On 11 June 2026, the Science Based Targets initiative or SBTi published Version 2.0 of the Corporate Net-Zero Standard, the document that roughly 11,000 companies worldwide use to define what “net-zero” means.
It is the first full revision since the framework launched in October 2021 with the standard growing from 87 to 105 pages. Several core principles have been rewritten, including how companies choose a base year, set targets, report progress and use carbon removals.
Version 2.0 takes effect on 1 February 2027. Companies can continue submitting targets under Version 1.3.1 until the end of 2027. Businesses with targets running to 2030 are expected to transition to Version 2.0 when setting their next cycle of targets for 2030–2035.
At a high level, the changes fall into six areas.
- Base years now reset every five years instead of remaining fixed.
- Companies are divided into two categories with different compliance requirements.
- A board-approved transition plan is now required for target validation.
- Scope 3 rules have been redesigned.
- Climate actions are ranked according to an implementation hierarchy.
- “Beyond Value Chain Mitigation” has been replaced by a structured programme called Ongoing Emissions Responsibility.
Side by Side Comparison
| Element | V1.3.1 (April 2026, current) | V2.0 (June 2026, effective Feb 2027) |
| Document length / structure | 87 pages; near-term + long-term targets, neutralisation, BVCM as the four pillars | 105 pages; reorganised into governance, base year, target setting, implementation, progress assessment, and ongoing responsibility as sequential chapters |
| Company differentiation | None. One set of rules for everyone, with some sector-specific add-ons | Two formal categories, A and B, based on revenue, headcount, and (for mid-sized firms) country income level and emissions volume |
| Target base year | Fixed historical base year, set once and generally kept for the life of the target | Rolling base year reselected at the start of every five-year cycle using the most recent year with complete data |
| Near-term target length | 5–10 years, aligned to a self-chosen target year | Fixed 5-year cycles, tied to the reporting year, renewed automatically at the end of each cycle |
| Long-term target | Required unless a company’s near-term target already reaches net-zero-level ambition within 10 years | Optional for all companies; only mandatory as a follow-on where a near-term scope 1 target uses the intensity or asset-transition method |
| Scope 1 target options | Effectively one method, absolute contraction (or sector intensity via SDA for a handful of sectors) | Three methods: absolute emissions reduction, sector emissions-intensity pathways, or an asset-transition approach built around capital stock turnover |
| Scope 2 approach | Renewable electricity target based on annual matching; contract-based instruments broadly accepted | Low-carbon electricity target (renewables plus nuclear plus CCS-fitted generation); geographic deliverability rules tightened; hourly matching pushed as the direction of travel, with mandatory disclosure for large electricity users |
| Scope 3 threshold for requiring a target | Triggered when scope 3 is 40% or more of total emissions; then 67% of scope 3 must be covered near-term, 90% long-term | Mandatory for Category A companies regardless of the scope 3 share of total emissions; optional for Category B |
| Scope 3 exclusions | Blanket cap. No more than 5% of the combined inventory or target boundary can be excluded | Rule-based exclusions: any category under 5% of total scope 3, category 3 fuel/energy activities already covered under scope 1/2, and activities the company has no practical influence over |
| Scope 3 target design | Emissions-reduction or engagement targets against the 67%/90% thresholds | Three named options: overarching emissions-reduction targets, supplier/customer alignment targets, or category- and activity-specific targets for concentrated emissions sources |
| Governance requirement | Board sign-off recommended as good practice; transition plans covered in reporting guidance, not mandatory | Board-level accountability and a transition plan are hard requirements for Target Validation, not optional disclosure |
| What counts as “action” | Not formally hierarchised — supplier engagement, market instruments, and direct reductions were treated fairly interchangeably | Explicit implementation hierarchy: direct activity-level action first, then activity-pool (shared systems like grids), then sector-level action as a last resort, each with its own integrity rules |
| Progress tracking | Reporting expected but validation was largely a point-in-time, at-submission exercise | Annual progress reporting plus a formal End-of-cycle Assessment; independent third-party assurance required for Category A companies |
| Consequence of missing a target | Not explicitly codified | Codified ratchet: shortfalls carry into the next cycle as steeper required reductions, and minimum progress criteria will gate eligibility to set new targets |
| Beyond value chain mitigation / carbon contributions | Encouraged, undefined in structure, no formal recognition mechanism | Rebuilt as the Ongoing Emissions Responsibility program — three named tiers (Engaged, Advanced, Leadership), voluntary until 2035, then a mandatory 1%-rising-to-100%-by-net-zero-year requirement for covering ongoing emissions with verified removals |
| Claims and communication | Governed by the general SBTi Claims Policy | Formalized as the “SBTi Claims System,” explicitly tied to validated targets, progress against them, and OER participation level |
| Underlying documents folded in | Referenced the separate SBTi Near-Term Criteria and retired Target Validation Protocol / Corporate Manual | Fully consolidates the Near-Term Criteria and all prior Corporate Net-Zero Standard provisions into one document |
| Fossil fuel companies | Excluded from validation pending sector-specific guidance | Same exclusion carried forward, with defined revenue-based exceptions |
What has changed
- Companies are sorted into categories
V1 largely applied the same rules to every company. V2 introduces two categories.
