Science-Based Targets Initiative: Proposed Changes in the Corporate Net-Zero Standard Version 2.0

The Science Based Targets Initiative (SBTi) has unveiled its highly anticipated Corporate Net-Zero Standard “V2”, which opened for public comment on March 18, 2025. The proposed changes contained in V2 represent significant updates to SBTi’s key standard that assesses, approves, and tracks companies’ decarbonization commitments to achieve net zero emissions and enable science-based climate target-setting. 

At 132-pages, the V2 “initial consultation” document describes proposed revisions that will affect a range of considerations within the greater SBTi framework. Of the many changes, those related to the enhanced methodologies for indirect emissions (Scope 2 and 3) target-setting stand out as especially important. Mandatory Scope 2 target-setting will encourage the use of zero-carbon energy, and a new obligation for large companies to establish Scope 3 value chain emissions goals will help strengthen emissions reductions performance.  

In this blog, Eric Olson, Senior Technical Manager of Climate Services for SCS Consulting Services, offers a high-level overview of the most significant proposed changes in the new SBTi V2 standard. 

Here’s why SBTi is so important

Founded in 2015, SBTi has served as the leading science-based organization committed to supporting businesses as they reduce greenhouse gas (GHG) emissions and measure climate action in service of holding Earth’s global average temperature to the 1.5°C goal. After 2024’s temporary surpassing of the 1.5°C goal — and its consequent designation as Earth’s hottest year on record — SBTi V2 strives to refocus the importance of global emissions reductions while offering clarified pathways for corporations to remain vigilant about their contributions to increasing temperatures.  

As SBTi’s executive summary notes, V2 proposes updates and revisions to the current version of the standard (1.2), incorporating stricter governance expectations, revised methodologies for Scope 3 emissions, and the introduction of zero-carbon electricity targets.

For climate- and sustainability-aware companies, changes proposed in V2 provide a more rigorous framework for setting science-based emissions reduction targets and ensuring transparency and accountability in the journey toward net zero. Importantly, V2 also reflects extensive feedback from businesses around the world that have already been engaging with SBTi and aims to increase rigor while also making science-based targets (SBTs) more practical.

Timeline for the Corporate Net-Zero Standard Version 2.0 (“V2”)  

The public feedback period for V2 is open until June 1, 2025, inviting corporations to inform the final standard that will guide global climate actions and commitments. The SBTi expects the final draft to be approved in 2026 and ready for use by companies in 2027.  

It’s important to note that even though V2 currently exists in the initial consultation phase, companies can still set SBTs using the original standard 1.2. Once the next version is finalized, companies will have until 2030 to implement the V2 requirements.

Key features of V2

Moving from ambition to progress: Enhanced accountability and recognition model proposed

As more companies conclude their initial target periods and the emphasis transitions from articulating ambitions to achieving measurable progress, the SBTi V2 draft standard introduces a comprehensive validation model. This model offers a full-spectrum framework for encouraging and acknowledging genuine climate action. It assists companies in setting SBTs, tracking and reporting their progress at the conclusion of their target cycle, and formulating new targets for subsequent periods. The objective is to enhance accountability, recognition, and foster continuous improvement.

Grounding in science-based target setting to uphold the 1.5°C threshold

The temporary surpassing of the 1.5°C global warming target in 2024 — and the escalating impact of climate change — highlight the urgent necessity to reduce GHG emissions across all economic sectors. Scientific data indicate that even minor increases in global temperature — each 0.1°C — intensify the risk of catastrophic consequences, including more severe weather events and irreversible tipping points that wreak havoc not only on businesses but also on communities around the world.

As the opportunity to hold global temperatures below the 1.5°C threshold diminishes — and the consequences of incremental temperature rises become increasingly severe — the justification for ramping up climate ambition grows more compelling. This ambition must translate into substantive corporate actions that decrease the concentration of GHGs in the atmosphere.  

In this context, the proposed revisions featured in V2 of the Corporate Net-Zero Standard — along with its foundational GHG reduction pathways based in IPCC science — uphold the 1.5°C goal as the principal target. 

