Proposed changes in the SBTi Net-Zero Standard version 2.0

“The climate crisis demands more than pledges – it requires businesses to back commitments with rapid, science-guided action.” 

The SBTi provides a globally recognised framework for setting science-based emissions reduction targets in line with climate science. Over 10,000 companies have now adopted SBTi-verified targets, demonstrating their commitment to aligning with the Paris Agreement and transitioning to a low-carbon economy. 

The current Corporate Net-Zero Standard (Version 1.2) faces challenges in addressing Scope 3 emissions data, offset reliance, and decarbonisation pacing. Therefore, the SBTi has released a draft of Version 2.0 for public consultation, aiming to refine the framework with updated methodologies that align with the latest climate science and regulatory landscapes, ensuring greater clarity, inclusivity, and effectiveness for corporate climate action 

Understanding the Science-Based Targets initiative (SBTi) 

The SBTi, launched in 2015 through a collaboration between CDP, the UN Global Compact, the World Resources Institute (WRI), and WWF, provides a globally recognised framework for corporate climate action. Its mission is to align corporate decarbonisation strategies with the Paris Agreement’s 1.5°C pathway by: 

• Defining science-based methodologies for emissions reduction 
• Validating corporate targets against climate science 
• Combating greenwashing through rigorous accountability measures 

Over 10,000 companies have now adopted SBTi-verified targets, representing 92% of global GDP and 88% of emissions. The initiative’s growth reflects its role as the “gold standard” for credible climate planning. 

The SBTi process: From commitment to accountability 

Setting science-based targets involves six critical steps: 

Why the Net-Zero Standard v2? Addressing emerging challenges 

The proposed updates to the Science Based Targets initiative’s (SBTi) Corporate Net-Zero Standard Version 2 (V2) aim to address critical gaps in corporate climate action, ensuring that businesses align their strategies with the latest climate science. Below, we explore the key components of the framework, along with the proposed changes that make V2 more robust and actionable.  

The proposed revisions to the SBTi Net-Zero Standard respond to three critical gaps in corporate climate action: 

1. Scope 3 complexity 

Value chain emissions account for 70%+ of corporate footprints but remain underreported. The draft standard mandates Scope 3 targets for large companies while introducing flexible implementation pathways. 

2. Offset reliance risks 

Following controversies over low-quality carbon credits, V2 prohibits offsets for Scope 1-2 reductions and limits their use to 10% of Scope 3 emissions until 2030. 

3. Decarbonisation pace 

Current corporate trajectories delay 50% of required cuts until post-2030. V2 enforces front-loaded reductions, requiring 50% cuts by 2030 (vs. 2019 levels). Additional drivers include tighter alignment with the EU’s Corporate Sustainability Reporting Directive (CSRD) and investor demands for standardised progress tracking. 

Strategic implications: Preparing for V2 compliance 

The transition to the Science Based Targets initiative’s (SBTi) Corporate Net-Zero Standard Version 2 (V2) represents a critical opportunity for businesses to align with evolving climate science and regulatory expectations. While the standard is still in the public consultation phase, companies should not delay action. Early preparation will not only ensure compliance but also position businesses as leaders in the global decarbonisation movement. Here’s why businesses should act now and how they can prepare effectively. 

1. Near-term action over distant promises 

• Requirement: Companies must reduce emissions by at least 50% by 2030 compared to 2019 levels. 
• The SBTi V2 draft reinforces the importance of near-term targets as a foundation for long-term net-zero sustainability ambitions. This shift addresses concerns that many companies focus on distant goals while delaying immediate action. By front-loading decarbonisation efforts, businesses can achieve meaningful reductions within this decade, aligning with the Intergovernmental Panel on Climate Change’s (IPCC) AR6 pathways. 
• Proposed changes: 
  • Sector-Specific pathways: The draft introduces stricter benchmarks tailored to high-emitting industries like steel, cement, and aviation, ensuring sectoral alignment with global climate goals. 
  • Enhanced validation: Companies will need third-party assurance for greenhouse gas (GHG) inventories in their base year to ensure data accuracy and accountability. 
  • Example in practice: A manufacturing firm might prioritise renewable energy procurement and energy-efficient retrofits to meet its near-term targets. For instance, replacing fossil fuel-based boilers with electric ones powered by renewable electricity could significantly cut Scope 1 emissions while reducing operational costs over time. 

2. Beyond carbon offsets 

• Shift: From purchasing temporary offsets to investing in certified carbon removal technologies (e.g., direct air capture or biochar). 
• Rule: Offsets cannot exceed 10% of total emissions until 2030 and are prohibited for Scope 1 and 2 reductions. 
• The SBTi V2 draft reflects growing scrutiny of carbon offsets, particularly their role in delaying direct decarbonisation. While offsets can play a role in neutralising residual emissions, they should not substitute for reductions within a company’s value chain. The draft introduces stricter rules to ensure offsets are used responsibly and only for unavoidable emissions. 
• Proposed changes: 
  • Guardrails for offsets: Clear thresholds and quality criteria will be established for environmental attribute certificates (EACs), ensuring they align with mitigation hierarchy principles. 
  • Focus on permanent Removal: Businesses are encouraged to transition from avoidance credits to removal technologies that lock carbon away permanently. 
  • Example in practice: A company previously relying on forestry-based offsets might invest in direct air capture facilities or biochar projects that provide durable carbon sequestration solutions. 

