In our previous article, we explored how the Science Based Targets initiative (SBTi) has become the gold standard for credible, science-backed corporate climate action. As businesses face mounting pressure to align with the 1.5°C pathway, setting robust and measurable emissions reduction targets is no longer optional, it’s essential.

Now, SBTi has taken a significant step forward with the release of Corporate Net-Zero Standard Version 2.0 (v2.0). This update isn’t just a routine refresh, it’s a strategic overhaul that responds to real-world feedback from businesses and the evolving landscape of climate science. SBTi v2.0 aims to turn high-level ambition into consistent progress by tightening requirements, improving flexibility for Scope 3 emissions, and placing greater emphasis on transparency and accountability.

For companies at various stages of their net-zero journey, these changes carry serious implications - especially when it comes to decarbonising operations, switching to clean power, and tackling complex value chain emissions.

In this article, we’ll unpack the most important updates in Version 2.0, compare them to the previous framework, and explore what they mean for businesses aiming to stay credible, competitive, and climate-aligned.

What’s New in Version 2.0

Version 2.0 of the SBTi Corporate Net-Zero Standard introduces a number of critical updates intended to close the gap between ambition and delivery. These changes reflect growing pressure for transparency, inclusion, and credible pathways to decarbonisation.

Key updates include:

• Separate targets for Scope 1 and Scope 2 emissions: Companies can no longer combine these into a single target. This separation demands clear, dedicated strategies for operational emissions and electricity procurement

• Stronger focus on Scope 3 action: SBTi has become more prescriptive in its approach to value chain value chain emissions. Instead of relying solely on broad absolute reduction metrics , the updated standard outlines specific pathways such as supplier engagement programmes or product-level targets encouraging companies to take more targeted and accountable action

• Mandatory transition to 100% zero-carbon electricity by 2040: Businesses are now expected to achieve full decarbonisation of their electricity use, with clear emphasis on renewable sources that are geographically and temporally aligned with actual energy use.

• Interim carbon removal expectations: Companies are encouraged to begin neutralising residual emissions through carbon removals well before their net-zero year, particularly for hard-to-abate Scope 1 emissions

• Beyond value chain mitigation (BVCM): While not a substitute for reductions, investments in verified mitigation projects outside the corporate value chain can now be publicly reported, though they still do not count towards meeting reduction targets

• Tailored criteria based on company size and region: Category A (large/global firms) face the full standard; Category B (SMEs and firms in emerging markets) benefit from relaxed requirements to improve accessibility

• Increased accountability and tracking: Version 2.0 requires companies to submit transition plans within a year of approval, revalidate their targets every five years, and report Scope 1 and 2 emissions annually with third-party assurance.

SBTi v2.0 vs. v1.2 – Why it matters?

While Version 1.2 helped lay the groundwork for credible net-zero target-setting, it was largely centred on commitment rather than implementation. Version 2.0 responds to this by embedding execution and transparency into the standard itself.  

The most notable shift is the disaggregation of Scope 1 and Scope 2 targets. Previously, companies could report a combined reduction target for their direct emissions and purchased electricity. While this simplified reporting, it allowed organisations to mask slower progress in operational emissions by overachieving in clean energy procurement - particularly through unbundled renewable energy certificates. Now, separate targets are required, meaning businesses must develop distinct strategies for decarbonising on-site emissions and shifting towards zero-carbon electricity. It raises the bar on both fronts and reduces the risk of superficial compliance.

On the electricity side, Version 2.0 sets a clear requirement: 100% zero-carbon electricity by 2040, globally. But it goes beyond targets, it’s also about integrity. Rather than allowing companies to buy renewable energy credits generated far away from where their emissions occur, the updated standard demands that procurement be geographically and temporally aligned. This change will fundamentally alter how companies structure their energy sourcing, with growing importance placed on local PPAs, on-site renewables, and emerging 24/7 clean energy solutions.

Scope 3, the long elephant in the room, has received a more pragmatic treatment. While Version 1.2 demanded that companies cover at least 67% of Scope 3 in near-term targets, this catch-all approach often overwhelmed organisations with complex supply chains. Version 2.0 shifts the focus to material emissions, encouraging businesses to prioritise meaningful areas of influence. For instance, supplier engagement becomes a central tactic, with large firms expected to ensure their Tier 1 suppliers in emissions-intensive categories set 1.5°C-aligned targets by 2030. Product portfolio alignment is another option, particularly for sectors where product use-phase emissions dominate. This empowers companies to tackle Scope 3 with more relevance and less administrative burden.

Another significant evolution is the introduction of interim carbon removal targets. In Version 1.2, companies were only expected to neutralise residual emissions at the point they declared themselves net-zero - usually in 2050. Now, they are encouraged to begin addressing these emissions earlier, especially for Scope 1. This reflects a growing recognition that residual emissions are not an end-game issue but a near-term challenge, particularly for sectors without easy decarbonisation pathways.

