What is the SBTi Corporate Net-Zero Standard V2.0 and what does it mean for target setting?
The SBTi has released Version 2.0 of its Corporate Net-Zero Standard, introducing company-size-based requirements, separate Scope 1, 2 & 3argets, and mandatory transition plans for larger companies, effective for all new target submissions from February 2028.
Most companies setting science-based targets today are still working to the current Standard (V1.3.1), and that remains valid for now. But the SBTi has published a major update, Version 2.0, which changes how targets are set and reported from 2027 onwards. If you're planning to introduce SBTi targets as part of AASB S2 disclosures, or you're using Trace's Reduce module to track progress toward targets, this is worth understanding now even though nothing changes immediately.
What is the SBTi Corporate Net-Zero Standard?
The SBTi Corporate Net-Zero Standard sets the criteria companies must meet to have their emissions reduction targets validated as "science-based", meaning they're aligned with what the latest climate science says is needed to limit global warming. Version 1.3.1 is the current version. Version 2.0 was released in June 2026 and will eventually replace it.
Company categorisation
V2.0 introduces two categories of company, based on size and geography:
- Category A: typically larger companies based in higher-income countries
- Category B: typically smaller companies based in lower-income countries
Category A companies face additional requirements that are optional for Category B, including:
- Disclosure of a climate transition plan
- Assurance of target base year data
- Mandatory Scope 3 target-setting (optional for Category B)
If your company reports under AASB S2, you'll most likely sit in Category A.
Separate targets for each scope
Currently, companies can set a combined Scope 1 & 2 target. Under V2.0, Scope 1 and Scope 2 targets must be set separately, each covering 100% of emissions in that scope. Scope 3 targets remain mandatory for Category A companies, focused on categories that make up 5% or more of total Scope 3 emissions.
Climate transition plans
V2.0 requires companies to have their targets approved at board level and to develop and maintain a climate transition plan setting out how targets will be delivered. This is a new governance expectation, not just a reporting add-on.
Ongoing reporting
The Standard moves from a one-off validation model toward a cycle of target setting, regular progress reporting, and periodic reassessment, rather than validation happening once and reporting being an afterthought.
Timeline
Companies setting or renewing targets in 2026 or early 2027 can still use the current Standard (V1.3.1). Version 2.0 becomes mandatory for all new target submissions from 1 February 2028.
| Period | What applies |
|---|---|
| Now – end of 2026 | Version 1.3.1 is the applicable Standard. Use this if setting or renewing targets now. |
| Q1 2027 – 31 January 2028 | Transition window. Companies can submit under either V1.3.1 or V2.0. |
| From 1 February 2028 | V2.0 becomes mandatory for all new target submissions. |
Companies with existing validated targets aren't required to switch immediately. Existing targets generally stay valid until the end of their target timeframe or until they're due for reassessment under the SBTi's periodic review cycle - worth checking your specific validation terms if this applies to you.
The Practical Test
- Are you setting or renewing an SBTi target before early 2027? → Use V1.3.1, the current Standard.
- Are you planning a first-time submission from 2027 onward? → You can choose V1.3.1 or V2.0 during the transition window, but V2.0 will apply either way from February 2028.
- Do you already have a validated target? → No immediate action needed, but start reviewing what V2.0's categorisation and separate-scope requirements will mean for you.
AASB S2 Considerations
AASB S2 doesn't require companies to set SBTi targets, but many AASB S2 reporters choose to reference science-based targets as part of their transition planning disclosures. If your target framework changes (separate scopes, transition plan requirements, board approval), this will flow through into how you describe your transition plan and governance arrangements under AASB S2. Category A companies pursuing SBTi validation will find the transition plan and governance requirements are broadly consistent with what AASB S2 already expects, which should make dual compliance easier over time.