SBTi Corporate Net-Zero Standard V2.0: What’s Changing for Businesses
- Vincent Erasmy
- Jul 6
- 6 min read
Updated: 14 hours ago
Vincent Erasmy, Carbon Competence Lead at First Climate, discusses the most important changes to the standard and what they mean for companies.
© AGORA Images | stock.adobe.com
With Version 2.0 of the Corporate Net-Zero Standard, the Science Based Targets initiative (SBTi) has released the most significant update to the framework since its introduction in 2021. While previous versions focused primarily on defining ambitious climate targets, the new standard places much greater emphasis on how those targets are implemented in practice. Read on to learn how companies can prepare for the new SBTi requirements and what the changes mean in concrete terms.
From Target Setting to Implementation
The publication of the Corporate Net-Zero Standard V2.0 marks a turning point. While the original standard played a pivotal role in embedding science-based climate targets into corporate climate strategies, practical experience has shown that implementation remains a major challenge for many companies. Common challenges have been for example, difficulties in reducing Scope 3 emissions across the value chain, developing robust transition plans, and managing residual emissions. The role of carbon credits and carbon removals as elements of credible net-zero strategies has also been the subject of ongoing debate.
With Version 2.0, the SBTi directly addresses these challenges. The result is a shift away from a framework focused primarily on target setting and toward a standard that places much greater emphasis on implementation.
But what exactly is changing with SBTi V2.0?
Introduction of the Ongoing Emissions Responsibility (OER) Framework
One of the most important innovations is the Ongoing Emissions Responsibility (OER) Framework, introduced as part of the Corporate Net-Zero Standard V2.0. Under this new SBTi recognition program, companies will be able to demonstrate that, alongside pursuing emission reduction targets, they are taking responsibility for the climate impact of their ongoing emissions. This can be done, for example, by financing high-quality, independently verified climate action initiatives such as carbon removal projects. In practical terms, companies will need to systematically account for their ongoing emissions and establish a plan that outlines how they intend to address them. They will also be required to document the quality and impact of the measures they support. From 2035 onwards, the OER Framework will gradually make the financing of qualified carbon removal projects mandatory for large companies and medium-sized companies operating in high-income countries.
A Paradigm Shift in the Role of Carbon Credits and Carbon Removals
With the introduction of OER, the SBTi has, for the first time, created a structured and official framework under which carbon credits, including carbon removals, can be explicitly recognised as legitimate complementary elements of a credible, SBTi-aligned net-zero strategy. These contributions complement the implementation of science-based emissions reduction targets but are reported separately from a company’s emissions inventory and target achievement progress.
The key message is clear:
Emissions reductions remain the top priority for businesses. However, SBTi V2.0 emphasises that voluntary climate finance can serve as a strategically important complement to ambitious emissions reduction efforts, even before net zero is achieved.
Carbon Removals Will Become Mandatory from 2035
Beginning in 2035, the standard introduces phased requirements for certain larger companies to finance high-quality carbon removal projects. This sends a strong market signal: carbon removals are set to become an integral component of long-term net-zero strategies.
Companies should therefore start preparing now by developing procurement strategies, implementing quality assurance processes, allocating budgets, and building suitable carbon removal portfolios. This is particularly important given expected future risks related to pricing and availability of high-quality removals.
Stricter Requirements for Net-Zero Transition Plans
Where climate targets themselves were often the primary focus in the past, implementation strategies, called "Transition Plans", will now take center stage. Large companies (Category A) will be required to provide much more detailed, time-bound Transition Plans that set out:
the measures they will implement to achieve their targets,
relevant timelines and milestones,
key assumptions and external dependencies, and
governance structures and accountability mechanisms.
As a result, Transition Plans are increasingly evolving into the central management tool for effective climate strategies. For small and medium-sized companies (Category B), disclosure of a Transition Plan remains voluntary.
Greater Focus on Scope 3 Emissions
Going forward, companies will need to take a more systematic approach to assessing which significant emission sources across their value chains must be covered by their Scope 3 targets.
