SBTi V2.0 is finally out, should your company adopt it or stay in the SBTi V1 lane?
The Science Based Targets initiative has published the final version of the Corporate Net-Zero Standard Version 2.0 (V2.0). The new standard marks an important milestone in corporate climate target setting by reworking a framework centered primarily on target ambition into a more comprehensive implementation system.
This shift toward climate ambition delivery and accountability has been developing for some time. In previous articles, we discussed how V2.0 represents a new paradigm for corporate climate strategies, and how climate credibility is increasingly moving from target setting to transition planning. The same change is also noticeable in the upcoming ISO Net-Zero Standard, where the focus has expanded beyond ambition and accounting into credible delivery, governance and continuous improvement. The draft ISO Net Zero Aligned Organizations Standard (ISO 14060) was made available on June 17, 2026 for a 12-week public consultation period to ISO’s national members in more than 170 countries.
The final V2.0 confirms this shift in SBTi’s strategy by introducing clearer target architecture, company categorization and transition planning requirements. It has also expanded target-setting options and put forth stronger expectations for Scope 2 electricity procurement, a materially redesigned Scope 3 framework, a target implementation hierarchy and end-of-cycle assessment, and a new recognition architecture for ongoing emissions responsibility.
At the same time, SBTi has not required companies to immediately move to the new framework, even acknowledging that the Corporate Net-Zero Standard Version 1.3.1 (V1) will remain applicable as an on-ramp to SBTi. Companies will have an extended transition period to submit targets under V1, and existing targets will remain valid for their full target cycle (e.g., even if their target timeframe ends after 2030).
V1 companies, however, will still be able to align with the new framework. SBTi has confirmed that several V2.0 elements will be applicable for legacy targets through transitional arrangements, including:
- Company categorization: companies under specific thresholds in Corporate Net-Zero Standard V2.0 may request to follow a simplified route for Small and Medium Enterprise under V1.
- Updated absolute contraction methodology: The new target-setting method ensures companies will be able to easily transition to V2.0 as it is already integrated into all SBTi tools and Validation Portal.
- Target implementation hierarchy: By allowing the use of market instruments, the V2.0 mitigation hierarchy can be applied to targets set using V1.
- Enhanced progress reporting: Per SBTi’s recommendation, companies using V1 can proactively adopt third-party assurance practices for end-of-cycle progress reporting.
- “Best-efforts” framing: Under both V1 and V2.0 frameworks, targets are pursued on a “best efforts” basis. This means that companies must keep reporting progress, barriers, and how they’ll address them, but with no minimum progress criteria applicable until the end of the first V2.0 cycle.
- Eligibility for ongoing emissions recognition: Starting in 2027, SBTi will allow companies under both V1 and V2.0 to be recognized for addressing their ongoing emissions (subject to integrity criteria), with the broader Ongoing Emissions Responsibility framework detailed in late 2026.
The continued acceptance of V1 poses a practical and strategic question for companies setting science-based targets for the first time and companies that already hold targets approved under V1: Should they set or keep their V1 targets or align their targets with V2.0? The answer is not the same for every organization. Although V2.0 is more strategic and flexible in some areas, and more closely connected to implementation, it is not automatically a better option for everyone. It also comes with greater expectations around governance, evidence, assurance, progress assessment and claims.
For both new entrants and companies with approved V1 targets, deciding which lane is right depends on the timing, complexity and maturity of their climate strategy. The following questions can support the decision-making process for your company:
1. How close is your company to a credible target submission?
Many companies became familiar with the core logic of SBTi target validation under V1: define the organizational boundary, calculate the GHG inventory, select a base year, set targets using eligible methods and report progress annually. V1 remains a credible and well-established route, particularly for companies that are already close to submission and do not need to redesign their climate strategy.
For V2.0, companies will need to consider governance, transition planning, implementation levers, market instruments, assurance, end-of-cycle assessment, claims and recognition programs. For companies seeking to embed climate targets into corporate strategy, this may be a better fit. But it will entail a broader assessment of whether the organization is ready to manage SBTi targets as part of its business planning and delivery architecture.
