SBTi Corporate Net-Zero Standard V2.0: What Changed and What It Means for Your Climate Strategy

In June 2026, the Science Based Targets initiative released Corporate Net-Zero Standard Version 2.0 - the most significant overhaul of corporate climate target-setting since the original standard launched in 2021.

The scale of change is substantial. 42% of sections are entirely new. The rest have been materially revised. This is not an incremental update. It is a fundamental rethinking of how corporate net-zero commitments are structured, validated, and held to account.

What drove it? Honest feedback from five years of implementation. Companies struggled with the rigidity of the original framework. Targets were set but progress was slow. The gap between ambition and action was widening. And the standard, for all its rigour, was not always translating into the real-world emissions reductions it was designed to deliver.

V2.0 responds to that reality. It introduces more flexibility in how companies approach target-setting, but pairs that flexibility with significantly stronger accountability mechanisms. More room to adapt. Less room to hide.

This blog walks through the key changes, what they mean in practice, and what we are seeing on the ground from the companies navigating this transition.

Who Does V2.0 Apply To - The New Company Categorisation

One of the first things to understand about V2.0 is that it no longer treats all companies the same way.

The original standard had a separate SME route, but beyond that, obligations were largely uniform. V2.0 introduces a formal two-tier categorisation: Category A and Category B, with meaningfully different requirements for each.

Category A covers large companies. To fall into Category A, a company must meet at least one of the following: annual revenue exceeding $1 billion, more than 500 employees, or significant emissions above defined thresholds. Category A companies face the full weight of V2.0 obligations - mandatory assurance, mandatory Climate Transition Plans, and the tighter Scope 3 requirements we will cover shortly.

Category B covers smaller companies that do not meet Category A thresholds. They still set science-based targets and report progress, but with proportionate obligations that reflect their size and capacity.

Why does this matter? Because it changes the conversation significantly depending on where your company sits. For most large enterprises and multinationals, Category A is the relevant framework. And Category A is demanding.

One practical note: the categorisation is not always straightforward for complex corporate structures with multiple subsidiaries across different geographies. Understanding which entities fall into which category, and at what level targets need to be set, is one of the first conversations worth having with your sustainability team.

The Best-Efforts Framework - A Fundamental Philosophical Shift

One of the most significant changes in V2.0 is one that does not get enough attention: the introduction of a best-efforts approach to compliance.

Under V1, the standard operated on a binary model. Companies either met the requirements or they did not. If a company missed its targets or could not demonstrate progress, it risked being removed from the programme. For companies in hard-to-abate sectors, or those facing genuine structural barriers to decarbonisation, this created a real dilemma - set targets and risk removal, or avoid the standard altogether.

V2.0 changes this logic. Companies that exhaust all available decarbonisation options, stay transparent about their progress and challenges, and can demonstrate genuine effort can remain in the programme even if they fall short of their targets. The standard explicitly acknowledges that some pathways are genuinely difficult, and that removing companies for circumstances outside their control was not serving the broader goal of driving real emissions reductions.

This is a meaningful shift. It makes the standard more accessible for sectors where the technology or infrastructure for deep decarbonisation is still developing - steel, cement, shipping, aviation, and others.

But it is important to be clear about what best-efforts is not. It is not a workaround. It is not a lower bar disguised as flexibility. Companies that underperform still face tighter renewal targets in the next cycle. And the mandatory assurance model means the quality of their efforts will be scrutinised by external verifiers, not self-reported.

Best-efforts rewards genuine commitment. It does not reward inaction dressed up as constraint.

Separate Scope 1 and 2 Targets - A Fundamental Shift

Under V1, companies could set a single combined Scope 1 and 2 target. That is no longer the case.

V2.0 requires separate targets for each. And the change is not just structural - it comes with a specific methodology requirement that will affect how many companies currently account for their Scope 2 emissions.

Scope 2 targets under V2.0 must now be based on the physical, location-based inventory. Not market-based. Not a blended figure. This means that market instruments - renewable energy certificates, power purchase agreements, and similar mechanisms - are no longer bundled into the Scope 2 target itself. They are handled separately under a new implementation hierarchy that the standard introduces.

For companies that have been relying heavily on RECs or PPAs to meet their Scope 2 commitments, this is a significant shift. The underlying location-based emissions picture will need to be clean before market instruments are applied, and both will need to be tracked and reported separately.

