SBTi Version 2 is expected to raise the bar through stricter near-term target windows, more detailed Scope 1–3 requirements, tighter electricity quality expectations, stronger requirements around transition planning and assurance, and enhanced Scope 3 rules that push for more comprehensive coverage on less material categories. In the first article of the series on SBTi Version 2, we explore the evolving expectations for companies and outline practical next steps in progressing from target-setting to the design and execution of a credible transition plan.
What does SBTi Version 2 signal to the market?
The tightening of target setting and decarbonization pathway requirements in the proposed SBTi Version 2, alongside updates to Scope 2 rules and a growing emphasis on formal transition plans all point to a broader market shift: what counts as a “credible” climate target is becoming much more rigorous.
Regulators and stakeholders are moving beyond high-level climate pledges and asking for more detailed evidence of implementation. The focus is increasingly on whether companies have a clear pathway, credible governance, and practical levers to deliver real emissions reductions within this decade, rather than promising action far into the future.
This shift is already creating pressure in the market. In Asia in particular, many multinational enterprises are expecting to face major hurdles on meeting the new stringent requirements for decarbonization in the form of data gaps, complex supply chains, limited access to low-carbon electricity, and risk of diluting effort across less material Scope 3 categories. Some companies have already revised, retired, or withdrawn SBTi targets after confronting the increasingly challenging requirements from SBTi on Scope 3 and power-related requirements.
However, corporates cannot assume that standards will soften over time. The direction of travel is clear: policy is tightening, not easing. Jurisdictions such as the UK and EU are strengthening climate laws, carbon budgets, and sector-level regulations, such as the mandatory of Corporate Sustainability Reporting Directive (CSRD) in 2024 and official rollout of the EU’s Carbon Border Adjustment Mechanism (CBAM) in 2026. It’s clear companies need strategies that can withstand increasing scrutiny through 2030 and beyond.
For corporates, the key shift is moving from “What target number should we set?” to “How do we actually deliver and maintain credibility?” Under SBTi Version 2 and emerging transition plan frameworks, the headline target is only the starting point. What matters is the underlying pathway, the investment plan, and the governance that supports execution, all of which sit at the heart of a structured decarbonization strategy and roadmap.
Below we examine what these evolving expectations mean for companies at different stages of decarbonization maturity, from those without targets, to those preparing targets or SBTs, and to those that already have validated SBTi commitments. We will also evaluate whether SBTi continues to be the most suitable framework in varying circumstances and identify alternative approaches where relevant. Finally, we set out practical next steps to support companies in progressing from target-setting to the design and execution of a credible transition plan.
Different stages, higher stakes: Implications for companies at various sustainability maturity levels
As expectations and requirements continue to tighten in the world of sustainability, the implications will differ depending on a company’s stage in its decarbonization journey. Maturity level will shape both the level of scrutiny a company faces, as well as the actions required to remain credible.
To provide a practical view, we have grouped companies into four maturity levels: beginning, developing, mature, and leading. We have also identified six relevant status points across the decarbonization pathway: no immediate plans for target commitment, plans for formal target commitment, SBT validation as compliance, SBT validation planned, and SBT validated. The table below sets out what tightening expectations mean for each maturity level, and the next steps companies should consider.
Before moving to the table, consider where your company sits today: What maturity level is your company? And what current status best describes your company’s climate targets and decarbonization journey?
| Maturity Level | Commitment Status | What tightening market expectations mean for you | Pragmatic next steps |
| Beginning | No immediate plans for target commitment | The “wait and see” option becomes riskier as target framework, emissions quantification methodology, and value chain requirements tighten with stakeholder expectations. | Establish a Scope 1-3 baseline, identify key emissions hotspots, and start monitoring value chain signals (key customers, peers, tender requirements). Build an internal view on whether target commitment, regardless of framework, will be needed within 12–24 months. |
| Developing | Plans for formal target commitment | SBTi Version 2 is a strong signal of where market practice is heading: higher expectations on scope coverage, decarbonization strategy, and execution. Even if your company adopt a different framework, stakeholders may still benchmark your company against SBTi-level rigour. | Run a framework options assessment across: (i) stakeholder/compliance needs (ii) sector applicability (iii) feasibility and cost (iv) business case (financing, customer access) Stress test the preferred approach against industry most-stringent practice such as SBTi Version 2 to ensure strategy durability.Example of alternative approaches to SBTi:Internal / hybrid framework by referencing or combining requirements from different standards such as ISO 14068, Oxford Principles, and Cumulative Benchmark Divergence.Alternative initiatives such as UNFCCC Race-to-Zero |
| Mature | SBT validation as compliance | Timing is now strategic. With SBTi Version 2 expected to be in effect starting 2028, companies pursuing validation for compliance should plan target submission timing carefully, as target submissions after the effective date will be required to follow the more stringent requirements in Version 2. | Access readiness of company and define a submission planWhere beneficial, the company may want to accelerate the submission process for validation ahead of 2028 to avoid the added complexity under Version 2Lock the baseline year and establish robust Scope 1-3 data foundationsIdentify emission hotspots and levers for achievable SBTi targets |
