SBTi’s Corporate Net-Zero Standard Version 2.0 raises the bar on what it means to have a credible science-based target. Compared with the earlier consultation draft, some requirements have been simplified, but the overall compliance and implementation burden is higher than under Version 1. We covered the release itself in our earlier analysis, SBTi Corporate Net-Zero Standard Version 2 Released: From Target Setting to Climate Transition Delivery. In a recent webinar, RESET Carbon’s Yang Liu, Senior Consultant, explored these changes in greater depth, examining what’s new, what stays the same, and how companies should prepare during the transition period.
Why SBTi updated the standard
Version 1 launched in 2021 and has been in use for more than five years. Over that time, companies have run into practical implementation challenges, and adjacent frameworks like the GHG Protocol and IFRS S2 have continued to evolve. Version 2 brings these learnings and developments into the updated framework.
The biggest structural change is the shift from a one-time target-setting exercise to an ongoing management cycle. Under V1, companies set a target and were largely able to maintain it until the next validation. Under V2, companies must review progress and reset targets every five years, moving the emphasis from demonstrating ambition to demonstrating implementation.
Key transition timeline
Here’s how the shift from Version 1 to Version 2 will unfold over the next two years:
- Version 2.0 was officially released in June 2026.
- Companies can still submit and validate targets under Version 1 through January 31, 2028.
- From February 1, 2028, all new and updated target submissions must follow Version 2.
- Existing validated V1 targets remain valid, but are subject to mandatory five-year renewal, at which point the company must follow whichever standard is in effect. A target validated in 2023, for example, would come up for renewal in 2028 and would need to align with V2.
- Companies can also choose to update a V1 target early, during 2027, which resets the clock and buys additional time before the next mandatory renewal falls under V2.
What’s new under Version 2
Company classification. V2 replaces the broad “large company vs. SME” split with a more precise system: companies are assigned to Category A or Category B based on company size and the income level of the country where their ultimate parent is registered. Classification is confirmed at SBTi registration, reconfirmed at validation, and holds for the five-year target cycle. Category A companies face the most stringent requirements.
Near-term targets stay mandatory; net-zero targets stay optional. This requirement remains unchanged. The key change is the obligation to review and update targets every five years, and for Category A companies, to publicly disclose a five-year transition plan showing not just how much they’ll reduce emissions, but how they’ll be achieved.
Stricter base year rules. Under V1, companies could choose a base year from a wide historical range. Under V2, companies must use the most recent available year unless the data isn’t representative, which means reductions already achieved can’t simply be carried forward into the next target cycle.
Stronger data assurance. V1 had no mandatory verification requirements. Under V2, Category A companies need limited third-party assurance over their base year and other core emissions data, raising the data quality bar and adding compliance cost.
A new role for carbon removals. From 2035, Category A companies must address at least 1% of their ongoing emissions through qualified carbon removals, rather than general carbon credits. Avoidance or reduction credits will not qualify. Eligible removals include certain forestry projects and carbon capture with durable storage, meaning the carbon stays out of the atmosphere for an extended period.
Scope 1 and Scope 2: separate targets, higher standards
Under V1, companies could combine Scope 1 and Scope 2 into a single target and cover 95% of emissions. Under V2, the two scopes must be addressed separately, each with 100% coverage. Companies can no longer offset weak Scope 1 performance with strong Scope 2 results, which makes fossil-fuel-dependent Scope 1 emissions far more visible and puts pressure on transition planning for energy sources like electrification.
Scope 2 requirements are also tighter. Category A companies expecting annual electricity demand to grow by more than 20% a year must set an absolute Scope 2 target, which requires stronger demand forecasting and earlier planning for renewable procurement, whether through green power, PPAs, or on-site solar. Category A companies using more than 10 GWh of electricity a year are classified as significant electricity users and must disclose hourly renewable-matching performance with third-party assurance. V2 doesn’t yet require a minimum matching percentage, but companies must state whether they’re participating in hourly matching and, if not, explain why.