There is also a specific provision worth noting for companies with rapidly growing electricity demand - defined as growth exceeding 20% per year. These companies must set absolute emissions targets rather than intensity-based alignment targets. Given the expansion of AI infrastructure and data centre capacity across many large enterprises, this provision is likely to catch more companies than expect it.

The practical implication is straightforward: if your current Scope 2 methodology does not distinguish cleanly between location-based and market-based figures, that work needs to start now.

Scope 3 Moves from Boundary-Based Targeting to Significant Category Targeting

This is arguably the most operationally significant change in V2.0, and the one that will require the most work from sustainability teams.

Under V1, companies were required to set targets covering Scope 3 categories that represented at least 67% of their total Scope 3 emissions. In practice, this meant most companies could focus on a handful of large categories and leave the rest largely unaddressed.

V2.0 replaces this with a significance-based approach. Any Scope 3 category from categories 1 to 14 that represents 5% or more of total Scope 3 emissions must now be covered by a target. 5%, not 67%.

The implications are significant. For many companies, this will mean bringing categories into scope that were previously below the threshold and therefore ignored. It will require more granular data across the value chain. And it will make the practice of aggregating emissions into broader categories, to avoid the complexity of individual ones, much harder to justify.

This change also has a direct connection to supplier engagement. As more categories come into scope, companies will need more specific, verifiable data from their suppliers. The days of relying on spend-based estimates for a majority of Scope 3 categories are numbered.

For sustainability teams that have been managing Scope 3 at a high level, this is the change that will require the most immediate attention. Understanding which categories cross the 5% threshold, and where the data gaps are, is a practical starting point.

Continuous Accountability Replaces One-Time Validation

Perhaps the most fundamental cultural shift in V2.0 is the move away from one-time validation toward a continuous accountability model.

Under V1, the process was essentially linear. A company set its targets, submitted them for validation, received the credential, and then reported progress annually. The validation itself was a one-time event. Once you had it, you had it.

V2.0 changes this entirely. The standard now introduces a formalised assurance model with end-of-cycle assessments conducted by recognised validation and verification bodies. For Category A companies, this includes mandatory limited assurance covering GHG inventories and the metrics used in target-setting.

What does this mean in practice? It means the quality of your data is no longer just a reporting question. It is an assurance question. The same rigour that financial auditors apply to financial statements will increasingly be applied to emissions data. Methodology documentation, data traceability, consistency between reporting periods, and the assumptions behind estimates will all be scrutinised.

There is also a consequence built into the system for companies that underperform. Under V2.0, companies that miss their targets during a cycle do not simply reset and try again. Their renewal targets are tightened. The standard is designed to create a ratchet effect, not a reset mechanism.

The message is clear. Setting a target is no longer the hard part. Delivering on it, demonstrating that delivery through assurance, and being prepared to face tighter obligations if you fall short - that is where the real work is.

Transition Plans Are Now Mandatory for Category A

V1 had no explicit requirement for governance structures or transition planning. Companies set targets and reported progress, but the standard did not prescribe how sustainability should be embedded into the business beyond the target itself.

V2.0 closes that gap significantly.

Category A companies must now publish a Climate Transition Plan within 12 months of target validation. This is not a voluntary disclosure or a best practice recommendation. It is a requirement.

The plan must include a credible decarbonisation pathway with clear milestones, annual emissions reporting against those milestones, and evidence of board-level accountability for net-zero delivery. The standard is explicit that transition plans must reflect genuine strategic intent, not just ambition statements.

What does good look like? A transition plan that clearly connects emissions reduction commitments to capital allocation decisions, operational changes, and supply chain strategy. One that shows the board understands the risks and opportunities associated with the transition and has ownership of the response. And one that is updated as circumstances change, not filed once and forgotten.

What will not pass scrutiny? A plan that restates the target without explaining how it will be achieved. A plan that lacks specific milestones or assigns accountability to no one in particular. And a plan that exists as a standalone document disconnected from how the business actually makes decisions.

For many companies, developing a credible transition plan will require a level of cross-functional collaboration - across finance, operations, procurement, and the board - that sustainability teams have been trying to achieve for years. V2.0 now makes it a requirement rather than an aspiration.

