The Impact of the SBTi’s New Corporate Net Zero Standard
When it comes to setting net zero targets, the Science Based Targets initiative is the gold standard globally.
For companies looking to decarbonise, having targets ratified by the SBTi is not just a good way of committing to net zero, it is also a badge of honour that distinguishes themselves amongst competitors.
For years, the Corporate Net Zero Standard has been the set of rules companies have had to follow when setting targets. In February 2025, though, the SBTi announced it would be revising this standard.
The firm invited consultation from corporations, giving them a chance to shape the framework that will encompass their net zero efforts from 2025 to 2050.
"Reaching net zero is never going to be straightforward. But the guidance to get businesses there should be,” says Tracy Wyman, Chief Impact Officer at the SBTi.
With the consultation set to end next month, companies are running out of time to respond.
The draft of the SBTi’s revised standard
The SBTi has already published the first draft of its revised Corporate Net Zero Standard 2.0, introducing significantly more rigorous requirements for companies seeking to validate their climate targets.
The consultation draft proposes replacing the current commitment letter system with a more robust process that requires companies to demonstrate clearer intentions and detailed implementation plans.
This change aligns with emerging best practices from the UN High-Level Expert Group on Net Zero Emissions Commitments of Non-State Entities and the UN Race to Zero campaign.
The SBTi has already proven itself to be fastidious and firm in maintaining standards, even without these amendments.
In recent years, it has made no bones about delisting high-profile companies for failing to meet targets or for failing to set frequent enough targets.
- Near-term target: Companies must first set a near-term emissions reduction target to be achieved within five to 10 years from the date of submission.
- Long-term target: Companies must then set a long-term target to cut all possible emissions - usually more than 90% - by 2050 at the latest.
- Neutralisation: Once a company achieves its long-term target, any ‘left over’ residual emissions they cannot cut must be neutralized - only then can they claim to be net zero. Neutralisation requires counterbalancing with permanent removals and storage.
Enhanced baseline requirements
So, what sorts of amendments does the SBTi plan to make to its Corporate Net Zero Standard?
Firstly, the draft standard introduces stricter requirements for determining base year performance, including a revised consolidation approach that aligns with emerging regulation and voluntary frameworks.
As such, companies will face new requirements for base year selection to ensure targets reflect actual company structure and drive meaningful change.
Category A companies – typically the largest emitters – will be required to obtain third-party assurance on their greenhouse gas emissions inventories, marking a significant shift towards enhanced verification.
Closer scrutiny on Scope 3 emissions
The revised standard also introduces a new approach to identify the most relevant sources of Scope 3 emissions, which often represent the majority of a company's carbon footprint.
This change aims to ensure companies focus their efforts on the most material indirect emissions sources rather than applying a one-size-fits-all approach.
The draft also proposes a more nuanced benchmarking approach to determine target ambition, moving away from blanket requirements towards sector-specific considerations.
Progress tracking becomes mandatory
Another major part of the Corporate Net Zero Standard 2.0 is the introduction of mandatory progress assessments and communication requirements.
If the standards are set following consultation, companies will henceforth be required to assess and communicate progress at the end of their target period, with new targets accounting for previous performance gaps.
This is a shift from the current system, which focuses primarily on target-setting rather than implementation tracking, making the pursuit of net zero a stricter, more action-based process.
The draft standard provides additional recognition for companies that address ongoing emissions through Beyond Value Chain Mitigation (BVCM).
This change incentivises companies to take responsibility for emissions released during their transition to net zero, contributing to climate mitigation outside their direct value chains.
Changing to implementation timelines
Companies setting new near-term targets in 2025 and 2026 will continue using the current Version 1.2 standard alongside Near-Term Criteria Version 5.2.
From 2027, companies will be required to use Version 2.0 for both new near-term and long-term targets.
Near-term targets validated in 2025 and 2026 will remain valid for five years or until the end of 2030, whichever comes first.
Industry impact expected
The revised standard is expected to significantly impact corporate climate commitments, with enhanced accountability measures potentially deterring less committed companies whilst strengthening credibility for serious participants.
The SBTi will provide transition pathways for companies with existing validated targets, ensuring continuity whilst raising standards.
“The SBTi has always been at the frontier of climate action,” says Francesco Starace, Chair of SBTi.
“The draft standard addresses complex, emerging issues and lays the foundation to enable more companies to move further and faster towards net zero.”
A second public consultation is scheduled for later this year, with final approval expected before the 2027 implementation date.
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