Category A is any large company anywhere in the world (turnover of €450 million or more, or 1,000+ full-time employees), plus medium-sized companies in high-income countries that clear certain emissions or financial thresholds.
Everyone else, small companies globally, and medium-sized companies in lower-income countries that don’t hit those thresholds, is Category B.
Several requirements now depend on this categorisation. Category A companies must set Scope 3 targets, disclose transition plans and obtain independent assurance for certain data. Category B companies face fewer mandatory requirements.
The change reflects a long-running criticism of the previous standard that smaller businesses were expected to meet many of the same requirements as multinational corporations.
- Base years move with each target cycle
Under V1, a company picked a base year once and measured progress against that same year for the life of its targets. Under V2, every five-year cycle starts with a fresh base year, i.e. the most recent year with complete data. So, base-year recalculation will become a recurring, built-in part of every target-setting cycle.
SBTi states that ambition should be pegged to a company’s current emissions profile, not what it was a decade ago, and that this makes more sense given how much company structures change through acquisitions, divestitures, and portfolio shifts.
Companies can still communicate progress against an older reference year if they want to keep a consistent public narrative, but the year that actually drives target ambition resets regularly.
- Transition plans are mandatory
Transition plans were previously recommended as good practice but are now part of the validation process.
To receive target validation under V2, companies must have a board-approved transition plan. For Category A organisations, that plan must also be disclosed publicly, although the standard allows limited flexibility on timing (up to 15 months after validation in specific cases).
- Scope 1 targets offer three pathways
V1 primarily relied on absolute emissions reductions, with sector-specific intensity pathways available for a limited number of industries.
V2 introduces three approaches. Companies can
- Continue using absolute emissions reductions
- Adopt sector-specific emissions intensity pathways
- Use an asset-transition approach designed for businesses whose emissions depend on long-lived infrastructure such as power plants, steel mills or shipping fleets.
Under the asset-transition pathway, companies can align targets with investment cycles and asset replacement. It is intended for sectors where emissions depend on capital turnover over several decades.
- Scope 2 keeps pushing toward hourly accounting
Both versions accept low-carbon electricity procurement through direct investment or contracts. What’s new in V2 is the pressure toward matching electricity consumption with generation on an hourly, rather than annual, basis.
Hourly matching is not yet mandatory for most companies. Category A companies with significant electricity consumption, however, must begin disclosing how much of their electricity is matched on an hourly basis.
For manufacturers, data centres and other electricity-intensive businesses, this is an early indication of what the standard is moving towards.
- Scope 3 requirements are tied to your company category
This is one of the more consequential structural changes. Under V1, companies only needed a Scope 3 target if value-chain emissions accounted for at least 40% of their total footprint. That threshold disappears for Category A companies.
If you’re in Category A, Scope 3 targets are mandatory, regardless of the share of emissions they represent.
In exchange, the exclusion rules have become more workable. Instead of a single 5% cap across the entire inventory, companies may exclude:
- individual Scope 3 categories that each account for less than 5% of total Scope 3 emissions;
- fuel- and energy-related activities already captured under Scope 1 and 2; and
- activities over which they have no practical influence.
Companies also have more flexibility in how they set Scope 3 targets. They can choose an overarching emissions reduction target, supplier or customer alignment targets, or targets focused on specific high-impact categories.
- Climate actions follow a clear hierarchy
V1 treated different forms of climate action with relatively little distinction. Direct emissions reductions, supplier engagement and market-based instruments were all recognised without a formal order of preference.
Under V2, the standard introduces an implementation hierarchy that ranks actions according to their integrity.
- The first priority is direct action within a company’s own operations and value chain.
- Where that is not immediately possible, companies can act through shared systems such as regional electricity grids, logistics networks or common supply chains.
- Sector-level initiatives sit at the bottom of the hierarchy and are intended for situations where the first two approaches are not feasible.
