Following the last public consultation this summer, the Science Based Targets initiative (SBTi) has unveiled a refined draft of its Corporate Net-Zero Standard Version 2.0. This second iteration responds to stakeholder feedback from the first consultation, incorporating input from various perspectives to refine requirements and clarify implementation pathways for companies pursuing net-zero targets. SE Advisory Services will be publishing targeted deep-dives on these critical areas in the coming weeks, helping companies understand both the technical details and strategic implications of this evolving Standard.
Following four years since initial publication, with nearly 12,000 participating companies, this second consultation draft includes changes to target-setting methodologies and implementation pathways based on first consultation input. With the consultation period closing on 8 December 2025, stakeholder input during this window will be critical in shaping the final version of the Standard, which will govern corporate net-zero target-setting for years to come.
The first draft introduced a two-tier categorization system, dividing companies into Category A (large and medium-sized companies in high-income geographies) and Category B (smaller companies and those in emerging markets), with different requirement levels for each.
The second draft maintains this framework but includes two adjustments. Category B scope has been expanded to now include medium-sized companies in ‘upper-middle to lower-income geographies’ rather than just ‘lower-income’. Additionally, requirement clarity has been improved, with the second draft providing more specific guidance on which criteria are optional versus mandatory for each category.
| Thresholds | Category A or B? | |||||
| Company size | Emissions | Balance sheet ($ or €) | Net turnover wordwide ($ or €) | Employee number | Company located in high-income country | Company located in low, lower-middle or upper-middle income country |
| Large If at least one threshold is met. | N/A | N/A | Over 450 million | Over 1,000 | A | A |
| Medium If at least two thresholds are met. | N/A | Over 25 million | Between 50 – 450 million | Between 250 – 1,000 | A | B |
| Small & micro If the emissions threshold and at least two other thresholds are met. | Less than 10,000 tons CO2e (scopes 1+2 combined) | Less than 25 million | Less than 50 million | Less than 250 | B | B |
This revised document, Version 2.0, is in draft and some of its criteria will likely change through the second public consultation process. The final version is expected to be published in spring 2026.
Companies can continue setting near-term targets under the current SBTi frameworks throughout 2025, 2026, and 2027. This applies to both the Corporate Net-Zero Standard Version 1.3 (for companies setting comprehensive net-zero targets) and the Near-Term Criteria Version 5.3 (for companies focusing only on near-term science-based targets). Near-term targets set in 2025, 2026, and 2027 under current criteria will remain valid until the end of their target timeframe. The SE Advisory Services team recommends moving forward with any ongoing or planned near-term target setting activities.
Regarding long-term net-zero targets, the draft Standard indicates that from 2028, companies will use Version 2.0 to set both near-term and long-term targets. The SBTi has committed to providing a transition pathway for companies with targets validated in 2025, 2026 and 2027 to align with Version 2.0, with further details to be released soon.
While we await these specific details, companies should continue working toward their climate commitments under the current guidance, as the SBTi emphasizes that efforts under Version 1.3 will continue to be relevant and provide a strong foundation for future alignment with Version 2.0.
Existing near-term targets will remain valid until the end of the target timeframe. For companies with existing long-term targets, the draft Standard doesn’t yet provide specific guidance on if or when these will need to be updated to align with Version 2.0. The SBTi has indicated that it will publish a transition guide to help companies move onto Version 2.0. The timeline for this guide has not been released.
The SBTi has released guidance on the renewal process, clarifying the process for companies to review, and if necessary, update their current near-term targets every 5 years. For targets that are up for review, companies have 6 months after the review period to assess if their targets are aligned with the current Near-Term Criteria Version 5.3. If the targets are not aligned, then the company has a further 6 months to update them.
If a target has been achieved early or a company has come to the end of its target timeframe, it is recommended to set new targets.
