SBTi finalizes long-awaited update to its Corporate Net-Zero Standard

The Science Based Targets initiative (SBTi) finalized updates to its Corporate Net-Zero Standard on Thursday, introducing differentiated target-setting based on company size and sector. The updated framework, known as Version 2, adds mandatory board accountability and requires larger organizations in high-income countries to purchase carbon removals starting in 2035, according to the organization.

How does the new SBTi standard change target-setting?

SBTi separated accounting and target-setting for scope 1 and scope 2 emissions. Companies now have three options for scope 1 emissions—those from organization-owned sources: absolute emissions reduction targets, emissions intensity reduction targets, or targets based on asset transition, according to the organization.

For scope 2 emissions, which involve purchased electricity, heat, steam, and cooling, companies can choose between emissions reduction targets or a requirement to increase their share of low-carbon electricity use over time.

The organization also shifted its approval process. Companies must now receive internal approval to pursue science-based targets instead of making a public proclamation. SBTi stated in a conclusions document that this change aims to reduce reputational or legal risks associated with public commitments before targets and plans are substantiated.

What are the new requirements for large companies?

Large and medium-sized companies in high-income countries, classified as Category A companies, must support eligible carbon removals starting in 2035. These removals must be equivalent to at least 1% of their ongoing emissions across scopes 1, 2, and 3, according to SBTi.

The standard also introduces an implementation hierarchy. Companies are required to prioritize activity-level actions to reduce emissions before pursuing indirect actions, which include market instruments and electricity purchasing.

SBTi Chair Francesco Starace stated the update serves as a navigation tool for boards and CFOs to connect targets directly to investment cycles and strategic planning. He described Version 2.0 as an action framework designed to assist decision-making.

When will companies begin using Version 2?

SBTi announced the standard will be ready for companies to use for target-setting in February 2027. The organization has been developing this version since April 2024 and issued public consultation drafts in March and November 2025.

Over 11,000 companies have already validated targets under previous standards. SBTi confirmed these targets remain valid through their current cycle. The organization expects to release a renewal policy in Q4 of this year to integrate Version 2 elements for companies already in the system.

Companies with renewals or commitments due in 2026 or 2027 are advised to continue using version 1.3. They may move to Version 2 during their next target cycle, according to the organization.

SBTi CEO David Kennedy stated the update is designed to help businesses manage transition risk. He noted that companies had specifically asked for more help with implementation.

Frequently Asked Questions

When can companies start using the Version 2 standard?
The standard will be available for target-setting beginning in February 2027.

What is the carbon removal requirement for Category A companies?
Starting in 2035, large and medium-sized companies in high-income countries must support eligible carbon removals equal to at least 1% of their ongoing emissions across scopes 1, 2, and 3.

Do existing science-based targets become invalid?
No. SBTi stated that targets set by the more than 11,000 companies already in the system will remain valid through their current target cycle.

How will the requirement for mandatory board accountability change how corporations approach climate risk?