Comparing original standard 1.2 and version 2.0

V2 includes seven major framework categories undergoing proposed updates. Below we discuss each major category and the twenty sub-components of each facing proposed revisions. For easy reference, be sure to review the comparison chart featured in the SBTi V2 executive summary (pgs. 8-11).

General: An overview  

The General category includes three sub-components: scope, validation model, and differentiation of requirements.  

One of the most consequential changes in the draft Corporate Net-Zero Standard Version 2.0 is how companies are categorized. The previous distinction between “SMEs” (small- and medium-sized enterprises) and all other companies has been replaced with a new system based on both size and geography. In this revised structure, companies are assigned to Category A or Category B. Category A includes large- and medium-sized companies in higher-income countries, while Category B includes small companies and medium-sized companies in lower-income countries. This change is more than administrative. It determines which targets must be set, what assurance is required, and how implementation will be evaluated.  

In particular, only Category A companies are required to set Scope 3 targets and obtain third-party assurance of base year data. This shift reflects an effort to increase global equity while raising the standard of ambition and accountability for companies with greater capacity. 

Under the original standard 1.2, scope was primarily focused on target-setting alone. But under proposed V2, scope will be much more comprehensive, covering base year performance assessment, target-setting, implementation, assessment and communication of progress, as well as claims.

The General category also includes proposed changes to the validation model.  Under the original Standard 1.2, validation was a one-time process focused solely on assessing the ambition of a company’s targets before implementation — a step known as ex-ante validation. There was no standardized follow-up to determine whether companies were on track or had made meaningful progress toward meeting their targets.  

In contrast, V2 introduces a full-cycle validation model that requires companies to assess and report their progress at the end of each five-year target cycle. This includes a formal renewal process in which companies must set new targets and, if they have underperformed, adjust their ambition through updated pathways, new net-zero timelines, or additional removals. For Category A companies, third-party assurance of GHG inventories and progress metrics is also required. Additionally, SBTI may conduct spot checks during the target period to ensure compliance. This new model closes the accountability gap between target-setting and real-world emissions performance and reinforces transparency across the entire target lifecycle.  

Previously, differentiation requirements were not required within the SBTi criteria, though there were separate validation processes for SMEs. V2 recommends that differentiated requirements should be based on company size and geographic locations. 

1. Net-zero commitment

   This primary category of the SBTi framework encompasses changes to two major sub-components: commitment model and transition plan.

   A commitment model under standard 1.2 is made through the SBTi. But with V2, a company’s public net-zero commitment model must be aligned with the UN High-Level Expert Group (HLEG) recommendations.  

   Commonly considered the first step followed by companies looking to begin their net-zero journey, crafting a transition plan is actually a new requirement proposed for V2 — the original standard 1.2 does not include this requirement. Not only will V2 mandate that companies disclose their net-zero transition plan, but also, they must publish their climate transition plans within 12 months following the validation of their targets by SBTi. (For additional details, refer to pg. 11 of the SBTi V2 executive summary.)

2. Assessing performance in the base year

   Whereas data assurance is not a requirement under 1.2, V2 mandates that Category A companies obtain third-party limited assurance on their base year GHG emissions. It is important to ensure accuracy of baseline emissions as all future inventories and reductions will rely on comparison to the baseline. 

3. Target-setting

   The category of target-setting contains the highest number of proposed changes under V2. Below we outline these nine sub-components.

   Underlying pathways for emission reduction benchmarks in standard 1.2 are derived from the IPCC Fifth Assessment Report (IPCC AR5) pathways. Appropriately, V2 aims to update these benchmarks by mandating adherence to IPCC AR6 pathways.  

   Near-term targets are currently required across all scopes, and SMEs are not required to set Scope 3 targets. V2 updates this requirement, mandating near-term targets across all scopes for Category A companies and Scopes 1 and 2 for Category B companies.  

   Long-term targets under standard 1.2 are required across all scopes. Under the proposed V2, Category A companies are required to set long-term targets across Scopes 1 and 2. Long-term scope 3 targets are still under consideration at this time. Here it’s of vital concern to note: This proposed change stands as one that is expected to have the most significant impact on companies engaging with V2.

   Aggregated targets by scope is a distinction represented under 1.2 that allows scopes 1, 2, and 3 to be combined. But under V2, separate targets are required for each scope.