Carbon Removals, Residual Emissions and Environmental Attribute Certificates

V2.0 significantly expands the options available for dealing with residual emissions - a change particularly relevant for companies in hard-to-abate sectors.

The standard introduces broader criteria for neutralising residual emissions, and a forward-looking requirement: from 2035 onwards, companies must actively support carbon removals as part of their net-zero strategy. This goes beyond purchasing credits - it is about contributing to the scaling of removal capacity over time.

On environmental attribute certificates, V2.0 gives greater recognition to instruments like RECs and PPAs, but with an important nuance. These are now handled separately from the Scope 2 target, which must be based on the physical, location-based inventory. Market instruments are recognised, but no longer bundled into the target itself.

The key principle remains unchanged: reduce first, remove or compensate only what cannot be eliminated. V2.0 is explicit that carbon removals and certificates are not a substitute for emissions reductions.

Key Timelines

Understanding when these changes apply is as important as understanding what they require.

V2.0 was released in June 2026. The transition into the new standard is structured to give companies time to adapt, but the window is shorter than it might appear.

Now until end of 2027: V1.3.1 remains valid. Companies can continue to submit targets under the existing framework during this period.

Q1 2027 to Q1 2028: The transition period. From the first quarter of 2027, companies can submit under either V1.3.1 or V2.0. This gives organisations flexibility to move to the new standard on their own timeline within this window.

February 1, 2028: V2.0 becomes mandatory for all new submissions. After this date, targets can only be validated against the new standard.

12 months from validation: The deadline for Category A companies to publish their Climate Transition Plan once their targets are validated under V2.0.

What does this mean practically? Companies that are planning to submit or renew targets in the next 12 to 18 months have a choice to make. Submit now under V1.3.1 and buy time, or begin the work of aligning to V2.0 now and submit under the new standard.

The timeline is generous enough to allow thoughtful preparation. It is not generous enough to allow indefinite delay.

What This Means for Your Data Infrastructure

Every change in V2.0 ultimately comes back to the same underlying challenge: data.

Separate Scope 1 and 2 targets require clean, methodology-specific tracking for each - not a blended figure pulled from an annual report.

The 5% Scope 3 threshold requires granular category-level data across the value chain, not high-level estimates that have been aggregated to stay below previous thresholds.

Mandatory assurance requires data that is traceable, documented, and defensible to an external verifier.

And a credible transition plan requires emissions data connected to capital allocation decisions, not sitting in a separate sustainability function.

In most organisations we work with, the data exists. The problem is that it is scattered. Across ERP systems, energy invoices, supplier submissions, and spreadsheets that have been passed between teams for years. Each source in a different format. Each requiring manual reconciliation before it can be used.

V2.0 does not create new data problems. It raises the bar on how data must be structured, validated, and used. And for organisations that have been managing their climate data at a high level, that bar is now significantly higher.

The companies that will navigate V2.0 well are the ones that treat this as an infrastructure question, not just a reporting question. That means connecting sustainability data to the systems where it actually lives, building processes that produce audit-ready outputs as a matter of course, and giving sustainability teams the tools to track progress continuously rather than annually.

At ecoPRISM, this is the work we do with organisations preparing for standards like V2.0 - building the data infrastructure that makes continuous accountability manageable rather than overwhelming.

What We Are Seeing and What It Means

Across the industry, a pattern has been consistent since science-based targets became mainstream.

Companies set ambitious targets. They get validated. And then the reality of delivering sets in. The data is not structured. Internal accountability is not clear. The Scope 3 picture is incomplete. Year after year, the gap between the target and actual performance quietly widens.

This is not a motivation problem. It is an infrastructure and accountability problem.

V2.0 was designed with exactly this dynamic in mind. The best-efforts framework gives companies more flexibility to adapt. But the continuous accountability cycle, mandatory assurance, and tighter renewal targets for underperformers mean there is significantly less room to let that gap widen quietly.

Will V2.0 make things easier or harder? Honestly, both.

Easier for companies that have been doing the real work - building data infrastructure, engaging their value chain, and connecting sustainability to business strategy. Harder for companies that have been setting targets without building the foundations to deliver on them.

If you are working through what V2.0 means for your organisation and want to talk through the implications, feel free to reach out.

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