The mission of the Science Based Targets initiative (SBTi) is to accelerate science-based corporate climate action consistent with net-zero by 2050 or sooner, contributing to international efforts aimed at limiting temperature change to 1.5°C by the end of the century. Over 11,000 companies have set targets with the SBTi to date, and in doing so have realized clear business benefits while contributing to the achievement of international climate objectives.
We know from widespread consultation that there remains a need for a common standard to guide corporate climate action, supporting companies to manage transition risk, strengthen business resilience, and remain competitive in a carbon-constrained world. The Corporate Net-Zero Standard V2.0 allows for a diversity of corporate contexts, with associated opportunities and challenges to reduce emissions; it aligns with levers that companies have for decarbonization; it is interoperable with developing frameworks, e.g., for carbon accounting and market instruments; and it provides continuity with the approach to date. The revised Standard reflects ten years of experience and learning, wide consultation, and pilot testing, and represents a major step forward for the SBTi.
Version 2.0 of the Corporate Net-Zero Standard includes the following key innovations:
The Standard includes both requirements and recommendations, along with two areas for voluntary recognition (scope 2 hourly matching and ongoing emissions responsibility). Table 1 summarizes specific requirements and options for target setting.
Scope 1 | Scope 2 | Scope 3 | |
|---|---|---|---|
Near-term targets (5-year targets) | Required for all companies | Required for all companies | Required for Category A companies |
Long-term targets (targets to reach residual emissions levels by 2050 at the latest) | Dependent on target-setting method | Optional for all companies | Optional for all companies |
Net-zero targets combine scope 1, 2, and 3 near-term and long-term targets, together with the neutralization of residual emissions at the net-zero target year. Net-zero targets are optional for all companies.1 | |||
Many of the elements of the Corporate Net-Zero Standard V2.0 are or will be available under the Corporate Net-Zero Standard Version 1 through transitional arrangements. Forward-looking target setting based on the latest data is already available. Company categorization, approaches to target implementation, progress assessment, and ongoing emissions responsibility will be available. Version 1 will remain attractive to many companies as an on-ramp to the SBTi, for example, through its combined scopes 1 and 2 targets and approaches to scope 3 emissions. Therefore, for companies that have commitments to set targets and have been planning against Version 1, we encourage them to submit targets on this basis. Version 1 of the Standard will remain open for setting targets until the end of 2027. For more information, refer to the accompanying documentation.
Companies that already have 2030 targets should start to set targets for the next cycle (2030–2035) under the Corporate Net-Zero Standard V2.0 from 2028, in order to allow sufficient lead time for implementation. In the meantime, and for the remainder of the target cycle, companies will be able to use elements of Version 2.0 as set out in the paragraph above.
The SBTi standards framework is anchored by the Corporate Net-Zero Standard, which establishes cross-sector requirements for scope 1, scope 2, and scope 3 emissions (categories 1–14), as defined by the GHG Protocol Corporate Standard. The framework also includes the Financial Institutions Net-Zero Standard and a suite of sector standards and approaches for high-emitting industries.2 The SBTi is updating its sector standards to ensure compatibility with the Corporate Net-Zero Standard V2.0, while adding new sectors. During this transition period, companies will continue to use existing sector standards.
The Corporate Net-Zero Standard is supported by three sets of complementary documents that are published separately from the Standard:
What follows provides more details on the various sections of the updated Standard.
There are two categories of companies within the Corporate Net-Zero Standard. Category A comprises large companies from all countries and medium companies from high-income countries, while Category B comprises small companies from all countries and medium-sized companies from lower-income countries, as defined by revenue and other criteria.
While certain requirements for Category A companies are optional for Category B companies – for example, disclosure of transition plans, assurance of target base year data, and scope 3 target setting – the SBTi strongly encourages Category B companies to go beyond these minimum requirements.
Subsidiary companies within conglomerates may be regarded as separate companies where they operate as distinct businesses.
Chapter 1 aims to secure senior leadership buy-in across the organization for target setting and implementation, and to establish governance to support this.
It starts by noting what the setting of an SBTi near-term target entails: Working toward net-zero; producing a transition plan that sets out key actions to implement the targets; and reporting regularly on progress. It requires the highest levels of governance within a company to sign off on SBTi targets, with supporting governance to oversee target implementation, and to join up carbon and commercial strategies.
All companies are required to have a transition plan that covers key actions to implement targets and their associated dependencies, and sets out a high-level path to net-zero. For Category A companies, this should be disclosed when targets are validated, with flexibility to disclose up to 15 months later where needed. The SBTi validates the presence of a transition plan and confirms that it includes the required elements set out in the Corporate Net-Zero Standard V2.0. Transparency about transition plans will allow relevant parties to assess them.
