Over the last decade, more than 11,000 companies have committed to science-based climate targets through the Science Based Targets initiative (SBTi). But while setting a target is relatively straightforward, delivering it is far more challenging.
Many businesses have already reduced emissions, yet some remain difficult to eliminate due to complex supply chains and hard-to-abate operations. This is where the SBTi Corporate Net-Zero Standard V2.0 comes in.
Developed after two years of global consultation, the updated framework shifts the focus from setting ambitious targets to implementing them. It provides clearer guidance on reducing emissions, managing unavoidable emissions, and using high-integrity carbon credits responsibly as part of a credible net-zero strategy.
What Is the Corporate Net-Zero Standard V2.0?
The Corporate Net-Zero Standard V2.0 is the latest framework developed by the Science Based Targets initiative (SBTi) to help businesses align their climate action with the latest science.
Compared to the previous version, nearly 40% of the framework has been newly developed, reflecting changes in climate science, evolving regulations, and lessons learned from thousands of companies implementing science-based targets.
Version 2.0 introduces several important improvements, including:
Greater flexibility for companies operating in different markets
Stronger emphasis on implementation and continuous progress
Annual reporting and improved transparency
Clearer guidance for managing residual emissions
A structured framework for using carbon credits and carbon removals responsibly
Rather than lowering climate ambition, the updated standard recognises that companies face different challenges depending on their industry, geography, and supply chain complexity. The objective remains the same: reach net zero, but the pathway is now more practical and implementation-focused.
Why Did SBTi Update the Standard?
When the original Corporate Net-Zero Standard was introduced, the primary goal was to help companies set credible science-based targets.
Today, expectations have changed.
Investors want measurable progress. Regulators are introducing stricter disclosure requirements. Customers increasingly expect businesses to demonstrate credible climate action rather than long-term promises.
At the same time, organisations continue to face common implementation challenges, including:
Limited visibility into Scope 3 emissions
Fragmented supplier data
Slow commercialisation of low-carbon technologies
Hard-to-abate industrial processes
Increasing reporting and compliance requirements
Recognising these realities, SBTi has repositioned the framework from "setting ambitious targets" to "helping companies deliver them."
The updated standard reinforces a simple but important principle:
Reduce emissions wherever possible. Use high-integrity carbon credits only to complement, not replace direct decarbonisation efforts.
This balanced approach gives businesses greater clarity without compromising scientific credibility.
What's New in Net-Zero Standard V2?
The updated framework introduces several changes that will influence how companies plan, measure, and report climate action over the coming years.
A Greater Focus on Implementation
One of the biggest shifts is the move from ambition to action.
Rather than simply validating a net-zero target, companies are now expected to demonstrate continuous progress through:
Annual emissions reporting
Greater transparency around implementation barriers
Regular target reviews
Clear disclosure of climate actions and outcomes
In other words, success is no longer measured by the target itself, but by the progress made toward achieving it.
More Flexibility for Different Businesses
The updated framework recognises that businesses operate under different circumstances. Requirements are now differentiated between:
Category A companies: Large companies and medium-sized businesses in high-income countries.
Category B companies: Small companies and medium-sized businesses in lower-income countries.
This allows organisations to adopt climate actions appropriate to their size and operating environment while maintaining alignment with science-based pathways.
A Clearer Role for Carbon Credits
Perhaps the most discussed update is SBTi's revised position on carbon credits.
Earlier versions provided limited guidance, leaving many businesses uncertain about how carbon credits fit within a science-based strategy.
Version 2.0 changes that.
The framework formally recognises Verified Mitigation Outcomes (VMOs) as part of a company's climate journey while making one thing clear:
Carbon credits should support emissions reductions, not replace them.
Instead of being treated as a shortcut to net zero, they are positioned as a tool for addressing emissions that cannot yet be eliminated.
Why This Update Matters for Businesses
The Corporate Net-Zero Standard V2.0 changes how businesses will prepare for the next decade of climate action.
Companies that begin planning now will have more time to improve emissions data, engage suppliers, strengthen reduction strategies, and develop long-term carbon procurement plans before new requirements take effect.
