SBTi Corporate Net Zero Standard Consultation: What’s changing & how to act early

The initial draft of the SBTi’s Corporate Net Zero Standard Version 2.0 raises expectations for scope 3 action, climate transition planning and early engagement with carbon markets to meet climate goals.

As global climate ambitions intensify, businesses face growing pressure to develop credible, science-based pathways to net zero. The Science Based Targets initiative (SBTi), a leading authority on corporate decarbonisation, is currently updating its Corporate Net Zero Standard. The draft revisions reflect significant developments in both expectations and available tools for companies seeking to align their climate strategies with global targets.

This updated standard draft signals a greater focus on tackling value chain (scope 3) emissions through new mechanisms, clarifies the role of carbon removals and beyond value chain mitigation (BVCM) and makes a comprehensive, operational climate transition plan a mandatory requirement for validation. For senior leaders, understanding these shifts is critical to bridging the gap between current climate reporting and future compliance and competitiveness.

Strengthening scope 3 action: From data gaps to practical solutions

Scope 3 emissions, those generated across a company’s value chain, remain one of the most complex aspects of corporate climate responsibility. The primary gap for most companies is the lack of precise, real-time emissions data from every supplier. The updated SBTi draft addresses this head-on by providing pragmatic solutions that move beyond perfect data, encouraging companies to focus on where they have the greatest leverage.

To make progress despite data gaps, the draft standard introduces more flexible, market-based mechanisms:

• Supply shed approach: For companies struggling with traceability in complex supply chains (e.g., agricultural commodities), this allows for investment in emission reductions within a specific sourcing region, rather than requiring direct supplier-level data.
• Book-and-claim system: This mechanism allows a company to purchase verified emission reduction certificates from a supplier in their sector but outside their direct value chain, providing a pathway for action while more robust traceability systems are developed.

The strategic question for leadership is no longer if you can act on scope 3, but how. The key is to assess which of these new mechanisms best fit your business model and begin piloting them, while simultaneously strengthening direct supplier engagement programs.

Clarifying beyond value chain mitigation and neutralisation: From cost centre to strategic investment

Another focus area of the draft standard is the evolving treatment of residual emissions and carbon removal strategies. Under current guidance, companies must neutralise residual emissions from the net zero target year onward by procuring verified carbon removals. The revised draft introduces interim removal targets for direct emissions (scope 1), durability criteria for removals and options for addressing scope 3 residuals through collaborative actions with value chain partners.

While BVCM, financing climate action outside your value chain, remains voluntary, the draft standard now offers formal recognition for early action. This directly addresses a crucial strategic gap: managing future risk. As net zero deadlines approach, the demand for high-quality carbon removals is expected to far outpace supply, leading to price volatility and scarcity. Proactive companies are advised to:

• Build internal knowledge of carbon credit markets and certification standards
• Develop a comprehensive carbon credit procurement strategy
• Integrate carbon removal costs into long-term financial planning

Early engagement not only secures access to high-quality projects but also provides price stability and strategic advantages as regulations tighten.

Climate transition plans: From vision to operational strategy

Perhaps the most substantial change introduced in the SBTi’s draft standard is the elevated role of climate transition plans. While earlier guidance recommended transition plans, the new draft makes them a mandatory, central component of corporate climate action.

Key requirements include:

• Comprehensive coverage of governance, strategy, financing, metrics, stakeholder engagement and enabling actions
• Publication of transition plans within 12 months of SBTi target validation
• Annual reporting on implementation progress, including emissions reductions and climate-aligned capital allocation

This transforms the transition plan from a sustainability report into a core business strategy document. It requires active, integrated involvement from the CFO to align investments, the COO to deliver operational changes, and the board to ensure accountability. The critical question for leadership is: Is our current climate plan robust enough to stand up to this level of scrutiny and guide our capital allocation decisions for the next decade?

The message from the SBTi and regulators is increasingly clear: climate transition planning is no longer optional. It is a strategic imperative that demands early, informed action across value chains, financial structures, and governance systems. Companies that rise to meet these higher standards today will be better equipped for tomorrow’s regulatory landscape and climate challenges.

Looking ahead: Building resilient climate strategies

The SBTi’s evolving Corporate Net Zero Standard draft signals a new era of climate accountability where detailed, actionable plans are essential. As regulatory frameworks like the CSRD gain momentum, the expectations of investors and financial institutions are rising in tandem. They are increasingly scrutinising the credibility of corporate climate plans to assess long-term risk and resilience in their own portfolios.

Early movers who embed a robust, operational climate strategy today will not only ensure compliance but will also strengthen their competitiveness and, crucially, their investor confidence in a rapidly changing global economy.