   Defining ambition in 1.2 is primarily defined through external benchmarks, such as pathways, and other target-setting methods. V2 brings a more nuanced approach that compares current performance with top-down benchmarks determined through pathways and methods.

   Setting Scope 1 targets compliant with standard 1.2 means using available methods, including sectoral decarbonization approach (SDA) and absolute contraction approach (ACA) with no budget conservation mechanism. Proposed changes coming from V2 focus on using available methods, including SDA and revised ACA (also under consideration), and are intended to address budget conservation while rewarding early action.  

   Setting Scope 2 targets compliant with standard 1.2 involves requirements for location- or market-based targets — with the option of renewable energy targets.  

   One of the most notable structural changes in V2 is the requirement for companies to set two separate Scope 2 targets: a location-based target AND either a market-based target or a zero-carbon electricity target. This shift aims to address long-standing concerns about the effectiveness of renewable energy certificates and ensure that emissions reductions are not only reflected in accounting but also realized at the grid level.  

   Location-based targets reflect the average emission intensity of the grid where electricity is consumed, while market-based targets or zero-carbon electricity targets focus on procurement actions. To enhance credibility, the standard encourages the use of high-integrity instruments with geographic and temporal matching. This update places greater emphasis on grid decarbonization and accountability for energy sourcing decisions.

   For Scope 2 targets, V2 also encourages, where possible, direct procurement of zero-carbon energy or high-integrity electricity market instruments, purchased and consumed in the same market, with appropriate temporal and spatial matching. If direct sourcing of zero-carbon electricity is not feasible, contributions to other grids may serve as an interim measure.

   Setting Scope 3 targets within the realm of standard 1.2 includes three tenets: a fixed minimum boundary for all companies (67% for near-term and 90% for long-term); a primary focus on emissions reduction targets; and allowable mitigation measures are undefined.  

   V2 proposes changes to each of these three tenets. Scope 3 target-setting boundaries will be focused on the most relevant emission sources for the company; there will be greater emphasis on non-emission metrics and targets; and finally, V2 clarifies how to substantiate progress against targets according to different chains of custody models — in contrast to the undefined allowable mitigation measures of standard 1.2.

   Residual emissions under V2 will see changes in two sub-components. While 1.2 focused on addressing the impact of residual emissions through neutralization from the net-zero year onwards, V2 offers three approaches to address the impact of residual emissions during the transition to the official net-zero year onwards.  The three proposed approaches outlined in V2 are:  

   • Setting Carbon Removal Targets: Companies are required to set both short-term and long-term carbon removal and reduction targets to address residual emissions by 2050. These targets must be validated by the SBTi and involves progressively increasing the volume of removals over time to match residual emissions at the net-zero year
   • Optional Recognition for Voluntary Carbon Removal Efforts: Companies may be recognized by SBTi for voluntarily setting carbon removal targets and integrating them into their climate strategies.
   • Flexibility in Addressing Residual Emissions: Companies have the option to use carbon removal to reduce residual emissions or to mitigate emissions within their supply chain, or both. This approach allows companies to choose the most feasible and effective method for addressing residual emissions

   For more information on these three approaches to addressing residual emissions, be sure to review pages 15-16 and 53-54 in the V2 executive summary.

   The permanence of these various carbon removal approaches also gets increased attention in V2. While 1.2 offered limited detail on required permanence of carbon removals, V2 gets more specific, detailing two options for removal durability requirements: 1) following either the like-for-like principle, which matches removal durability to the atmospheric lifetime of each greenhouse gas; and 2) the gradual transition approach, which increases the share of durable removals over time.  

   V2 also introduces a more flexible and transparent approach to removals. Companies are not only required to neutralize residual emissions at their net-zero target year but are also encouraged to begin purchasing or deploying removals earlier through interim removal targets. These updates strengthen the scientific basis and integrity of neutralization claims while giving companies flexibility in how they prepare to meet their net-zero obligations. 