According to the new standard, particular attention should be given to emission sources that individually account for more than five percent of total Scope 3 emissions. For businesses, this means placing greater emphasis on data quality, supplier engagement and management, and the development of targeted reduction measures across the entire value chain.
Expanded Use of Market-Based Instruments
The SBTi also introduces a hierarchy for implementing decarbonisation measures.
Direct emissions reductions within a company's own operations and value chains remain the preferred approach. However, under defined conditions, market-based instruments such as renewable electricity certificates (e.g. I-RECs), biomethane certificates, and similar instruments may also contribute toward target achievement. Clear requirements are established regarding quality, attribution, accounting practices, and evidence of use.
What Do These Changes Mean for Businesses?
First and foremost, SBTi V2.0 does not mean that companies with existing targets need to completely redesign their climate strategies. Emissions reductions remain the foundation of any credible and SBTi-aligned net-zero strategy.
For many companies, the key task over the coming months will be to systematically assess their climate strategies for potential gaps and place a stronger emphasis on implementation. Governance structures and progress tracking will become increasingly important.
The specific actions required will vary significantly from one company to another. Factors that should be carefully reviewed include the status of SBTi targets (validated or planned), the company’s Scope 3 emissions profile and data quality. Further factors are the current use of carbon credits and other market instruments, the maturity of the Transition Plan, the net-zero roadmap, and the company's long-term carbon removal strategy.
What Happens Next?
Although the new standard has now been published, several detailed requirements have yet to be finalized. By the end of 2026, the SBTi plans to publish final target-setting methodologies and pathways, additional interpretation guidance, preliminary guidance for the accounting and reporting of market-based instruments, and an initial recognition framework for instruments eligible under the OER programme. From 1 February 2027, companies will be able to submit targets for validation under Version 2.0. Until 31 January 2028, Versions 1.3.1 and 2.0 will be available in parallel.
After that date, Version 2.0 will become mandatory for new submissions. Targets that have already been validated will generally remain valid for the duration of their existing target cycle. The voluntary OER recognition programme is also expected to be open from 2027 onwards to companies with existing SBTi targets.
The SBTi is also expected to publish specific guidance on claims and communications during 2027. Until then, companies should continue to clearly distinguish between actual emissions reductions, voluntary OER contributions, associated contribution claims, and the neutralisation of residual emissions in the net-zero target year. We will continue to closely monitor further developments at the SBTi and keep you informed.
Early Preparation Pays Off
Rather than waiting for additional guidance documents to be released, companies would be well advised to use the intervening period to prepare. Taking a proactive approach to the new requirements lays the foundation for efficient implementation while strengthening competitiveness. Investors, customers, and regulatory frameworks increasingly demand robust evidence of credible climate strategies. SBTi V2.0 provides a new, practice-oriented framework to support this. While most companies are unlikely to face immediate changes to their existing SBTi targets, the new standard offers an excellent opportunity to review current climate strategies and targets and align them with emerging requirements at an early stage.
At First Climate, we can help your organization assess the implications of the new standard for your climate strategy, identify potential gaps and areas for action, and develop a pragmatic roadmap for the next steps.
Prepare Your Business for SBTi 2.0!
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What Is the Corporate Net-Zero Standard?
The Corporate Net-Zero Standard of the Science Based Targets initiative (SBTi) defines how companies must design their climate targets and net-zero strategies to align with the scientific requirements of the Paris Agreement and credibly demonstrate progress toward these goals. First published in 2021, the Corporate Net-Zero Standard quickly became the world's leading framework for science-based climate targets.
Today, thousands of companies worldwide have adopted Science Based Targets or committed to setting them. To date, approximately 13,900 companies globally have established targets or made formal commitments to do so, while more than 11,500 companies already have validated science-based targets.
About the Author:
Vincent Erasmy is the Carbon Competence Lead at First Climate. In this role, he empowers companies across the globe on their climate journey by translating the latest carbon standards, market insights, and regulatory shifts into actionable strategies. Internally, he leads dynamic projects and trainings that drive carbon expertise within our teams and beyond. Committed to making a measurable impact, he thrives at the intersection of innovation, market leadership, and sustainability transformation.