While companies can still set optional Market-Based and Location-Based targets in the future, there is an additional mandatory requirement to set Electricity targets to reach 100% low carbon electricity by 2040. SBTi sets the criteria for low carbon electricity to be sourced from the same market as consumed and mandates it to be matching consumption on an hourly basis, with gradual implementation. These mandatory requirements are going to make substantial Scope 2 reduction incredibly challenging and likely much more expensive. It is yet to be seen how companies committed to taking climate action will cope with these requirements. Under current market conditions, it is questionable how companies would confidently set targets against the new guidelines, achieve any progress or even provide the required yearly reporting.
Additionally, as the target will need to be set in % terms, it does not seem to incentivize energy efficiency improvements.
Near-term targets will be required across Scopes 1, 2 & 3 for Category A companies (large and medium-sized companies in high-income geographies), and only across Scope 1 & 2 for Category B companies (medium-sized companies in upper-middle, lower-middle, and low-income countries as well as small and micro-sized companies).
Category A companies are required to set long-term targets for Scopes 1 and 2 only, with long-term Scope 3 targets optional. However, the SBTi have not clarified the renewal process for near-term Scope 3 targets set under the new framework. The SE Advisory Services team assumes that the SBTi will require companies to continually set interim 5-year Scope 3 targets from the target submission date until 2050.
All long-term targets are optional for Category B companies.
This second Draft reframes “Beyond Value Chain Mitigation” (BVCM) as part of a broader framework for taking responsibility for “ongoing emissions” – the emissions companies continue to produce while transitioning to net-zero. The draft introduces the term “supplementary climate contributions” to encompass various pathways for addressing these ongoing emissions. Traditional BVCM activities, primarily purchasing high-quality carbon credits for verified emission reductions or removals, remain valid but are now part of a broader framework. This expanded framework allows companies to also direct climate finance toward forward-looking mitigation investments, R&D and innovation, adaptation and resilience initiatives, and loss & damage support.
A new optional recognition program (available until 2035) allows companies to voluntarily take responsibility for their ongoing emissions and achieve:
Important to note that these contributions are separate from value chain reduction targets and cannot substitute for deep decarbonization. Instead, they provide a mechanism for companies to demonstrate climate leadership while transitioning to net-zero.
From 2035 onwards, Category A companies will face mandatory requirements to take increasing responsibility for ongoing emissions, rising linearly to 100% by 2050. Specific thresholds and requirements will be finalized in Version 3 of the Standard.
In practice, companies with existing high-quality carbon credit portfolios can leverage these investments to achieve recognition status today while positioning themselves for the potential post-2035 mandatory requirements outlined in the Draft.
The Draft distinguishes between “ongoing emissions” that companies produce while transitioning to net-zero and “residual emissions” that remain after all feasible reductions at the net-zero target year. Before companies reach their net-zero target year, which must be 2050 or earlier, they can voluntarily participate in the optional recognition program for addressing ongoing emissions described above.
During this transition period, companies can use both emission reduction and removal carbon credits to demonstrate climate leadership through the “Recognized” or “Leadership” tiers. This voluntary action for ongoing emissions is entirely separate from the mandatory neutralization requirements for residual emissions that apply at net-zero.
Once companies reach their net-zero target year, the requirements become much more stringent. At this point, companies must neutralize all residual emissions using exclusively carbon removal credits. Emission reduction credits are not eligible for neutralization claims. The Draft proposes that 41% of these removals come from long-lived storage solutions capable of storing carbon for centuries to millennia. The remaining 59% can be addressed through short-lived removals with decadal storage timeframes. Companies may also choose to use additional long-lived removal credits. These percentages are marked as illustrative in the Draft and will be refined in future versions based on evolving climate science.
The draft Standard also delineates responsibility by scope:
For companies with existing carbon credit portfolios, this creates a clear strategic imperative. Reduction credits (e.g., from energy efficiency, efficient cookstoves, and avoided deforestation projects, among others) remain valuable for the voluntary recognition program in the near term but cannot be used for neutralization at net-zero. In contrast, removal credits (e.g., from reforestation, biochar, or direct carbon capture or other carbon sequestration projects) serve a dual purpose, providing value both for the current voluntary program and future neutralization requirements.