4. Addressing the impact of ongoing emissions

   In recognizing the urgency of the climate crisis, SBTi recommends “that all companies take action to deliver beyond value chain mitigation (BVCM) as they transition to net-zero.” SBTi describes BVCM as a “mechanism through which companies can accelerate the global net-zero transformation by going above and beyond their science-based targets.” Specifically, BVCM is defined in V2 as a “mitigation action or investments that fall outside a company’s value chain, including activities that avoid or reduce GHG emissions, or remove and store GHGs from the atmosphere.”

   BVCM will see stronger incentives under V2. Where standard 1.2 offered recommendations for companies to support mitigation outside of their value chains, V2 proposes formal recognition for companies that voluntarily address ongoing emissions through BVCM.  

   While these actions remain optional, companies can gain reputational benefits and disclosure credit by supporting climate mitigation outside their value chain, such as through high-quality carbon credits or direct investment in mitigation projects. To be eligible, companies must demonstrate achievement or meaningful progress meeting their science-based targets and transparently report the scale and nature of their contributions. This addition rewards leadership while allowing flexibility for companies at different stages of their decarbonization journey.

   It is important to note that BVCM contributions do not count toward meeting science-based targets. They are not a substitute for direct emissions reductions or required neutralization of residual emissions at the net-zero target year. Instead, BVCM is presented as a voluntary action that companies can pursue in parallel with their decarbonization plans.

   Under V2, companies that meet certain progress thresholds and transparently report the scale and nature of their contributions can receive formal recognition for BVCM, but they are not required to engage in it. This structure positions BVCM as a marker of corporate leadership and climate ambition rather than a compliance element within the core target-setting framework. 

5. Assessing and communicating progress against targets

   In V2, this category includes three sub-components facing proposed changes: substantiation of progress against targets, determining progress, and renewal. We outline the specific changes below.

   Substantiation of progress refers to the requirement for companies to provide robust evidence that their reported emissions reductions are genuine, verifiable, and align with the methodologies and criteria established by the SBTi. This concept is pivotal for ensuring that companies not only set ambitious net-zero targets but also demonstrate credible and measurable progress toward achieving them.

   And while substantiation of progress wasn’t quite ‘non-applicable’ in standard 1.2, this sub-component lacked guidance on what substantiation of progress against targets should look like and how companies were expected to go about implementing it. Under V2, substantiation of progress against targets is expected to be achieved through interventions traceable to the emission source, activity pool, or in some limited cases, through interim indirect mitigation.

   Similar to ‘substantiation of progress,’ determining progress in standard 1.2 involves a requirement to report progress annually against targets without definition of how to assess that progress. V2 clarifies this sub-component, requiring companies to assess progress at the end of their target cycle according to a set of pre-defined algorithms.

   The sub-component of renewal in standard 1.2 required companies to review and, if necessary, revalidate targets every five years — but there was no requirement to set new targets.  

   Another important change is the shift to an end-to-end validation cycle that includes initial validation, mid-cycle spot checks, and mandatory target renewal. Companies must assess progress at the end of each five-year cycle and either update targets based on observed performance or correct for underperformance using specified mechanisms. These include a linear contraction approach with or without permanent removals, or a budget-conserving approach that adjusts the net-zero year to account for past emissions overshoot. This change ensures that companies continuously improve and that targets remain aligned with emissions pathways over time. 

6. Claims

   Changes to claims that companies can make relative to their SBTi achievements under the original standard are provided within the SBTi Communications Guide. But in V2, any claims companies want to make regarding their SBTi engagement and accomplishments will be enabled through the new standard, meaning that preliminary requirements are outlined around the need to substantiate those claims. Currently, the specifications regarding preliminary requirements for substantiation of claims are still under consultation.  

Looking ahead

Because the Corporate Net-Zero Standard Version 2.0 has been released under “initial consultation,” companies can provide official responses to inform the subsequent development of this draft standard through June 1, 2025.

Submit your company’s official response to V2 here.

You can learn more about V2 by reading the official executive summary published by SBTi here. And you can read the full V2 initial consultation draft here.

And if you have more questions about transitioning your company from the SBTi original standard 1.2 to the Corporate Net-Zero Standard Version 2.0, we encourage you to reach out to SCS Consulting Services for customized, expert guidance.  

Contact us by submitting your questions on our website or booking a meeting with us.