Those waiting until compliance deadlines arrive may face significant operational and procurement challenges.
That makes one thing clear: Preparing for Version 2.0 starts today, not in 2027 or 2035.
Timeline: Key Milestones
Timeline | What Happens |
Q1 2027 | Companies can begin submitting targets under Corporate Net-Zero Standard V2.0 |
31 January 2028 | Final date to submit targets under Version 1.3.1 |
1 February 2028 | Version 2.0 becomes mandatory for all new target submissions |
2035 | Mandatory carbon removal requirements begin for Category A companies |
Net-zero target year | Remaining residual emissions must be neutralised using eligible carbon removals |
What Should Businesses Do Now?
Although many requirements will be phased in over the coming years, there are several actions organisations can begin immediately.
Identify emissions that are likely to remain difficult to eliminate.
Strengthen supplier engagement and data collection.
Build a long-term decarbonisation roadmap.
Develop a carbon procurement strategy focused on high-integrity credits.
Monitor evolving reporting and disclosure requirements.
Businesses that take these steps today will be far better prepared as the Corporate Net-Zero Standard V2.0 becomes the industry benchmark.
Understanding the Ongoing Emissions Responsibility (OER) Framework
One of the biggest additions to the Corporate Net-Zero Standard V2.0 is the Ongoing Emissions Responsibility (OER) framework.
The idea behind OER is simple.
Even the most ambitious companies won't eliminate every tonne of emissions overnight. Certain industrial processes, supply chains, and technologies will continue to generate emissions while businesses transition towards net zero.
Instead of asking companies to wait until 2050 to deal with these emissions, SBTi encourages them to start taking responsibility now.
Importantly, OER does not replace emissions reductions. Businesses are still expected to reduce emissions as much as possible. The framework simply recognises that climate action should continue even while unavoidable emissions remain.
How Does the OER Framework Work?
The framework follows a phased approach that gradually increases corporate responsibility over time.
Initially, participation is voluntary. Over time, certain requirements become mandatory for larger organisations.
Phase 1: Voluntary Recognition Programme
The first phase encourages companies to begin supporting climate action beyond their own operations.
Businesses can earn recognition across three levels depending on how much of their ongoing emissions they address.
Recognition Level | Requirement |
Engaged | Address at least 1% of ongoing Scope 1, 2, 3 emissions through Verified Mitigation Outcomes (VMOs) or a climate contribution budget. |
Advanced | Cover 100% of ongoing Scope 1 and Scope 2 emissions, plus enough Scope 3 emissions to reach 10% of total ongoing emissions, using VMOs or a contribution budget of US$20/tCO₂e. |
Leadership | Establish a climate contribution budget of US$80/tCO₂e, purchase verified mitigation outcomes, and invest remaining funds into eligible climate initiatives. |
Rather than viewing these levels as compliance milestones, it's helpful to think of them as a maturity model. As organisations strengthen their decarbonisation strategies, they're encouraged to take greater responsibility for emissions that remain difficult to eliminate.
Companies that decide not to participate in this voluntary phase must explain their decision during target validation, signalling that climate contributions are increasingly becoming part of expected corporate practice.
Where Can Climate Contribution Budgets Be Used?
A climate contribution budget is not limited to purchasing carbon credits.
Under the framework, companies can support a wider range of climate initiatives, including:
Eligible Climate Action | Examples |
Verified Mitigation Outcomes | High-integrity carbon credits and removals |
Climate mitigation funding | Early-stage emissions reduction projects |
Low-carbon innovation | Research and clean technology development |
Adaptation and resilience | Projects that help communities adapt to climate change |
Loss and damage initiatives | Support for regions most affected by climate impacts |
This broader approach recognises that businesses can contribute to climate action in multiple ways while continuing to reduce their own emissions.
Carbon Removals Become Mandatory from 2035
One of the most significant long-term changes introduced in the Net-Zero Standard V2 is the gradual introduction of mandatory carbon removals.
From 2035, Category A companies must begin covering 1% of their ongoing Scope 1, Scope 2, and Scope 3 emissions using eligible carbon removals.