This is the foundation for setting targets in the Standard, using the latest data for the target base year in contrast to the historical base year in the Corporate Net-Zero Standard Version 1, ensuring ongoing alignment to net-zero. A minimum of limited assurance of target base year data is required for Category A companies and recommended for Category B companies. Companies may continue to communicate their targets relative to an earlier base year if they choose.
This aims to transition companies to net-zero scope 1 emissions by 2050 or sooner. There are three options for companies to choose from when setting near-term targets:
All three approaches work toward a net-zero year of 2050 at the latest. Companies may choose to set a long-term scope 1 target for 2050 or earlier. Where a near-term emissions intensity or asset transition target is set, companies are required to set a long-term target.
The target-setting options for scope 2 emissions support the transition toward low-carbon electricity use over time. Low-carbon electricity may include renewable and nuclear energy, as well as electricity generation fitted with carbon capture and storage. Companies may choose to set targets based on emissions reductions and/or increases in the share of low-carbon electricity, including optional long-term targets to reach 100% low-carbon electricity or residual levels of scope 2 emissions.
Targets can be implemented either through investment in low-carbon power generation or contracts (e.g., power purchase agreements, contracts for difference, renewable energy certificates). Contracts for plants up to 15 years of age are allowed to align with other frameworks and match project business cases or finance periods; power purchase agreements can be longer where these are for plants less than 36 months into operation. Existing contracts will be grandfathered for the duration of the contract, meaning they will not need to meet new requirements.
There are conditions about procurement being in the same system as consumption, defined on the basis of deliverability regions. One exception to this is where a company can show it has transmission interconnection rights to a neighboring deliverability region. Similarly, when it is more practical to aggregate load across regions and sign a single long-term contract, companies may do so. Where structural barriers exist, such as insufficient supply of low-carbon electricity relative to demand, companies may take sector-level actions (e.g., purchasing from other systems).
Hourly matching of power contracts with consumption is generally preferable to annual matching, as it can support more effective price signals for load shifting and investment in low-carbon generation and storage, and better align electricity demand with low-carbon supply. To improve transparency as practices develop, companies with significant electricity use are required to report the share of electricity consumption matched with low-carbon electricity on an hourly basis. Companies demonstrating leadership in this area may seek SBTi recognition for achieving certain levels of hourly matching.
The intention is to transition companies to net-zero by 2050 or sooner for their scope 3 emissions.
Companies may choose to make limited, justified exclusions from their near-term targets to focus on the most material emissions sources in their value chain and areas where they have influence. Examples of these exclusions include:
They then choose from three options for setting near-term targets:
These approaches work toward a net-zero year of 2050. While companies are generally not required to set long-term targets, they can choose to do this for scope 3.
The Corporate Net-Zero Standard V2.0 introduces a hierarchy to define what credible target delivery looks like so that companies prioritize actions to decarbonize their operations and value chains over time:
Actions and market instruments are required to meet minimum integrity criteria, as set out in the Corporate Net-Zero Standard V2.0 and to be further elaborated in future guidance. These include an additionality requirement for projects and a requirement for programs issuing market instruments to demonstrate system-level impact. The SBTi plans to recognize relevant third-party frameworks where appropriate. Claims will depend on the outcomes of the actions taken: where an action results in emissions reductions within the company’s physical inventory, this may be reflected in the company’s claim; whereas actions that support decarbonization at the activity-pool or sector level would result in system contribution claims.
Targets are pursued on a best-efforts basis, subject to dependencies. Companies are expected to use all available levers to drive emissions reductions. Companies go through a continuous process of progress assessment, highlighting successes and identifying any emerging gaps and related barriers, along with how these will be addressed. Companies then set targets for the next cycle to ensure ongoing alignment toward net-zero. Higher emissions in the target year result in steeper reductions required in the next target cycle and an accelerated pace of action. Minimum progress criteria for companies setting new targets in subsequent cycles will be set out in the SBTi Assurance Manual. Companies following this process can continue to be part of the SBTi framework for target setting and implementation and progressing to net-zero.
The intent here is to reflect the need for accelerated climate contributions to achieve global climate objectives. This is a complement, not a substitute, for companies reducing their own emissions, which remains the core of the SBTi framework.
Voluntary recognition is offered for companies that see value in taking responsibility for their ongoing emissions as part of a holistic net-zero strategy. The approach is flexible regarding the level of ambition, which can be from 1% to 100% of ongoing emissions; and the means to achieve this, for example through emissions reductions or removals, whether removals are long-lived or not, as well as other climate actions (e.g., ex-ante mitigation funding, low-carbon research and development, adaptation and resilience, and loss and damage).
Minimum criteria aligned with high-integrity frameworks have been set for activities recognized under the Ongoing Emissions Responsibility program, and the SBTi will develop an approach to recognize relevant third-party frameworks. The intention is to mandate ongoing emissions responsibility from 2035, with requirements to neutralize residual emissions at net-zero.
This concludes the overview of the Corporate Net-Zero Standard V2.0, which is now set out in full through the remainder of this document.
