The final standard is the result of a development process spanning several years, including two public consultation phases, and builds on proven elements from Version 1.0.

In this post, we provide an overview of the SBTi’s new strategic narrative, its revised governance requirements, and the new target-setting methodologies for Scope 1, 2, and 3.

The SBTi’s New Narrative: Best Efforts, Real Barriers

Until now, the SBTi has been known as a strict guardian of science-based climate targets. Although the SBTi cannot impose sanctions for failing to meet targets, the risk of publicly failing to meet a target apparently acted as a deterrent for some companies and likely contributed to ambitious targets sometimes being avoided altogether. Often, it was unclear how the emissions reductions required by the SBTi could be achieved technically and economically. Setting an SBTi target therefore required the courage to commit to goals whose full feasibility had not yet been established.

With the new Net-Zero Standard, the SBTi is aligning its narrative with the reality facing companies. While emissions reductions remain central to 1.5-degree-compliant targets, they are now based on a “best-effort” approach. Specifically, this means:

Companies must demonstrate that they have exhausted all measures within their sphere of influence—only then will the SBTi acknowledge that a target has not been met, provided that external factors such as a lack of technology or regulatory barriers have demonstrably prevented the target from being achieved.

New Requirements for Governance and Transparency

The new standard now goes beyond simply setting targets and, for the first time, requires Category A companies to translate their climate targets into binding transition plans and embed them at the highest level of the organization. Specifically, companies must publish a transition plan no later than 15 months after their targets have been validated. The SBTi bases its approach on established standards such as the Transition Planning Taskforce (TPT) framework.

In addition to these changes, the standard introduces further specific requirements that companies must meet starting in 2027:

• Auditing the base-year emissions inventory (the emissions inventory for the reference year to which all targets refer) is mandatory for Category A companies
• Identification of emission-intensive activities (e.g., steel, shipping, the use phase of sold products)
• Quantification of FLAG emissions (emissions from deforestation, agriculture, and land use) for all companies

New Goal-Setting Methods Starting in 2027

Under the first version of the Net-Zero Standard, the flexibility in setting SBTi targets was limited. While companies could tailor their targets by choosing their target boundary, they were restricted in their choice of the actual methodology. Most companies therefore set absolute reduction targets—which, however, are not always the best choice depending on the company’s context. The new Standard 2.0 specifically supplements existing methods with activity-specific approaches: In the future, companies will also be able to define their own targets for individual emission sources or categories, rather than having to commit to a single overarching overall target. Absolute reduction targets remain an option, but are supplemented by meaningful alternatives.

Important: All targets—including short-term Scope 3 targets—must be consistent with the 1.5-degree ambition level. In addition, Scope 1, 2, and 3 emissions must be reported in separate targets going forward; combined targets are no longer permitted.

Scope 1

In addition to overarching absolute reduction targets, there are now so-called asset transition targets—facility-specific transition targets for particularly emission-intensive activities. This approach uses a fixed emissions budget and takes into account the reality that emissions from large industrial facilities are not reduced continuously, but rather through one-time investments. The decarbonization of such facilities cannot be postponed until 2050: Rather, the emissions budget establishes a binding deadline by which the facility must be decarbonized. Those who choose this path must submit a long-term Scope 1 target and a corresponding transition plan in addition to the short-term target. The long-term ambition level for Scope 1 is a complete reduction to zero by 2050 at the latest.

Scope 2

For Scope 2 targets, companies will have three options in the future: a site-specific absolute reduction target, a low-carbon electricity alignment target, or a combination of both. Under the site-specific approach, the purchase of green electricity is not directly factored in—however, it can be recorded and counted toward a separate low-carbon electricity target. Regarding long-term ambition levels, the SBTi differentiates based on economic region: industrialized countries (Advanced Economies) must reduce their Scope 2 emissions to zero by 2040, while emerging and developing economies (Emerging Markets and Developing Economies) must do so by 2045.

Scope 3

Companies can continue to set an overarching absolute reduction target for Scope 3 or define a separate target for each relevant emissions category. The latter approach is more practical: it allows companies to focus their efforts specifically on areas where reduction measures are actually effective.

Also new is:

• Short-term target coverage must include all Scope 3 categories that account for at least 5% of total Scope 3 emissions.
• In the long term, 100% of Scope 3 emissions must be tracked and reduced. The new minimum ambition level for absolute reduction targets is –90.9% by 2050.

Market-based instruments can now be used for Scope 1 and Scope 3 for the first time

The use of market-based solutions to achieve Scope 2 targets has long been established practice. The SBTi is now extending this principle to Scope 1 and Scope 3 for the first time and establishing binding quality criteria for this purpose—in coordination with the GHG Protocol, which is simultaneously developing its own standard for market-based solutions and has announced that it will be released in 2028.

This is particularly relevant for Scope 1: In the future, companies will be able to count instruments such as green gas certificates toward their climate targets—but only in cases where direct emissions reductions are demonstrably not feasible. For Scope 3, the new regulation opens up similar possibilities: Companies that do not have direct access to their suppliers or cannot implement physical reduction measures in the supply chain for specific activities may use market-based mechanisms to address these emissions. Market-based mechanisms are therefore not a substitute for a company’s own reduction measures, but rather a supplement for cases in which those measures reach their limits.

Good to know: The new regulations are intended to apply even to targets that fall below the current V1.3.1 standard.

Our Conclusion

The new standard combines established elements from the previous standard with the lessons learned from a decade of SBTi targets. Greater flexibility in setting targets ensures that companies can establish more individualized and tailored goals. At the same time, the new standard is significantly more complex than the previous one. It is encouraging that the SBTi is incorporating feedback and thereby bridging the gap between scientific perspectives and corporate reality.