Complementing this is the formal recognition of beyond value chain mitigation (BVCM). While still prohibited as a method for achieving core reduction targets, investments in verified mitigation activities such as reforestation or engineered removals can now be publicly reported and recognised as climate leadership. This shift doesn’t compromise the standard’s integrity but does allow companies to be acknowledged for going above and beyond.

Finally, Version 2.0 introduces structured accountability mechanisms. Transition plans must be published within 12 months of target approval. Targets must be revalidated every five years. And for larger organisations, third-party assurance of emissions data will be required. These changes reflect a broader trend toward not just setting goals, but proving progress consistently, publicly, and with rigour.

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‍Business Implications of SBTi v2.0

Scope 1 – Direct Emissions from Operations

For Scope 1 emissions, businesses are now required to isolate and directly address their operational emissions, such as fuel combustion, process emissions, or company vehicles. This requirement compels companies to move beyond offsets and RECs and to take a hard look at their own facilities and fleets. Electrifying transport, investing in low-carbon fuels, and retrofitting industrial processes will become critical paths forward. In high-emitting sectors such as cement, steel, or chemicals, carbon removal technologies like bioenergy with carbon capture and storage (BECCS) or direct air capture may become necessary sooner than anticipated. Importantly, companies can no longer delay planning for residual emissions until the 2040s. Under v2.0, interim removal targets are encouraged, meaning decarbonisation and neutralisation strategies must be designed in parallel.

Scope 2 – Purchased Electricity and Heat

Under the new standard, Scope 2 emissions are no longer an easy win. The mandate for 100% zero-carbon electricity by 2040 forces companies to reevaluate their renewable energy strategies. Purchasing cheap certificates from remote wind or solar projects won’t be enough. Instead, SBTi expects organisations to buy or produce renewable energy that is location- and time-matched to their actual consumption. This may involve negotiating region-specific power purchase agreements, building on-site solar or wind installations, or joining consortia focused on clean energy access. For companies operating across multiple jurisdictions, the challenge will be even greater - each region’s decarbonisation must be addressed individually. In the short term, companies may be allowed limited use of credits from other grids, but this is intended as a bridge, not a solution. Businesses must also ensure their reporting reflects both market-based and location-based emissions, in line with global disclosure best practices.

Scope 3 – Value Chain Emissions

Scope 3 remains the most challenging - and arguably the most transformative aspect of net-zero planning. With the new flexibility introduced in v2.0, companies must now shift from broad-stroke commitments to targeted interventions. This means conducting hotspot analysis across upstream and downstream emissions, identifying where the biggest impacts lie, and prioritising action accordingly. A company whose emissions are primarily upstream may choose to engage suppliers, develop preferred supplier lists based on climate performance, or co-invest in decarbonisation solutions. Downstream-heavy companies might reengineer products, invest in circularity, or launch low-carbon product lines to meet “green revenue” targets.

Importantly, large companies are now expected to help suppliers along their SBTi journey. This includes offering tools, guidance, and potentially financial support to ensure smaller partners, many of whom may lack internal expertise, can participate in science-based climate action. Companies that fail to invest in this capability risk losing supply chain visibility and credibility.

At a strategic level, Scope 3 under v2.0 shifts from being a compliance headache to a competitive differentiator. Firms that can decarbonise their value chains without compromising cost or performance will be well-positioned to lead in a market increasingly defined by climate-conscious customers, investors, and regulators.

How KarbonWise Can Help

Navigating the new SBTi framework requires more than technical knowledge, it demands strategic foresight and cross-functional execution. At KarbonWise, we support businesses across all stages of their net-zero journey. Whether you're just getting started with target setting or need help adapting your validated targets to the new Version 2.0 criteria, we provide the data, tools, and expertise to ensure you stay compliant, credible, and competitive.

Our platform simplifies the technical complexities of SBTi alignment by aggregating, calculating, and tracking emissions data across Scopes 1, 2 and 3. Designed as a one-stop solution for emissions management, it is fully aligned with SBTi requirements. We are also embedding AI agents into the platform to further automate and streamline your net-zero journey, making it easier to stay on track and up to date.

In addition to our technology offering, we provide flexible consulting support to meet businesses where they are. Whether you require a high-level strategic roadmap or more specific techno-commercial planning, for example, around Scope 1 reductions, our team is equipped to help. Much of this consulting capability is included as part of our platform offering at no additional cost, ensuring accessible and scalable support.

KarbonWise has always taken a Scope 3-first approach, which makes the enhanced focus in Version 2.0 on Tier 1 supplier engagement and material emissions a natural fit with our methodology. Our platform is built to enable targeted supplier engagement at scale, empowering companies to take meaningful, credible action where it matters most.

SBTi Version 2.0 marks a new chapter in corporate climate action. With KarbonWise as your partner, you don’t just set science-based targets, you achieve them!

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