Who is this article for?

This article is for any company that is:

• Planning to set SBTi targets for the first time.
• Intending to renew existing net-zero target commitments under SBTi.
• Requiring or encouraging their supply chain to set SBTi targets, as the updated version will apply to suppliers.

What is the SBTi Corporate Net Zero Standard V2?

The SBTi Corporate Net Zero Standard Version 2 (CNZS V2) is a comprehensive update to the framework companies use to set, validate, and report on science-based net-zero targets at a corporate level. Where the current standard focused primarily on target ambition at the point of approval, V2 goes significantly further by introducing cyclical performance reviews, mandatory transition plans, stricter emissions accounting, and new accountability mechanisms.

V2 marks a fundamental shift in focus from ambition to implementation, accountability, and performance. It is no longer enough to set a target, companies must now demonstrate they are genuinely delivering on them.

Timeline

• V2 was published on 11th June 2026 .
• Validations for V2 will open on 1st February 2027.
• Companies may continue setting targets under the current Corporate Net-Zero Standard (Version 1.3) and Near-Term Criteria (Version 5.3) until 31 January 2028.
• From 1 February 2028, CNZS V2 will become mandatory for all new target submissions.
• Companies with existing approved targets will not be required to immediately revise them. Targets will continue to remain valid until the company reaches its next five-year target renewal cycle.

Important note for real estate companies

Those within scope of the Buildings Criteria cannot use CNZS V2 until a compatible Buildings Criteria is released in 2027. However, companies should prepare for compliance with the updated standard.

Applicability to companies setting SBTi targets

CNZS V2 introduces a new company classification that replaces the previous SME/corporate split:

1. Category A – expected to lead the transition:

• Large companies globally
• Medium-sized companies in high-income countries

2. Category B – greater flexibility granted:

• Medium-sized companies in low, lower-middle, and upper-middle-income countries
• Small and micro-sized companies globally

Category B companies receive more time and flexibility, but both categories are subject to the core requirements of the standard. Category A companies face the most stringent obligations, including mandatory third-party assurance of target performance and progressive obligations around addressing ongoing emissions from 2035. All companies classified as ‘corporates’ under Version 1, within the UK, will qualify as Category A.

What is changing?

The new version is not a minor update. SBTi is making significant changes to the new CNZS V2, which will impact all companies planning to set and validate net zero targets. It may require companies to review and update their approach to emissions accounting, reporting, and net-zero planning.

The following changes are the most critical for companies:

1. Ongoing validation and accountability: Companies must regularly demonstrate progress through entry, validation, and 5-year renewal reviews, with performance assessed throughout the target lifecycle.
2. Transition plans: All companies must publish a credible, time-bound transition plan explaining how targets will be achieved, managed, and governed.
3. Annual and end-of-cycle reporting: Mandatory annual and end-of-cycle reporting is required, including explanations and corrective actions where targets are missed. For Category A companies, third-party assurance is compulsory, a requirement that brings material cost and lead-time implications. Companies will need to identify and engage suitable assurance providers well ahead of their target submission or renewal date.
4. No exclusions permitted from the GHG inventory: Companies can no longer exclude emissions from their inventory, even if they fall below the materiality threshold.
5. Companies can no longer set targets on market-based emissions: Companies are required to use the physical inventory (location-based approach) to set their scope 2 targets.
6. Revised baseline year rules: Baseline emissions must use the most recent year with complete, third-party assured data year unless it is not representative of a typical year. This rule, combined with the assurance requirement, means many companies will need to revisit their existing baseline before resubmitting.
7. Separate Scope 1, 2 and 3 targets: Companies must set individual targets for each emissions scope, with new requirements and methodologies for each. This increases the technical complexity of target-setting.
8. Stricter Scope 3 coverage: All material scope 3 categories must be included within the target boundary, i.e. any category representing more than 5% of total Scope 3 emissions. For many companies, this may significantly expand the boundary of their existing targets.
9. Ongoing Emissions Responsibility (OER): From 2035, Category A companies must progressively address ongoing emissions, ultimately neutralising residual emissions at net zero, through eligible carbon removals such as direct air capture or nature-based solutions. A credible carbon removal strategy will need to be in place well before 2035 with timely planning for investments needed to procure high quality carbon removal credits that meet SBTi requirements.

Looking ahead: what is coming in 2027

SBTi will release updated sector guidance, including the Buildings Criteria, in 2027, enabling organisations to set targets using CNZS V2. Two further developments are expected in parallel:

• SBTi Assurance Framework: This will establish the policies, processes, and requirements that ensure applicable criteria in SBTi standards are fulfilled during validation and assessment.
• SBTi Claims System: Rules, conditions, and processes for companies to make claims about their targets in accordance with SBTi standards, ensuring all communications are accurate, consistent, credible, and transparent

Other developments:

The Greenhouse Gas Protocol (GHG Protocol) is the global standard for calculating and reporting corporate emissions. SBTi requires companies to calculate their emissions aligned to GHG Protocol prior to setting targets. It is undergoing its most significant revision over two decades, which are scheduled for final publication in 2027, in alignment with CNZS V2.

This will impact how companies calculate their emissions inventory and submit targets to SBTi. Here is a summary of key proposed changes:

Scope 2 changes:

• Hourly and regional matching for renewable energy
• Stronger EAC criteria for renewable energy procurement
• Clearer location-based hierarchy
• Better reflection of the real-world impact of electricity use

Scope 3 changes:

• Mandatory reporting of major emissions categories (over 5%)
• Separating spend-based data from activity-based data
• Stronger supplier engagement and longer-term plans to improve data quality

What should companies do now?

Even with mandatory adoption not required until 2028, early action is essential. Companies that wait until 2027 to begin planning risk finding themselves unable to meet assurance, data, or transition plan requirements in time for a 2028 submission. Companies should:

• Assess how your company is classified under the new Category A/B framework and understand the obligations that apply.
• Review your current baseline year against the new requirements and identify whether third-party assurance will be needed.
• Map your Scope 3 emissions categories against the 5% threshold to identify which must now be included in target-setting.
• Begin transition plan development in line with SBTi’s requirements, ahead of your next target submission or renewal cycle.
• Review renewable energy market certificates (REGOs/EACs) to ensure they meet the stricter requirements introduced by V2.
• Plan for carbon removal investments given the mandatory OER requirements for Category A companies from 2035.
• Monitor Buildings Criteria developments if you operate within the real estate sector.