must report on their progress regularly and using standardized methods.
• Companies may only be considered "net zero" if their residual emissions have been offset by verifiable carbon capture.

What are the challenges and opportunities for companies?

The new requirements bring both risks and new opportunities:

Challenges:

• Increased data requirements: Companies must carry out more detailed and more frequent emissions assessments.
• Accelerated deadlines: Large companies have to validate their targets within a year - quick action is required.
• Stricter review: Audits and external reviews make reporting more demanding.
• New investment requirements: Companies that have previously relied heavily on offsets need to revise their strategy.

Opportunities:

• More flexibility in Scope 3 strategies: companies can focus specifically on the most emission-intensive areas.
• Recognition of proactive decarbonization: Early investment in carbon reduction brings strategic advantages.
• Reputation gain: Companies with clear, demonstrable progress strengthen their confidence among investors, customers and regulatory authorities.
• Improved competitive position: Companies that implement sustainable strategies at an early stage gain market share.

How should companies react now?

1. Early adaptation to the new standard: Companies should already revise their strategy now in order to be compatible with version 2.0.
2. Actively tackle Scope 3 reductions: Collaboration with suppliers and prioritization of emission-intensive categories should be started quickly.
3. Accelerate validation: Companies must ensure that they get their net zero targets validated within one year.
4. Strategically integrate carbon reduction: Those who invest early will not only enjoy regulatory advantages, but will also benefit from additional recognition.
5. Strengthen transparency and evidence: The new accountability and reporting requirements should already be built into the ESG strategy.

Conclusion: A decisive step towards net zero

Version 2.0 of the SBTi Corporate Net-Zero Standard marks an important milestone for corporate climate strategies. While stricter requirements and an extended verification obligation pose challenges for companies, the new flexibilities - particularly for Scope 3 and carbon removals - offer workable solutions. However, it is important to emphasize that this is a draft that is still in the public consultation phase. Companies and stakeholders are invited to provide feedback by June 1, 2025, before the final version is adopted.

For companies that take their climate targets seriously, the message is clear: science-based emissions reductions must be measurable, traceable and transparent to ensure they meet the new requirements for their feasibility.