Inside SBTi Version 2: What You Need to Know

The Science-Based Targets initiative (SBTi) has just closed consultation on Version 2 of their Corporate Net-Zero Standard.

These proposed changes represent the most significant overhaul since the Standard launched in 2021, presenting wide-reaching impacts for companies committed to science-based targets.

We’ve analysed the key changes and what they could mean for your business.

Remember, these proposals are still under consultation and will likely evolve before the new standard officially launches (expected in 2027).

What's Actually Changing

1. Company Categories

The updated Standard introduces two company categories (A & B) based on size and location, replacing the previous categorisation based exclusively on size.

For Category B companies — smaller organisations operating in lower-income countries — Scope 3 measurement and reduction remain essential, but the validated near-term Scope 3 targets become optional.

This lets smaller players focus resources on operational emissions reduction without the pressure of transforming complex supply chains.

2. Target Setting Rules

Version 2 changes significantly how you'll set and meet targets across all scopes, with more stringent targets for the things you directly control (Scope 1 and 2), and more practical and focused targets for the things outside (Scope 3).

Scope 1 & 2 Separation

‍Previously grouped Scope 1 and 2 targets will now be separated. This prevents companies from relying solely on Scope 2 reductions to meet combined targets. For Scope 1, you'll need to invest in cleaner fuel technologies and less energy-intensive operations.

Dual Scope 2 Requirements

‍You'll need to set targets for both market-based and location-based Scope 2 emissions. This means you can't rely entirely on purchasing renewable electricity. You'll also need to reduce actual electricity consumption through efficiency improvements and technology upgrades.

Material Approach for Scope 3 Categories

Version 2 lets you focus on the emission categories most relevant to your business. While some companies might see their scope expand, the focus on material categories should help you to prioritise resources more effectively.

Alignment-Based Targets

The new standard recognises the challenges of accurate emissions measurement. Therefore, it emphasises setting practical targets like ensuring a percentage of your procurement spend goes to suppliers with net-zero commitments, or that a percentage of your products meet specific sustainability criteria. This shift puts supply chain engagement and sustainable product design at the heart of your strategy.

Beyond Direct Scope 3 Reductions

Version 2 introduces recognition of “indirect mitigation” measures and “Beyond Value Chain Mitigation” — two concepts essential for practically addressing Scope 3 emission complexities.

3. Data Quality & Reporting Requirements

The new standard raises the bar on data quality and transparency:

• Third-party assurance on base-year emissions becomes mandatory. Your baseline data needs to be accurate, complete, and aligned with the GHG Protocol—and now it needs external verification too.
• Data traceability assessment requires you to disclose data uncertainty and demonstrate improvement plans, making supplier engagement essential.
• Standardised transition plan disclosure means everyone reports progress in the same way. Your plans must be based on accurate, granular data that clearly shows how your operations are changing.

Your Next Steps

Don't wait for 2027. Version 2 is still some time away, but these changes reflect broader trends across the emissions measurement and decarbonisation space:

• Greater ambition coupled with increased accountability - the EU's CSDDD also pushes organisations to develop transition plans aligned with 1.5°C warming limits, with a mandate that incurs financial penalties for non-compliance
• Enhanced data quality standards - California's Climate Corporate Data Accountability Act (SB 253) also demands third-party assurance of emissions reporting and imposes sanctions for failures
• Value chain engagement as a primary catalyst - the EU’s CSDDD Supply Chain Requirements also push companies to identify, mitigate and prevent negative environmental impacts across subsidiaries and business partner operations

What can you do to prepare?

• Strengthen supplier engagement programmes, leaning towards collaborative approaches
• Invest in operational efficiency and clean technology
• Build robust measurement and reporting systems for third-party scrutiny

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- Written by Amber Robinson