| Mature | SBT validation planned | This “pre-commitment” window is where futureproofing matters most. Decisions on Scope 3 coverage, renewable electricity approach, governance, and delivery capacity will determine whether a commitment remains feasible under tightening expectations including SBTi Version 2. A feasibility assessment is therefore essential to avoid committing to targets that become impractical and risk credibility. | Conduct feasibility study on SBTi Version 2 (e.g. data readiness, electricity sourcing options, supplier engagement, delivery capacity)If SBTi Version 2 requirements are deemed feasible: Design a target “architecture” that can evolve (e.g. clear scope 1-3 boundaries, a credible electricity roadmap, and an early supplier engagement plan for major categories)Treat target submission as an operating cycle, not a one-off project.Integrate Version 2 effective timing into the wider corporate decarbonisation strategy If SBTi Version 2 requirements are deemed not feasible today:Companies should not set targets under SBTi Version 2, instead, explore alternative target frameworks to set achievable targets (refer to the “Developing” maturity level row above for examples)Consider developing a phased target setting pathway to remain ambitious and strengthen over time |
| Leading | SBT validated | As near‑term target years approach, the stakeholder question shifts from “Does your company have targets?” to “Can your company deliver?” With the transition to SBTi Version 2 at each company’s target review year after 2028, the urgency of conducting a feasibility study for Version 2 depends on how close that review year is. For companies rapidly approaching their target review year, priority should be placed on assessing the feasibility of transitioning into Version 2, as the more stringent Version 2 requirements may appear difficult to achieve for organizations that are not yet on a clear decarbonization pathway. For companies with more lead time before their review year, there is an opportunity to take an early‑mover approach, through strengthening the emissions reduction strategy in anticipation of a more stringent market landscape, while keeping the feasibility of the Version 2 transition under continuous review to ensure that short‑term plans do not conflict with long‑term climate commitments. | Conduct feasibility and implementation study on transition to SBTi Version 2 requirementsIf SBTi Version 2 requirements are deemed feasible: Develop implementation plan for the transition (e.g. funded transition plan with CapEx priorities, milestones, KPIs)If SBTi Version 2 requirements are deemed not feasible at target review year:Companies should explore alternative target frameworks to set achievable targets beyond the target review year (refer to the “Developing” maturity level row above for examples)Maintain focus on material emissions sources and strengthen scalable levers in anticipation of more stringent market landscapeEnsure external claims and communications align with delivery reality |
Executing an effective decarbonization strategy: What should companies focus on?
While every company starts from a different position, the market is moving in the same direction: toward tougher standards, greater scrutiny, and a stronger focus on delivery rather than intent. The key is not to react to each new requirement in isolation, but to treat these tightening expectations as a signal to build a coherent, board‑level decarbonization strategy that can evolve over time.
For companies that already have, or are considering, SBT-aligned targets, the focus should be on ensuring that their existing pathway is credible, on track, and aligned with SBTi Version 2 expectations. Critical actions include diagnosing gaps, clarifying priorities, and designing practical adjustments that can be integrated into business planning. RESET Carbon can support companies with:
- SBT strategy sessions to clarify the right targets and scope, aligning them with capex, portfolio, and operating plans.
- SBT progress reviews to assess current performance, identify gaps, and define the actions needed to stay on track.
- SBTi Version 2 feasibility studies to test whether existing targets can be recalibrated under Version 2 rules and how new requirements on Scope 3, electricity quality, and transition plans may affect decarbonization pathways.
- Implementation support to refine the action timeline and facilitating effective communications across internal business units, including but not limited to MACC analysis, RE procurement support, and supplier engagement programs.
For companies that are ready to move from ambition to action but have not yet set a formal target, the focus should be on building a robust and credible foundation for climate commitments. Our support is designed to help companies turn early‑stage interest into a structured, investor‑ready roadmap:
- Target setting framework studies to define the right approach, including sector context, material scopes, and alignment with national or regional policies.
- Emissions Inventory and roadmap development to quantify a baseline emissions inventory across Scope 1-3, and to develop a decarbonization roadmap that identifies priority measures, quantifies their reduction potential, and sequences them over time toward selected targets, supported by financial impacts, constraints, and implementation requirements.
Turning tightening expectations into an actionable roadmap
The sustainability landscape is becoming increasingly complex and demanding. With a strong Asia focus and deep expertise in supply chain decarbonization and carbon management, RESET Carbon is committed to helping corporate clients navigate every stage of their journey, helping turn evolving standards into a structured, practical, and board-ready climate strategy.
Experience shows that meaningful climate progress is built through long-term partnerships, practical execution, and solutions grounded in commercial reality. With the right combination of diagnostics, strategy development, and roadmap execution, companies can advance from having a target to running a credible, implementable transition plan that keeps pace with tightening market expectations.
If your organization seeks to explore, navigate, or adopt new market expectations, contact our team to turn your ambition into action.