SBTi Net-Zero Standard v2.0: What Companies Need to Know

August 18, 2026

SBTi Net-Zero Standard v2.0: What Companies Need to Know About Transition Plans, Scope 3 and Carbon Removals

The Science Based Targets initiative (SBTi) Corporate Net-Zero Standard v2.0 marks a step change in corporate climate action. While the original standard helped drive widespread target-setting, v2.0 shifts the focus squarely to delivery and progress, requiring companies to demonstrate how targets will be achieved, governed and evidenced over time.
.

The new standard is set to take effect from 1 February 2027. A transition period through the end of 2027 gives organisations time to assess requirements and prepare their approach. Companies should act now to ensure readiness and strategically plan their energy and carbon credit procurement. At its core, the update reflects a maturing market. Investors, regulators and other stakeholders are no longer asking whether companies have targets, but if those targets are credible, achievable and backed by action.
.

There are four significant changes organizations should understand.
.

1. From Climate Targets to Transition Plans
.

Companies will be expected to publish detailed, decision-useful transition plans within a defined timeframe following target validation. These plans must go beyond high-level ambition and outline how targets will be delivered in practice including

Key actions
Implementation timelines
Costs and financing requirements
Governance structures
Accountability mechanisms

Net-zero is no longer a sustainability commitment that sits alongside the business. Instead, organisations must embed climate goals into capital allocation decisions, procurement strategies and executive accountability frameworks. This complements the Australian Accounting Standards Board (AASB) S2 requirements to publish details of how organisations plan to manage and fund the actions required to adapt to their identified climate risks.
.

2. A Revised Approach to Scope 3 Emissions

The updated standard raises expectations around coverage, data quality and transparency, including more rigorous Greenhouse Gas (GHG) inventories and assurance requirements. At the same time, SBTi acknowledges the complexity of value chains by enabling multiple target-setting approaches depending on the nature of emissions. Companies may move beyond pure absolute reduction targets to incorporate supplier alignment, activity-level interventions, and sectoral or system-based pathways. This opens the door to more practical levers such as circularity strategies, product design changes, and participation in shared infrastructure or industry initiatives where direct control is limited. This approach is pragmatic while raising the bar on governance, measurement and execution.
.

3. Formalising Responsibility for Residual Emissions Through Carbon Removals

Another notable change is the expectation that companies take increasing responsibility for emissions that persist over time as they decarbonise. Rather than deferring action until they approach their net-zero target year, organisations will be expected to address ongoing emissions through a structured approach. This creates a more defined role for carbon markets, not as a substitute for value chain emissions reduction, but as a complementary mechanism that supports additional climate action through high-quality carbon removals.
.

Importantly, carbon credits still cannot be used to reduce an organisation's carbon footprint and will continue to be reported separately. However, there is now a responsibility to invest in carbon removals alongside decarbonisation efforts. As a result, companies will need to plan their approach to carbon credits and removals well in advance by:

Assessing future carbon removal demand
Securing access to high-quality supply
Evaluating market availability and pricing risks
Establishing robust governance frameworks to support credible claims

.
4. Higher Expectations for Scope 2 Emissions and Renewable Energy Procurement

One of the most immediate and practical shifts sits within Scope 2. While existing long-term renewable energy contracts will be grandfathered, the direction of travel is clear: companies will need to demonstrate that their energy strategy is driving real-world decarbonisation outcomes, not just relying on unbundled certificates.
.

Under SBTi v2.0, organisations are generally expected to source environmental attribute certificates (EACs) from regions that are deliverable to their load. This strengthens the link between procurement decisions and physical electricity systems. However, there is flexibility where aggregation makes sense, particularly through long-term instruments such as power purchase agreements (PPAs).
.

In practice, this reinforces the role of structured procurement strategies, including PPAs, over simple certificate purchasing. There is also a notable shift in how time is considered. Companies will be asked to report the extent to which renewable electricity is matched over time, effectively disclosing the percentage of consumption covered on a 24/7 basis. While hourly matching is not yet mandatory to meet SBTi targets, the introduction of time-based reporting signals a clear future direction.
.

What SBTi v2.0 Means for Companies

Beyond these shifts, v2.0 introduces a more dynamic model of accountability. Companies will be expected to:

Track progress regularly
Report against targets on an ongoing basis
Reassess performance periodically
Update decarbonization pathways when needed
Revalidate targets through defined review cycles

This creates an ongoing loop of target-setting, implementation, and revalidation; moving net-zero from a static commitment to a continuous management process.
.

How Schneider Electric can help

SE Advisory Services can support with stress-testing existing targets against the new requirements, developing forward-looking carbon market and renewable energy strategies, and building integrated transition plans that align operational decarbonisation, energy procurement and supply chain action. Those that move quickly will be best placed not only to comply, but to secure supply, manage cost exposure and strengthen the credibility of their net zero journey.
.

Want to understand more? Access our recent webinar “Corporate Net-Zero Standard Version 2: What Does It Mean for Your Strategy?”