Below is a summary of the most significant updates, along with the SE Advisory Services team’s perspective on how they might impact you and your organization.
| Topic | Current requirements (v1.3) | Second consultation proposed requirements (v2.0) | SE Advisory Services view on impact |
| Commitments | Optional stage including a letter of commitment to the SBTi, then 24 months to submit targets | Category A companies must publicly state their intention to develop and implement targets to reach net-zero emissions by no later than 2050, including commitment to neutralize residual emissions, with formal approval from the Board of Directors or equivalent governing body | Increased requirements on net-zero goal setting and public communication will necessitate increased management and board input at the very start of your target-setting journey |
| Climate Transition Plan | No requirement | Category A companies to publish a climate transition plan within 12 months of target validation, with increased requirements including a goal to phase out unabated fossil fuels as well as estimates of what the transition will cost and how it will be funded | Drives need for early roadmap assessments to net-zero during target-setting, companies will need to coordinate across finance, operations, and sustainability teams early in the process |
| Target Submission | Near-term only or both near- and long-term targets | Scope 1 and Scope 2 long-term (net-zero) targets are mandatory for all Category A companies’ SBT submissions, with near-term targets for each Scope 1, 2 and 3 | Companies can no longer delay action, with mandatory renewal cycles and annual progress reporting, companies will have to set KPIs and create standing agenda items during senior leadership and board meetings to ensure continuous progress |
| Target Renewal process | Requirement to review and, if necessary, revalidate targets every five years, but no requirement to set new targets | Companies must set new targets at the end of each target cycle and undergo renewal validation | Increased time and resources spent on target management and continuous improvement |
| Target Progress | Limited guidance on disclosing progress | Annual public reporting on target progress and identified actions to address remaining challenges | Increased level of process complexity for companies to understand and educate key stakeholders on prior to target-setting. Increases transparency on journey to net-zero, needing robust tracking and reporting systems |
| Long-Term Targets | Covers Scope 1, 2, and 3 | Category A: Separate long-term Scope 1 and 2 targets required; Scope 3 optional. Category B: All long-term targets optional | Companies will require less disclosure and planning on long-term scope 3 reduction, simplifying climate transition plans |
| Base Year | 2015 or later | Must use the most recent year with comprehensive data as the base year, aligned to the financial reporting period where possible. Companies may communicate targets relative to their previous base year for continuity, but must calculate new targets using recent data | Companies setting new targets need to reassess feasibility with recent baseline data, ideally aligned to their financial reporting cycle |
| GHG Inventory Assurance & Data Quality | No assurance required | Category A companies require third-party assurance (limited assurance at a minimum) on base and target year emission metrics used in targets, including Scope 1, 2 and significant Scope 3 categories | Significant increase in GHG inventory quality requirements – ensure high maturity and strong organizational familiarity with inventory development process before target-setting |
| Scope 1 | Scope 1 and 2 targets can be combined | Separate target for scope 1, including three options: linear reduction, low-carbon activity share, or asset decarbonization plans | Increased focus required on Scope 1 reduction (e.g., energy efficiency and alternative fuel measures) for the majority of companies |
| Scope 2 | Choose either location- or market-based approach | One target to achieve 100% share of low-carbon electricity by 2040, through purchased electricity or matched EACs | The SBTi is aligning with GHGP’s proposed Scope 2 standard update. Both proposals focus on deliverability, hourly alignment, and more near-term commissioning of projects. These changes will likely increase cost for long-term contracts as well as unbundled EACs and may push corporations towards unbundled instruments rather than away from them |
| Scope 3 | Must set Scope 3 target if Scope 3 ≥ 40% of total emissions | Category A companies must set near-term targets for each Scope 3 category ≥5% of total Scope 3 | More focused approach allowing companies to prioritize material value chain emissions |
| Scope 3 Target Options | Limited to either absolute, physical intensity, economic intensity or engagement targets | Multiple target options per Scope 3 category, including emission intensity, volume-alignment (increasing share of low-emission commodities or activities), or supplier engagement (increase share of procurement from suppliers with SBTs) | Increased complexity in developing and tracking progress of targets, will require robust and granular GHG inventory with high data quality |
