SBTi unveils draft version 2 of Corporate Net-Zero Standard: What you need to know
The Science Based Targets initiative (SBTi) has released the draft of its updated Corporate Net-Zero Standard (Version 2), marking a significant step forward in the evolution of corporate climate action. This revised version is now open for public consultation until 1 June 2025 and organisations are strongly encouraged to review the changes and provide feedback via the official consultation portal here.
The revision introduces stricter validation timelines, refined company classifications, and new methods for value chain engagement. Below, we have listed all the key updates which will affect businesses.
Updated company categories
The draft introduces a new company classification system:
- Category A includes large companies globally, as well as medium-sized companies in high and upper-middle income countries.
- Category B covers medium-sized companies in lower-income countries and all small and micro enterprises.
These categories guide the level of ambition and timelines expected under the proposed updated standard. The specific thresholds defining which category companies fall into based on balance sheet turnover, and employee number can be found in the consultation draft document.
Strengthened commitment rules
The current 24-month commitment letter will be replaced. Instead, companies will be required to publicly declare their net-zero intentions.
Category A companies must set targets within 12 months, while Category B companies have up to 24 months. A climate transition plan must also be published within 12 months of SBTi target validation.
Tighter rules on base years and inventory
Base years must now reflect typical operations, align with financial reporting, and be no more than three years before submission. Importantly, no exclusions are allowed from emissions inventories. This displays a stricter stance than the GHG Protocol’s 5% threshold.
Category A companies are also required to obtain limited assurance.
New target-setting criteria
All net-zero targets must be aligned with the 1.5°C pathway. Category A companies must set long-term targets for Scopes 1 and 2, with near-term milestones set every five years.
Targets must be set separately for each scope, and both location and market-based metrics are required for Scope 2. Scope 3 targets are mandatory for Category A but optional for Category B.
Rather than rigid percentage coverage, Scope 3 targets should now focus on high-impact activities, defined as those generating more than 1% of emissions or over 10,000 tCO₂e annually.
Focus on value chain engagement
Recognising that a significant portion of a company’s emissions often lies outside its direct operations, the updated guidance offers more flexible ways to address emissions within the value chain.
These targets are expected to reduce emissions or increase alignment at a rate consistent with achieving net-zero emissions by 2050. Companies may pursue three approaches for Scope 3 emissions targets:
- Reducing absolute emissions associated with a given category or activity.
- Reducing the average emissions intensity (e.g. CO₂e per product or per revenue unit).
- Increasing the percentage of suppliers or partners that are net-zero aligned.
Overall, this new approach recognises that achieving net zero requires not only internal reductions but also deep collaboration across supply chains and customer networks.
Handling residual and ongoing emissions
Companies must now set removal targets to address residual emissions. There is also optional recognition for companies that commit to more ambitious removal strategies.
For companies seeking additional recognition, there's now a requirement to take responsibility for ongoing emissions. This can be addressed through beyond value chain mitigation, such as high-integrity carbon credits or conservation projects.
Tracking progress over time
The Standard now requires companies to assess and report progress at the end of each target period. If targets are not met, then companies must set new ones to address the gap, this ensures continuous improvement and accountability.
Implementation timeline
Near-term targets can still be set under the current version in 2025 and 2026, existing near-term targets will remain valid for five years or until the end of 2030. From 2027, all companies will be required to use the final Version 2.
Next steps for businesses
This draft marks a shift toward more rigorous, transparent, and accountable net-zero strategies.
We strongly encourage all customers, especially those meeting Category A criteria or subject to EU regulation, to begin reviewing their current emissions data, assurance processes, and climate plans. The introduction of stricter validation timelines, enhanced Scope 3 expectations, and new value chain-focused methods means that preparation will be key.
If you need any support in setting Science-Based Targets or would like guidance on the updated Net-Zero Standard, please don’t hesitate to contact our sustainability team. We are here to help you take confident, credible steps toward net zero. If you would like more information on how we can help, please email solutions@beyond.ly or call us at 01756 794 951.