SBTi V2.0 Is Here: What the New Corporate Net-Zero Standard Means for Your Business

The Science Based Targets initiative released Version 2.0 of its Corporate Net-Zero Standard on 11 June 2026 the biggest overhaul of corporate climate targets since 2021. Here's what's changed, what it means for UK and Irish SMEs, and the actions worth taking before the standard becomes mandatory in January 2028.

Why this update matters

More than 10,000 companies globally now hold SBTi-validated targets, covering around 41% of global market capitalisation. In the UK, over 1,850 companies are SBTi-committed though only 509 have fully validated net-zero targets, so the gap between ambition and delivery is real.

Investors, procurement teams and regulators increasingly treat SBTi alignment as a baseline expectation rather than a differentiator. V2.0 doesn't just raise the bar it changes the nature of the race, shifting from a one-time credential to an ongoing cycle of accountability.

The five changes that matter most

1. Two company categories, two sets of obligations

V2.0 replaces the old SME/non-SME split with a formal classification. Category A covers large companies globally plus medium-sized businesses in high-income countries broadly those above $450M (c. £350M) turnover or 1,000+ employees. They face the most demanding requirements: mandatory climate transition plans, third-party assurance on emissions data, and mandatory Scope 3 targets.

Category B covers small and micro businesses everywhere, plus medium businesses in lower-income countries. This is where most UK and Irish SMEs will land and it comes with deliberately proportionate obligations. Near-term Scope 3 targets are optional, validation timelines are longer (24 months versus 12), and there's no mandatory third-party assurance.

2. Scope 1 and Scope 2 — now separate targets

The option to set a combined Scope 1+2 target with a 5% exclusion is gone. V2.0 requires standalone targets for each scope, covering 100% of relevant emissions.

For Scope 2, the changes go further. Companies must now set both a location-based target and a market-based or zero-carbon electricity target, with an alignment goal of 100% low-carbon electricity by 2040. Quality criteria for energy certificates (REGOs in the UK) are tightening significantly geographic matching requirements are coming, and large consumers face hourly matching from 2030. If your carbon accounting currently relies on annual average grid intensity, it's time to upgrade the methodology.

3. Scope 3 — more flexible, but further reaching

The old blanket rule requiring targets covering 67% of Scope 3 emissions is replaced by a materiality approach: Category A companies must set targets for any category representing more than 5% of their total Scope 3 footprint.

For Category B businesses, Scope 3 targets remain optional. But here's the catch: if your customers are Category A, your emissions are part of their Scope 3 compliance whether you're subject to SBTi requirements or not. Tier 1 suppliers of large companies are now explicitly expected to set their own net-zero targets, and full supply chain traceability for the most emissions-intensive activities is expected by 2035.

Practically: if you supply large UK or Irish businesses, expect more supplier questionnaires, more emissions data requests, and more weight placed on your answers in contract decisions over the next two to three years. Businesses with credible carbon data and a reduction plan will win that comparison.

4. From one-time validation to a continuous cycle

V2.0 replaces the credential model with a rolling three-stage cycle: Entry Check → Initial Validation → Renewal Validation. Annual progress assessments are built in, and renewal targets account for actual performance underperform in one cycle, and the next cycle's targets get tougher.

Category A companies must also publish a Climate Transition Plan within 12 months of validation and obtain third-party limited assurance on base year emissions data. And note: the mandatory 5-year review is now triggering its first wave of revalidations if your targets were validated in 2020 or earlier, you need to revalidate against current criteria.

5. Ongoing Emissions Responsibility — carbon credits get a formal role

The new OER framework structures how companies take responsibility for the emissions that remain while they work toward net zero. The critical point: OER is not a loophole. Carbon credits under OER cannot offset emissions or count toward Scope 3 reduction targets. They sit in a separate lane entirely.

Two voluntary recognition tiers run until 2035:

• Recognised: take responsibility for at least 1% of ongoing Scope 1–3 emissions through verified mitigation, or apply an internal carbon price of at least $20/tCO₂e directed to eligible climate action.
• Leadership: apply at least $80/tCO₂e to all ongoing emissions, funding mitigation equivalent to at least 40% through carbon credits.

From 2035, OER becomes mandatory for Category A companies. The case for early engagement is partly reputational and partly financial removal credit supply is limited (currently 5–10 Mt/year against a 180 Mt voluntary market), and prices are expected to rise as 2035 approaches.

Your timeline at a glance

Timeframe	Priority actions
Now – Q4 2026	Establish a robust GHG inventory; confirm whether you're Category A or B; check existing SBTi targets for 5-year renewal triggers
2027	Prepare V2.0-aligned targets; build or update your transition plan narrative; map Scope 3 materiality; consider voluntary OER participation
31 Dec 2027	Last date to submit new targets under V1.3
1 Jan 2028	All new submissions must use V2.0; cyclical annual progress reporting begins
2030	Large consumers (≥10 GWh) begin hourly energy certificate matching for Scope 2
Post-2035	OER mandatory for Category A; full Scope 3 traceability expected for the most emissions-intensive activities

What we recommend: four priority actions

• Clarify your category. Whether you're Category A or B determines your mandatory obligations from 2028. If you're near the threshold or supply Category A customers, this matters doubly.
• Establish or refresh your GHG inventory. V2.0 requires base years that reflect typical operations, align with financial reporting, and include no exclusions. If your last assessment is over two years old or relies on spend-based estimates, update it.
• Map your Scope 3 hotspots. Even where targets are optional, knowing your material categories means you can answer customer questionnaires confidently rather than scrambling.
• Start the transition plan conversation. A structured decarbonisation narrative has become a commercial differentiator with procurement teams and investors mandate or no mandate.

Frequently asked questions

Do my existing SBTi targets still count under V2.0?

Yes — targets validated under V1.2 or V1.3 remain valid through their target period. You don't need to revalidate immediately. The exception: targets validated in 2020 or earlier are now hitting the mandatory 5-year review and must be updated against current criteria.

I'm an SME — do I have to set Scope 3 targets?

No. For Category B companies (which covers most UK and Irish SMEs), near-term Scope 3 targets are optional under V2.0. You're still expected to commit to measuring and reducing value chain emissions — and your larger customers may require your emissions data for their own compliance regardless.

Can I still submit targets under the old standard?

Yes, until 31 December 2027. V1.3 remains valid for new submissions until then, which may suit businesses with timeline or resource constraints. From 1 January 2028, all new submissions must use V2.0.

Can carbon credits be used to meet my reduction targets?

No. Under V2.0's Ongoing Emissions Responsibility framework, carbon credits address residual emissions on the way to net zero — they cannot substitute for real reductions or count toward Scope 3 targets. Offsets remain limited to neutralising residual emissions at your net-zero target year.

How does V2.0 relate to CSRD and SECR?

V2.0 was deliberately designed for interoperability. UK companies with EU operations remain subject to CSRD, where SBTi alignment is increasingly cited as evidence of Paris-aligned climate action. SECR disclosures will also be shaped by V2.0's dual Scope 2 target requirement. Work done for one framework increasingly counts toward the others.