3. Scope 3 accountability 

• Focus: Engage suppliers and customers across the value chain to reduce indirect emissions. 
• Toolkit: The SBTi’s updated Scope 3 Guidance helps companies map hotspots across logistics, materials, and product use phases. 
• Scope 3 emissions often represent over 70% of a company’s total footprint but remain one of the most challenging areas to address due to data complexity and limited control over external stakeholders. The V2 draft introduces a more structured approach to Scope 3 target-setting, recognising its critical role in achieving net-zero. 
• Proposed Changes: 
  • Mandatory targets for high emitters: Companies whose Scope 3 emissions account for more than 40% of their total footprint must set specific Scope 3 targets under the new framework. 
  • Flexibility for SMEs in low-income regions: Small and medium-sized enterprises (SMEs) operating in lower-income geographies will have more flexible requirements, ensuring inclusivity without compromising ambition. 
  • Example in practice: A consumer goods company might collaborate with suppliers to switch from fossil fuel-based raw materials to recycled or bio-based alternatives, cutting upstream emissions significantly. 

Timeline of the Net-Zero Standard revisions 

The SBTi’s consultative approach ensures robustness while maintaining momentum: 

Companies with existing targets can transition gradually, while new adopters from 2027 must comply with V2. 

Why the changes matter 

The SBTi’s proposed updates are designed to address gaps identified during the implementation of Version 1 standards: 

• Enhanced credibility: By requiring third-party validation and stricter offset rules, V2 ensures that corporate claims are backed by tangible progress rather than symbolic gestures. 
• Greater inclusivity: The distinction between Category A and B companies considers the varying resources available to different organisations, allowing smaller or resource-constrained companies to participate while still encouraging ambitious climate action across all industries. 
• Alignment with global trends: The updates align closely with regulatory frameworks such as the EU Corporate Sustainability Reporting Directive (CSRD), enabling businesses to meet multiple compliance requirements simultaneously. 

These proposed changes signal a significant evolution in corporate climate action frameworks. By focusing on near-term reductions, limiting offset dependency, and mandating Scope 3 accountability, SBTi V2 aims to accelerate progress toward global net-zero goals while ensuring transparency and credibility at every step of the journey. 

Future impact

The SBTi Corporate Net-Zero Standard V2 represents not just a compliance requirement but an opportunity for businesses to lead the global transition toward a sustainable future. By conducting comprehensive Scope 3 audits, reassessing offset strategies, and aligning budgets with front-loaded targets today, companies can secure their place as climate leaders while reaping financial and reputational rewards tomorrow.

At Nexio Projects, we support businesses in navigating these challenges by offering tailored services such as setting science-based targets, conducting gap analyses, and optimising ESG data management. With our expertise, organisations can confidently align with the updated SBTi framework and take meaningful strides toward net-zero while strengthening their leadership in sustainability. Contact us and find out about our tailored climate solutions.

References:

1. Science Based Targets initiative. (2024, February 28). SBTi launches draft Corporate Net-Zero Standard (V2) for consultation. https://sciencebasedtargets.org/news/sbti-launches-draft-corporate-net-zero-standard-v2-for-consultation 

2. Science Based Targets initiative. (2024, March 4). Draft Corporate Net-Zero Standard V2 explained: Scopes 1, 2 and 3. https://sciencebasedtargets.org/blog/draft-corporate-net-zero-standard-v2-explained-scopes-1-2-and-3 

3. Science Based Targets initiative. (2024, August 22). Climate action milestone: 6,000 companies adopt science-based targets. https://sciencebasedtargets.org/blog/climate-action-milestone-6-000-companies-adopt-science-based-targets 

4. Science Based Targets initiative. (n.d.). Who we are. https://sciencebasedtargets.org/about-us 

5. Wernau, J. (2024, March 4). SBTi proposes opening the door to carbon removals. The Wall Street Journal. https://www.wsj.com/articles/sbti-proposes-opening-the-door-to-carbon-removals-8af40233 

6. Wernau, J. (2024, March 20). SBTi releases scenarios for carbon credits despite finding little evidence they work. The Wall Street Journal. https://www.wsj.com/articles/sbti-releases-scenarios-for-carbon-credits-despite-finding-little-evidence-they-work-71fe2e73 

7. Hodgson, C. (2024, February 5). Many companies fail to meet SBTi climate target deadline. Financial Times. https://www.ft.com/content/3ebc5b56-a8f0-4fcd-99dd-9023d7a20013 

8. Wernau, J. (2023, October 30). It’s the most important name in sustainability. It’s battling for its survival. The Wall Street Journal. https://www.wsj.com/articles/its-the-most-important-name-in-sustainability-its-battling-for-its-survival-e9a4f670