SBTi Net-Zero Standard 2.0 Enhances Corporate Climate Action

The Science Based Targets Initiative (SBTi) has published the new Corporate Net-Zero Standard Version 2.0, the most significant update to the international framework that guides companies in setting science-aligned climate targets. The revision follows a decade of field experience and over 11,000 companies with SBTi-validated targets worldwide. The goal is to make the path to net zero more effective, more in line with companies’ operational dynamics, and more focused on implementing decarbonization strategies.

The new version marks a paradigm shift. While the first standard primarily aimed to define what it means to be aligned with a trajectory compatible with the 1.5°C limit set by the Paris Agreement, the Corporate Net-Zero Standard 2.0 aims to transform climate objectives into concrete tools for managing the transition.

What is SBTi’s Corporate Net-Zero Standard?

The Corporate Net-Zero Standard is the leading international framework used by companies to set science-based climate targets. Developed by the Science Based Targets initiative, a collaboration between the Carbon Disclosure Project (CDP), the United Nations Global Compact, the World Resources Institute (WRI), and the World Wildlife Fund (WWF), the standard establishes criteria through which companies can demonstrate that their emissions reduction pathways are consistent with global climate goals.

Launched in 2021, the framework helped create a common benchmark in a market characterized by often heterogeneous approaches to the concept of net zero. Before its introduction, many companies announced climate neutrality goals without shared criteria or verifiable methodologies, raising doubts about the credibility of their commitments.

The standard defined precise rules for setting targets for Scope 1, Scope 2, and Scope 3 emissions, indicating the reductions required to align with climate scenarios compatible with limiting global warming to 1.5°C. Over time, it has become one of the main benchmarks used by investors, financial institutions, and stakeholders to evaluate the quality of corporate climate strategies.

With version 2.0, SBTi further expands its role. The goal is no longer simply to validate targets, but to support companies in implementing decarbonization pathways, integrating climate objectives into investment decisions, industrial strategies, and supply chain management.

The main new features of version 2.0

The Corporate Net-Zero Standard 2.0 represents the result of a review that SBTi initiated to address the critical issues that emerged during the implementation of the first version of the framework. In recent years, thousands of companies have begun measuring their emissions, setting reduction targets, and developing climate strategies, highlighting the need for more flexible yet more implementation-oriented tools.

One of the main innovations is the introduction of differentiated requirements based on company characteristics. The new version distinguishes between Category A and Category B companies, taking into account the company’s size and the economic context in which they operate. This approach aims to facilitate access to the standard for less structured organizations, while maintaining high levels of ambition for large companies.

The framework also introduces an implementation hierarchy that prioritizes direct emissions reductions within corporate operations and the value chain . Only subsequently are actions implemented in shared systems, such as electricity grids or production chains, and initiatives capable of contributing to the decarbonization of entire economic sectors recognized.

Finally, particular attention is also paid to monitoring progress. Version 2.0 moves beyond a logic based solely on the initial validation of targets and introduces a continuous performance evaluation process. Companies will be required to report on the results achieved, highlight any deviations from the expected trajectories, and demonstrate how they intend to address any delays on the path to net zero.

Scope 1: More flexibility in defining targets

For direct emissions generated by corporate activities, the new standard introduces three different ways to set targets. Companies can continue to use absolute emissions reduction targets, based on a linear trajectory from the baseline year to achieving net zero; adopt pathways based on the emissions intensity of their sector, calibrated to the characteristics and decarbonization opportunities of sectors such as steel, cement, or chemicals; or choose an approach based on the transformation of production assets.

This latter pathway is designed primarily for sectors characterized by long investment cycles and emissions-intensive infrastructure, where decarbonization depends on the gradual replacement of existing plants with low-emission technologies.

Scope 2: focus on the energy transition

For emissions related to purchased energy, SBTi expands the options available to demonstrate the decarbonization of energy consumption. Companies can set targets based on both emissions reductions and increased low-carbon electricity. The standard recognizes various energy procurement instruments, including Power Purchase Agreements, direct investments, and energy certificates, provided they meet integrity and connection requirements to the energy system in which consumption occurs.

Version 2.0 also introduces voluntary recognition for companies that adopt hourly matching systems, i.e. the hourly matching of electricity consumption and low-emission energy production.

Scope 3: Greater attention to materiality

The management of Scope 3 indirect emissions has been made more pragmatic and focused on materiality, allowing companies to exclude categories that represent less than 5% of total emissions or where the practical influence is minimal.

For short-term targets , companies can choose between three options : linear emissions reductions, actively engaging suppliers and customers to adopt science-based standards, or using category-specific targets. This last option is designed for companies with concentrated emissions and differentiates between upstream emissions, for which there are defined sectoral pathways, and other activities in the value chain, encouraging the sourcing of raw materials with a lower carbon footprint.

Governance and transition plans

One of the most important innovations of SBTi’s version 2.0 concerns the strengthening of climate governance.

All companies adopting the standard will be required to prepare a transition plan describing the main actions needed to achieve the established targets and the overall path to net zero. For large companies (Category A), this document must be made public upon validation of the targets. The plan must outline the main decarbonization drivers, planned investments, and how the climate strategy will be integrated into the company’s operational and financial activities.

SBTi also requires the direct involvement of top management, requiring targets to be approved at the highest levels of governance and integrated into the organization’s decision-making processes. Decarbonization is therefore increasingly being treated as a strategic issue, not just a matter of sustainability or reporting.

The principle of best efforts and responsibility for emissions

Version 2.0 also adopts a “best efforts” approach, meaning companies are required to use all reasonably available levers to reduce emissions and to demonstrate transparency regarding the challenges encountered along the way. The goal is to recognize that companies do not always have direct control over all emissions sources, particularly along the supply chain, while still requiring them to demonstrate a concrete and demonstrable commitment to achieving climate goals.

Alongside this, the Ongoing Emissions Responsibility Program is being introduced , a voluntary system that recognizes companies committed to financing emissions reduction or removal activities beyond their own operational perimeter.

Why it’s important

The update to the Corporate Net-Zero Standard comes at a crucial time for the global climate transition. Regulatory pressure, investor demands, and growing attention to climate risks are pushing companies to transform ESG commitments into increasingly concrete operational strategies.

Version 2.0 reflects this evolution. Rather than redefining the concept of net zero, the new standard aims to make corporate decarbonization paths more credible and achievable , recognizing the complexities of the transition while maintaining alignment with scientific objectives.

For companies, the framework is set to increasingly become a tool for risk management and strategic planning . For investors and stakeholders, it represents an updated reference for assessing the quality and credibility of corporate climate commitments in an environment where the ability to translate announcements into results will be increasingly crucial.

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(Featured image by Florida-Guidebook.com via Unsplash)

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