The Science Based Targets initiative (SBTi) has unveiled its draft Corporate Net Zero Standard 2.0, and with it, a wave of significant potential changes for corporate sustainability. The new standard aims to drive deeper action on climate, but its implications may feel complex at first glance.
This blog will demystify some of the key elements of the new SBTi standard and help you understand what your organization can do to adapt, thrive, and lead in the climate economy.
What to know about the Corporate Net Zero Standard 2.0
Changes are coming, but not immediately
The rollout of the new standard isn’t happening overnight. Companies with approved near-term and net-zero SBTi targets or those planning to submit targets will need to align with the updated standards starting in 2027.
For now, companies can still submit or revalidate targets using the current framework through 2025 and 2026. That means there’s time to prepare—and we suggest digging into the details to determine the impacts on your organization. Sustainability leaders should use this time to understand and plan for what’s ahead.
Importantly, the standard itself is not final: a public comment period commenced with the proposal and will close on June 1, 2025.
Changes for scope 1-3 targets
Under the draft standard, the way businesses set and structure targets will fundamentally change.
Higher ambition for scopes 1 and 2
Scope 1 and scope 2 targets, previously allowed to be combined, are now required to be set separately. For scope 1, companies must also address operational emissions from fuels that were not emphasized under the previous standard, and potentially determine how these can be neutralized with carbon removals.
For scope 2, the new location-based target requires companies to play a part in directly mitigating emissions from local grids. No more relying on unbundled renewable energy credits (RECs) that are generated far away from your operations—this change pushes companies to invest in geographically matched renewable energy.
Revamped scope 3 framework
In an effort to focus scope 3 actions on the most emissions-intensive parts of the value chain, key changes include:
- Significant activities: Companies must disclose and set targets for specific, SBTi-defined “emissions-intensive activities”—such as agricultural commodities and metals, transport-related emissions, and other activities where abatement is critical to achieve net zero—across their value chain.
- Supplier engagement: A new mandate requires 100% of tier 1 suppliers associated with emissions-intensive activities to set 1.5°C-aligned targets by 2030. Remaining tier 1 suppliers must align by 2050.
These changes would intensify the network effect by requiring suppliers to set targets. However, that intensification is now concentrated in emissions-intensive activities rather than across all business activities.
More rigorous reporting for greater transparency
The new standard raises the bar for accountability. Under the updated guidance, companies will need to:
- Publish a formal transition plan outlining how they will achieve their targets within one year of target validation.
- Annually disclose scope 1 and scope 2 inventories. Publicly report scope 3 inventories at least every three years.
- Prepare for potential assurance requirements, with SBTi considering limited assurance for inventories and target progress reporting.
This level of rigor is a step forward, not just for stakeholders demanding transparency, but for businesses themselves. For example, organizations will gain detailed insights into whether their suppliers are making progress toward targets.
Indirect mitigation gains traction; beyond value chain mitigation gets recognition
The updated framework introduces new tools and mechanisms to complement direct decarbonization efforts:
- Indirect mitigation: Recognizes tactics like book-and-claim methods (e.g., clean power contractual instruments, sustainable aviation fuel) to cover interim scope 2 and 3 reductions. However, this option is presented as time-limited, making it essential for businesses to move towards direct purchase over time instead of book-and-claim as those options become more available with market growth.
- Beyond Value Chain Mitigation (BVCM): Carbon credits and other mechanisms aimed at mitigating ongoing emissions will be formally acknowledged—but only as supplementary tools for ambitious climate strategies.
What does this mean for your business?
This new standard is an opportunity for companies to progress their sustainability leadership. Here are our recommended actions:
Provide feedback on the draft standard
The SBTi is inviting public consultation on critical elements of the framework, including supplier engagement targets, scope 1 removal guidance, and indirect mitigation measures. Sustainability leads can leverage their industry expertise to shape SBTi’s final guidance.
Participate in the consultation here. In the meantime, continue to validate targets under the existing framework, as the draft guidance may still evolve before finalization.
Begin developing a transition plan
Under the new standard, a transition plan is no longer optional. Start thinking now about how your organization will meet its decarbonization targets while integrating direct mitigation strategies. Areas to focus on include:
- Localized renewable energy sourcing
- Targeted supplier engagement
- Carbon removals for scope 1 emissions
- Indirect mitigation potential
Upgrade measurement and reporting capabilities
The updated standard sharpens the focus on measurement granularity, particularly for scope 3. Preparing now to measure emissions and improve supply chain traceability will give you a more efficient and adaptable foundation from which to report for years to come.
If your organization is unsure where to begin, partnering with a platform like Watershed can provide clarity and structure for implementing a data strategy that aligns with the new framework.