Companies that are close to submission and have a clear target package may benefit from staying with V1. Companies that are redesigning their climate strategy, preparing for post-2030 targets, or seeking to integrate targets into governance and transition planning should begin preparing for V2.0.
2. Which company category will apply to you?
Under V1, SMEs had access to a more streamlined target-setting route, while the regular route applied broadly to larger companies.
V2.0 introduces a formal distinction based on company size and geography. This categorization affects the level of requirements companies must meet, including Scope 3 target setting, assurance and transition plan disclosure.
The following table describes the V2.0 thresholds and conditions for different company categories.
| Thresholds and conditions | Geography* | Company Category |
|---|---|---|
| Meets at least one of the following: – Net turnover: ≥ €450 million – Full Time Equivalent: ≥1,000 | Any country | Category A |
| Scope 1 and 2 emissions are ≥ 10,000 tCO2e, or at least two of the following: – Balance sheet: ≥ €25 million – Net turnover: ≥ €50 million – Full Time Equivalent: ≥250 | High-income countries | Category A |
| Does not meet the Category A criteria in the rows above | Category B |
*Geography is determined by the jurisdiction of incorporation of the ultimate parent company and is classified using the World Bank economic income categories.
This important classification is designed to make V2.0 more proportionate. It recognizes that not all companies have the same resources, data maturity or implementation capacity. For some smaller companies or companies based in lower-income countries, V2.0 may offer a more tailored framework than the previous version. For others, the SME or V1 validation routes may remain tactically attractive during the transition period.
Before choosing a framework, companies should first identify which route they are eligible for and which category they are likely to fall into under V2.0, as the choice will determine the technical complexity and scale of preparation required.
3. Does your climate strategy have board-level backing?
While transition planning is strongly encouraged and increasingly expected under V1, V2.0 makes governance and transition planning an explicit requirement. Companies will need board-level accountability for targets, documented oversight of implementation, and transition plans that explain how targets will be delivered. For larger companies, disclosure expectations also become more relevant.
A target submission under V2.0 will not only ask whether the ambition calculation is correct, it will also ask whether the organization has the governance structures needed to pursue the target credibly. For companies in which climate strategy falls mostly within the sustainability function, this may be a challenge. V2.0 requires broader internal alignment with finance, procurement, operations, product strategy and executive leadership. This aligns with emerging regulatory expectations, including transition plan requirements under frameworks such as CSRD and ESRS, but it also raises the preparation burden.
Companies should remain on the V1 route if governance sponsorship is not yet mature and submission is otherwise ready. Companies should build toward V2.0 if target setting is part of a broader corporate strategy, transition planning or regulatory-readiness process.
4. Would combined or separate targets serve you better?
In the V1 framework, combined Scope 1 and Scope 2 targets are allowed, provided the ambition of the individual components can be assessed. This simplicity can be useful, particularly for companies with relatively straightforward operational emissions and a limited need to manage Scope 1 and Scope 2 separately.
V2.0 requires separate Scope 1, Scope 2 and Scope 3 targets for larger companies. Aggregation remains possible for communication purposes, but the underlying targets are expected to be set and assessed separately.
In some cases, V2.0 may create clearer accountability: As Scope 1 decarbonization, Scope 2 electricity procurement and Scope 3 value chain transformation involve different levers, owners and timelines, separate targets can make those differences more visible. But for companies that value simplicity, have limited operational complexity, or are preparing a near-term submission, the V1 framework may still be more practical.
The lane choice depends on whether simplicity or accountability is the priority. If a combined Scope 1 and Scope 2 target is strategically important, the V1 route may remain attractive. If separated target accountability supports delivery efforts, V2.0 may be the better direction.
5. Have you mapped your Scope 3 obligations?
For many companies, Scope 3 will be the most important deciding factor.
Requirements under the V1 framework are well known: Scope 3 targets are required when emissions exceed 40% of the total, with coverage thresholds of 67% for near-term and 90% for long-term targets, using familiar methods such as absolute or intensity reductions and supplier or customer engagement.