Scope 3: smaller companies get flexibility, larger ones get more scrutiny
Scope 3 sees the most complex set of changes. Under V1, any company with Scope 3 emissions above 40% of its total footprint had to set a Scope 3 target, a threshold that applied to the vast majority of companies. Under V2, Category B companies can choose whether to set a Scope 3 target at all. For Category A companies, a near-term Scope 3 target remains mandatory, though the long-term target is optional.
V2 also introduces the concept of “significant categories.” Scope 3 covers around 15 emissions categories, and any category representing more than 5% of a company’s total Scope 3 footprint must now be covered by the target. Under V1, companies only needed to cover 67% of Scope 3 emissions and could choose which categories to include. Under V2, covering all significant categories can push required coverage to 80 to 90%, often pulling harder-to-manage categories, like the use and disposal of sold products, into scope for the first time.
On the flexibility side, V2 allows more ways to structure a target beyond a single absolute reduction goal, including supplier or customer engagement targets and targets focused on specific categories, products, or activities. That flexibility opens up more communication pathways, but it also adds complexity to supplier management, data collection, and long-term implementation.
Transition plans: a new core requirement
One of the most significant additions in V2 is the transition plan. Category A companies must disclose an implementation roadmap explaining not just their reduction target, but the specific actions and timeline behind it. RESET Carbon recommends treating this as an internal management tool rather than a disclosure document. When effectively implemented, it connects the SBT target to capital investment, equipment upgrades, energy procurement, operational improvements, and supply chain engagement, with clear owners, timelines, and milestones defined during the target-setting phase itself.
Preparing for Version 2
Companies generally fall into two distinct groups.
Companies without a validated target yet should first decide whether to pursue Version 1 or Version 2, particularly if customers are requiring a target in the near term. That decision depends on the strength of your current emissions inventory, data availability, and whether you already have a workable decarbonization pathway to support delivery, since V2 also requires a transition plan upfront.
Companies with an existing validated target should run a gap analysis between V1 and V2: identify additional data and assurance needs, review whether current reduction pathways still hold up, and determine which targets will need updating at the next renewal.
RESET Carbon’s three recommendations:
- Plan your emissions strategy early. Decide whether to pursue Version 1 (accepted through January 31, 2028) or prepare directly for Version 2. Either way, begin assembling your emissions inventory and supporting data now.
- If you’re still uncertain, consider setting a Version 1 target while it remains available. This buys up to five additional years to strengthen data quality, mature your GHG accounting, and build internal carbon management capability before moving to V2. Scope 3 should be a particular priority given how much more complex it becomes.
- Start planning implementation now. A clear decarbonization roadmap turns net-zero transition into a competitive advantage, supporting supplier qualification, customer retention, ESG performance, and investor confidence.
How RESET Carbon can help
RESET Carbon has been closely engaged with SBTi since 2019, when we supported Swire Properties in becoming the first real estate developer in Greater China to receive a validated long-term SBTi target. Since then, we’ve supported more than 20 corporates across sectors, including apparel, real estate, food and beverage, and professional services, in setting SBTi targets and translating them into practical decarbonization roadmaps.
Three principles set our approach apart:
- We don’t default to the most common method. SBTi offers several target-setting options across absolute and intensity-based approaches. We assess which method best fits your business model and is genuinely achievable before committing to it.
- We model and stress-test before we finalize. We build emissions models and run scenario analysis before locking in a target, so the pathway is grounded in tested feasibility rather than ambition alone.
- We support implementation, not just target-setting. Our engineering team has conducted decarbonization assessments across more than 2,000 factories, giving us the facility-level experience to support the energy efficiency and decarbonization measures needed to actually deliver on a target.
RESET Carbon offers end-to-end support, from GHG inventory and target setting through SBTi validation, decarbonization roadmap development, and future target renewal. Learn more about our Corporate Decarbonization Strategy and Roadmap services. Ready to prepare for the transition? Learn more about our SBTi Corporate Net-Zero Standard V2.0 Advisory services.
2026 and 2027 are a critical preparation window. Whether you are setting your first target or preparing to renew one, now is the time to assess your options.
To discuss your organization’s SBTi readiness, contact us.