SBTi launches Corporate Net-Zero Standard Version 2.0: What businesses need to know
The Science Based Targets initiative (SBTi) officially launched Version 2.0 of its Corporate Net-Zero Standard on Thursday 11th June; marking a significant shift in how companies will set, implement and demonstrate progress against science-based emissions reduction targets.
The updated standard expands on the previous version to capture how companies should implement targets, embed decarbonisation into their organisation, and report and evidence their progress against the targets.
There will be a transitional period for companies to move onto Version 2 of the standard, and any existing targets will remain valid until they are due to be reviewed at the 5 year mark. Throughout 2027, companies can choose to submit targets on either Version 1 or Version 2 of the standard. From 2028, Version 2 will become the mandatory route for any new target submissions and renewals.
What has changed from Version 1?
Version 2 introduces several changes from Version 1. Most significantly, the standard now provides greater detail on how companies should move from setting targets to implementing and evidencing them.
The key changes are as follows:
New company categorisations: Companies will now be categorised as either Category A or Category B depending on their size, geography, and emissions profile. Requirements vary depending on the category, with more for companies within Category A.
Transition plans: All companies will need to develop a transition plan to include target details, planned actions, emissions sources, and any assumptions. The SBTi will not validate the plans themselves, but will validate whether the required information is included.
Greenhouse gas (GHG) inventories: A GHG inventory needs to be submitted along with information on actions and market instruments, electricity consumption data, and percentage of low carbon electricity. Category A companies will also need to identify significant Scope 3 categories and emissions-intensive activities.
Third party assurance: Category A companies are required to obtain limited assurance as a minimum for their emissions inventories and other metrics.
5 year target cycles: Targets have to be set on a 5 year basis under Version 2, whereas previously they could be set between 5 and 10 years.
Target setting: Companies must set separate targets for each emissions Scope (1, 2 and 3). There are various changes to emission coverage and target setting options compared to Version 1. These include a new asset transition target route, and a move away from a blanket Scope 3 target. Instead, companies are now required to set Scope 3 targets for any categories which exceed 5% of Scope 3 emissions, whilst allowing exclusions for certain categories.
Implementation hierarchy: This has been introduced to define how companies should prioritise decarbonisation actions, with strongest emphasis on actions that directly reduce emissions within the value chain, then allowing wider activity-pool or sector-level actions where these are measured, attributable and reported.
Market instruments: More detailed criteria for actions and market instruments have been introduced, with hourly matching required for Category A companies.
End of cycle assessments: At the end of the target cycle, companies will now need to complete a more robust progress assessment to help determine whether they have made all reasonable efforts to implement decarbonisation actions. If targets have not been met, companies will still be able to set new targets, provided they can explain barriers and demonstrate best efforts.
Ongoing emissions responsibility: Version 2 introduces future requirements around supporting carbon removals and neutralizing residual emissions at the net-zero target year, with recognition levels linked to the level of emissions mitigation companies make.
How can Beyondly help?
Beyondly can support with science-based target development, including emissions inventory review, target modelling, supplier engagement and preparation for SBTi submission. As Version 2.0 is introduced, we can help businesses understand what the changes may mean for their current or future targets and navigate the most appropriate route during the transition period.