| Scope 1, 2 & 3 Target Boundary | 95% of Scope 1 & 2, 67% of Scope 3 (near-term), 90% (long-term) | Near-term: 100% Scopes 1&2 (all companies), Scope 3 categories ≥5% (Category A only). Long-term: 100% Scopes 1&2 (Category A only) | Likely to increase the required emissions for target coverage for most organizations, and reaffirms the need for GHG inventory maturity prior to target submission |
| Scope 2 EAC Guidelines | Limited guidance | More specific requirements for both unbundled EACs and long-term contracts for deliverability, phasing in of more granular hourly matching for many corporates, and more limited availability of EACs due to reduced timelines for commissioning dates to be phased in | Increased criteria for eligible Scope 2 EACs may increase renewable energy costs for target-setters and make the renewable energy sourcing process significantly more challenging. It is yet to be seen how this will impact voluntary buyers’ appetite for target setting in general |
| Use of EACs for Scope 3 Reduction | No allowances | Allows the use of unbundled EACs when companies cannot purchase sufficient volumes of low-carbon goods or services, with strict integrity principles | Additional options now available for companies to demonstrate progress against Scope 3 targets, however, market instruments must meet strict integrity principles and be justified publicly on use |
| Scope 3 Performance Tracking at the Activity Pool Level | Tracing scope 3 emissions back to individual sources required for target achievement | Allows Scope 3 interventions at the activity pool level to be used to demonstrate performance against alignment targets | Activity pool level performance tracking provides more flexibility and opportunities around mitigation strategies that companies can use across their value chain, especially for “hard to trace” scope 3 sources |
| Ongoing Emissions | No guidance or incentive to address ongoing emissions in the interim years | Replaces “Beyond Value Chain Mitigation” (BVCM) with “supplementary climate contributions framework”. Introduces a new recognition mechanism with two tiers: Recognized’ tier (≥1% of ongoing emissions addressed through verified carbon credits or applying ≥USD 20/tCO₂e carbon price), ‘Leadership’ tier (100% of ongoing emissions at ≥USD 80/tCO₂e carbon price, with ≥40% directed to verified carbon credits). Both reduction and removal credits are eligible. Voluntary recognition program until 2035, then mandatory for Category A companies, scaling linearly to 100% by 2050 | Allows companies to be recognized for showing leadership in investing in and procuring carbon credits now, while positioning for post-2035 mandatory requirements. However, starting in 2035 some companies will face increasing financial costs to maintain this recognition up to 2050. This underscores the importance of beginning to build blended carbon credit portfolios early – not only to navigate potential price increases as demand grows, but also because high-quality carbon credits, particularly those from removal projects, often require significant lead time from project development to credit issuance |
| Residual Emissions Neutralization | Must neutralize residual emissions at net-zero target year; limited specificity on credit types or storage duration requirements | Once companies reach their net-zero target year (2050 or earlier), all residual emissions must be neutralized using exclusively carbon removal credits – emission reduction credits are not eligible for neutralization claims. Proposed allocation: 41% from long-lived storage solutions (centuries to millennia), 59% from short-lived removals (decadal storage), though these percentages are marked as illustrative | Fundamental strategic shift requiring portfolio planning now. Reduction credits (from energy efficiency, cookstoves, avoided deforestation) remain valuable for the voluntary recognition program but cannot be used for neutralization at net-zero. Removal credits (from reforestation, biochar, direct carbon capture) serve dual purpose for both current voluntary program and future mandatory neutralization |
With the consultation period closing on 8 December 2025, now is the time for companies to make their voices heard. Whether you’re already on your net-zero journey or just beginning to explore science-based targets, your feedback matters in shaping a standard that will govern corporate climate action for years to come.
Submit your feedback through the SBTi consultation response form.
If you’d like to discuss how these proposed changes might affect your organization’s climate strategy or need support navigating the implications of the draft Standard, our SE Advisory Services team is here to help.
Connect with our experts today to explore what these updates mean for your business.
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