The percentage then increases over time until companies reach their net-zero target year, when all remaining residual emissions must be neutralised.
The framework also introduces the concept of long-lived removals.
For greenhouse gases such as carbon dioxide (CO₂) and nitrous oxide (N₂O), businesses will increasingly need removal solutions capable of storing carbon for centuries rather than decades.
This is expected to accelerate investment in durable carbon removal technologies over the coming years.
Although these requirements are scheduled to begin in 2035, SBTi has stated that they will be reviewed as part of future revisions to ensure they reflect the latest science and market developments.
What Qualifies as a Carbon Credit Under Version 2.0?
Not every carbon credit qualifies under the new framework.
SBTi introduces the concept of Verified Mitigation Outcomes (VMOs), a category of high-integrity climate outcomes that meet strict quality and transparency requirements.
To qualify, projects must demonstrate:
Independent third-party verification
Additionality
Transparent methodologies
Protection against double counting
Safeguards for biodiversity and local communities
Appropriate management of reversal risks
Eligible projects may include emissions reductions, carbon removals, and nature-based solutions outside a company's value chain.
For businesses, this raises the bar on carbon procurement. Choosing credits based on price alone will no longer be enough. Organisations will need stronger due diligence processes to evaluate project quality, integrity, and long-term impact.
Why Accurate Carbon Accounting Comes First?
Before companies can reduce emissions, participate in the OER framework, or estimate future carbon removal needs, they need one thing above all else: Accurate Emissions Data.
Without reliable Scope 1, Scope 2, and Scope 3 calculations, businesses cannot:
identify ongoing emissions,
measure progress,
estimate residual emissions,
or build credible net-zero roadmaps.
This is why carbon accounting becomes the foundation of every requirement introduced in Corporate Net-Zero Standard V2.0.
Platforms like Sustainiam's Emission Calculator, ECal, help organisations automate emissions calculations, consolidate data across operations and supply chains, and generate audit-ready reports aligned with leading reporting frameworks.
By building a reliable emissions baseline today, businesses can make better decisions tomorrow, whether that's setting science-based targets, identifying reduction opportunities, or planning future carbon procurement.
Carbon Procurement Will Become More Strategic
As demand for high-integrity carbon credits grows, carbon procurement is expected to become a strategic business function rather than a one-time compliance activity.
Instead of purchasing credits only when reporting deadlines approach, organisations will increasingly need long-term procurement strategies built around quality, transparency, and future availability.
Businesses should evaluate factors such as:
Project methodology
Permanence
Additionality
Registry credibility
Co-benefits
Project developer track record
This is where platforms like Sustainiam's EmX can support the procurement journey.
EmX enables businesses to discover verified carbon credits, compare project information, access transparent pricing, and procure credits through multiple transaction models including spot purchases, forward contracts, and long-term offtake agreements.
As carbon markets mature, this level of transparency and procurement flexibility will become increasingly valuable.
What Does This Mean for Carbon Markets?
The Corporate Net-Zero Standard V2.0 sends one of the strongest long-term demand signals the voluntary carbon market has received.
Although many requirements are phased in over time, the framework provides greater confidence for businesses, project developers, and investors by outlining a clear pathway for responsible climate contributions.
Some of the likely market impacts include:
Growing demand for high-integrity carbon credits
Increased investment in carbon removal technologies
Greater emphasis on project quality and due diligence
Stronger alignment between voluntary and compliance carbon markets
Higher expectations around transparency and reporting
Conclusion
The SBTi Corporate Net-Zero Standard V2.0 marks an important shift in corporate climate action.
Instead of focusing only on ambitious commitments, it provides businesses with a more practical roadmap for delivering them.
The framework reinforces that reducing emissions remains the highest priority while recognising that high-integrity carbon credits and carbon removals have an important role in addressing emissions that cannot yet be eliminated.
For businesses, the message is clear: start preparing now.
Building accurate emissions inventories, strengthening supplier data, developing reduction strategies, and planning long-term carbon procurement all take time.
Organisations that begin today will be better positioned to adapt as reporting expectations, stakeholder scrutiny, and carbon markets continue to evolve.