V2.0 takes a different approach by focusing on the most significant Scope 3 categories. It introduces emissions-intensive activities and justified exclusions, and expands target-setting options to include supplier and customer alignment, volume alignment, and product use and end-of-life strategies.
This shift can offer real strategic value, especially for companies with complex value chains, by linking targets more directly to procurement, product strategy and customer engagement. However, it also requires more judgment in defining scope, selecting methods and explaining implementation.
Companies should keep to the V1 framework if existing methods are sufficient and submission is feasible. They should move to V2.0 if Scope 3 is strategically important, difficult to influence or better addressed through commercial levers.
6. What role do market instruments play in your climate strategy?
The use of market instruments is a key change in V2.0. Under the V1 framework, carbon credits do not count toward science-based targets, and market-based Scope 3 accounting is not allowed. Emissions reductions must be reflected in the company’s inventory, while credits sit outside target progress.
V2.0 maintains this distinction but introduces a more nuanced role for market instruments as implementation levers. Companies are expected to prioritize direct reductions, but may use actions in shared systems or at the sector level where direct action is limited. Market instruments can support these efforts if they meet integrity criteria and are reported separately where required.
This change creates both opportunity and risk. Instruments such as book-and-claim or mass-balance models can help scale lower-carbon solutions in complex value chains, but companies must clearly distinguish between inventory reductions, system-level actions, and broader contribution claims.
The V1 framework remains simpler and more conservative. V2.0 may be more useful for companies that rely on market instruments to drive value chain or sector-level change, provided they apply strong guardrails and communicate carefully.
7. Are you ready for ongoing progress reporting?
Under the V1 framework, companies must report target progress annually, review targets at least every five years, and recalculate or revalidate targets when significant changes occur. This creates important accountability, but the framework is still largely centered on target validation and periodic updates.
V2.0 introduces a more formal end-of-cycle assessment model. Companies will need to assess progress at the end of each target cycle, explain barriers, report implementation outcomes, and set new targets for the next cycle. For larger companies, assurance expectations will also become more prominent.
This version will bring SBTi closer to a continuous improvement model, where target delivery becomes a recurring evidence process, not a one-time validation milestone. It will require companies to improve internal tracking, document actions more clearly, strengthen data controls, and prepare to explain deviations from expected progress.
Companies that are not ready for this level of recurring assessment may be better off holding to the V1 framework during the transition period. Companies already building governance, reporting and assurance processes around climate performance should position for V2.0.
8. Do you want formal recognition for action beyond your value chain?
The final lane-choice question concerns mitigation beyond the company’s own value chain.
Under the V1 framework, SBTi encourages beyond value chain mitigation (BVCM), but these actions do not count toward meeting science-based targets.
V2.0 formalizes this through ongoing emissions responsibility, introducing an optional recognition program and signaling future requirements from 2035 onward. This creates a clearer structure for carbon finance and responsibility claims, but also requires careful separation between target delivery and voluntary contributions. Reducing Scope 1, Scope 2 and Scope 3 emissions remains the core priority.
Companies seeking a simple BVCM approach may stay with the V1 framework, while those aiming for formal recognition or a more developed carbon finance strategy should lay the groundwork for V2.0.
How can Sustainserv help?
The publication of SBTi Corporate Net-Zero Standard V2.0 does not mean every company should immediately switch lanes. While the SBTi framework will remain central to climate credibility, its shift toward implementation and target delivery means companies have a strategic decision to make between now and January 2028.
V1 remains credible and may suit companies that are close to submission, rely on combined Scope 1 and Scope 2 targets, have workable Scope 3 methods, or are not yet ready for V2.0 governance requirements.
V2.0 is more strategic and implementation-focused, but is also more demanding in its expectations around governance, evidence, assurance and transition planning. It is better suited to companies updating their climate strategy, preparing for future targets, or integrating targets into business planning.
Sustainserv can help companies assess which lane is right for them, prepare credible target submissions, and build the transition planning and governance structures needed to make climate ambition deliverable.
Get in touch. We are happy to tell you more about it.