Market-based instruments remain part of the framework, but they aren’t an equivalent alternative to direct emissions reductions anymore. Their role is more limited, and companies are expected to be transparent about where those actions fit within the hierarchy.
- Progress reporting becomes continuous
Earlier, targets were submitted for assessment and received validation if they met the criteria. Reporting after that was expected, but ongoing performance played a limited role in the validation process.
V2 introduces continuous oversight.
Companies must report progress every year and complete an End-of-cycle Assessment at the conclusion of each five-year target period. Category A companies must also obtain independent third-party assurance over their reported progress.
Any shortfall carries into the next target cycle, increasing the reductions required in future years. SBTi also plans to introduce minimum progress requirements that companies must meet before setting subsequent targets.
- Beyond Value Chain Mitigation is replaced by Ongoing Emissions Responsibility
This is the change that ties most directly back to why SBTi rewrote the standard. Under the previous standard, companies were encouraged to support climate action beyond their own value chains, but the guidance was broad and there was no formal recognition system.
V2 replaces that approach with Ongoing Emissions Responsibility (OER), a structured programme with three participation levels:
- Engaged means covering 1% of ongoing emissions through either a contribution budget or verified removals.
- Advanced steps that up to 10%, including all of scope 1 and 2.
- Leadership means covering 100% of ongoing emissions for large companies (10% for smaller ones), at a much higher implied carbon price.
Participation remains voluntary until 2035.
From 2035 onwards, however, Category A companies must begin supporting carbon removals equal to at least 1% of their ongoing emissions. That requirement increases over time until it reaches full coverage by the company’s net-zero year. The standard also expects an increasing share of those removals to come from durable, long-lived methods.
Importantly, OER does not replace emissions reductions.
Carbon removals supported through the programme cannot be counted towards Scope 1, Scope 2 or Scope 3 targets, nor can they be used to offset emissions in the company’s inventory. They sit alongside emissions reductions rather than replacing them.
- Reporting gets more forensic.
V2 introduces a new reporting concept called Emissions-Intensive Activities (EIAs).
These are individual activities within Scope 3 that account for at least 5% of total Scope 3 emissions, regardless of how they are classified in the inventory.
Category A companies must report how much of each significant activity has transitioned to lower-carbon or net-zero-aligned alternatives over successive reporting cycles.
The requirement makes it harder for major emissions sources to disappear within broad reporting categories and gives stakeholders a clearer view of where progress is or isn’t being made.
How we got here: the version-by-version history
April 2026 — Version 1.3.1. The last update to the outgoing standard was a correction to how the absolute contraction method handles more recent target base years, plus the addition of two recommendations pulled in from the separate Near-Term Criteria document, mainly to keep terminology consistent ahead of the bigger V2.0 release everyone knew was coming.
September 2025 — Version 1.3. Also non-substantive by SBTi’s own description. It corrected the bioenergy accounting rules, clarified how the “sold and distributed fossil fuels” requirement applied, tightened the definition of the near-term target timeframe, and clarified long-term target years for the power and maritime sectors specifically. It also introduced a recommendation nudging companies toward near-term target years that would align with the transition period V2.0 was already being designed around, a sign that SBTi was quietly preparing the ground for the bigger change.
March 2024 — Version 1.2. This update folded two previously separate documents, the Target Validation Protocol and the Corporate Manual, both since retired, directly into the Corporate Net-Zero Standard, consolidating guidance that companies previously had to cross-reference across three documents into one.
April 2023 — Version 1.1. A non-substantive revision, mostly housekeeping and clarification following the standard’s first eighteen months in real-world use.
October 28, 2021 — Version 1.0. The original Corporate Net-Zero Standard was the first framework anywhere that let a company make a credible, independently validated claim to be pursuing “net-zero,” as opposed to a vague carbon-neutral or offset-based claim. It set out the structure that defined corporate net-zero for the next five years, near-term targets, long-term targets, neutralization of whatever emissions remained, and voluntary action beyond the value chain.
What corporates should actually do with this
If your targets are already validated under V1 and your current cycle runs through 2030, you don’t need to panic. V1 stays valid and open for new submissions through the end of 2027, and elements of V2.0 (forward-looking target setting, company categorization, progress assessment) will be usable alongside it during the transition.
SBTi is explicitly telling companies that V1 remains “an on-ramp” for those already committed to it, while everyone setting fresh 2030–2035 targets should be building toward V2.0 from 2028. Given how much of V2.0’s structure, the rolling base year, the transition plan requirement, the implementation hierarchy, will shape how climate teams work regardless of which version they’re formally validated under, it’s worth treating this as the new baseline to design against.
