Earlier this year, the Science Based Targets initiative (SBTi) released its revised draft Corporate Net-Zero Standard for public consultation. This update marks a significant step forward in aligning corporate net-zero strategies with climate science. By changing how companies are categorized, strengthening emission reduction expectations, and adding new guidance on carbon removal and transparency, the draft aims to close the credibility gap in climate target setting.

The revision comes at a time of growing concern over the gap between global climate ambition and action.Net Zero Trackerreports show that national net-zero commitments now cover more than 90% of global GDP. However, thelatest UN Emissions Gap Reportindicates that the world is still on track for a 2.7°C temperature rise this century. For businesses, this makes the urgency of establishing more credible, science-aligned pathways clear and pressing.

Although the update is still in the consultation phase, companies that delay action while waiting for the forthcoming guidance may fall behind, while first movers—those already developing science-based emission reduction strategies and implementing robust climate transition plans—will be better positioned to adapt to change.

Here is what the revised standard means for businesses.

A more inclusive standard reflecting company context

One of the most notable changes in the SBTi is the introduction of differentiated requirements based on company size and geography. Large companies in high-income countries are classified as Category A and must meet all criteria of the standard. Meanwhile, small companies in low-income regions fall into Category B, where some elements of the standard become optional.

This is a shift toward a more inclusive, globally relevant framework. For large companies, the message is clear: the flexibility of earlier years is gone. With greater resources comes greater responsibility, and full compliance is expected. For smaller companies, especially those in emerging markets, the updated approach recognizes their limited capacity to act.

For all companies, this change underscores the importance of not only understandingwhatthe standard requires, but alsowhyit requires it. This is no longer just about meeting benchmarks, but about doing so in a way that reflects operational context and leadership.

What does this mean for existing and planned targets?

If you are currently setting near-term targets, you can continue using the current Corporate Net-Zero Standard (Version 1.2) and Near-Term Standard (Version 5.2) until the end of 2026. Version 1.2 applies to companies seeking to set comprehensive near-term and long-term net-zero targets, while Version 5.2 is designed for companies aiming to set near-term targets only.

All near-term targets set under these existing frameworks will remain valid for five years or until the end of 2030, whichever comes first. However, near-term targets with target years beyond 2030 will need to be updated.

From 2027 onward, companies will be expected to use Version 2.0 to set both near-term and long-term targets. The SBTi has committed to developing a transition process for companies with targets validated in 2025-2026 to align with the new standard.

For companies with existing long-term targets, specific guidance is still being developed, with more clarity expected in a second public consultation later this year.

In the meantime, companies should continue to act in line with current guidance. Early action will still provide a solid foundation for alignment with the revised standard.

What changes for Scope 3 emission reporting?

Scope 3 emissions remain a key focus. For Category A companies, near-term targets covering Scopes 1, 2, and 3 are mandatory. However, long-term Scope 3 targets are currently not required, though this requirement may evolve during the consultation process.

This does not mean Scope 3 can be treated as a lower priority. Companies should continue to improve data collection, value chain engagement, and targeted emission reduction strategies. In many industries, Scope 3 accounts for the majority of emissions, so addressing it is critical even where long-term targets are not yet mandatory.

The draft standard also moves away from previous percentage-based approaches (67% for near-term targets and 90% for long-term targets) in favor of a more focused method that prioritizes the most relevant emission sources. Companies will need to identify "significant Scope 3 categories" (those accounting for 5% or more of total Scope 3 emissions) and "emission-intensive activities" within their value chains. This shift aims to make Scope 3 targets more effective in driving transformation in key areas.

Additionally, the standard places greater emphasis on non-emission metrics and alignment targets. This includes measures such as the proportion of procurement from net-zero aligned suppliers or the share of revenue from net-zero aligned products. These alignment metrics offer alternative ways to demonstrate progress, particularly valuable for companies facing data challenges or those providing climate solutions.

How are residual emissions addressed?

The draft requires companies to neutralize any residual emissions that remain in the net-zero target year and beyond. For residual Scope 1 emissions, companies have three proposed options:

  1. Setting a mandatory carbon removal target in addition to emission reduction targets.
  2. Obtaining recognition for a voluntary carbon removal target.
  3. Addressing residual emissions through additional reductions, carbon removals, or a combination of both.

For Scope 3, Category A companies must ensure residual emissions are neutralized by responsible value chain partners, or by providing support to enable their neutralization.

All options limit carbon removals to the small amount of emissions expected to remain in the net-zero target year, typically less than 10% of baseline year emissions. Carbon removals must meet high-integrity sustainability and quality standards, with more specific criteria to be developed during the consultation process.

Companies that have already invested in high-quality carbon removals may find themselves well aligned with the direction of the draft. Early planning will enable companies to integrate these requirements into financial and strategic climate planning.

What is the role of carbon credits and beyond value chain mitigation?

The draft continues to recognize the importance of beyond value chain mitigation (BVCM) while maintaining its clear separation from the requirement to neutralize residual emissions in the net-zero target year.

BVCM activities, such as investing in climate solutions, funding external emission reduction projects, and purchasing carbon credits, are still encouraged as valuable contributions to global climate goals. The SBTi is actively using the consultation process to gather feedback to better recognize BVCM, set reporting requirements, and integrate these efforts into corporate climate strategy.

Notably, the guidance suggests that companies should aim to address 100% of their remaining emissions according to recognized third-party frameworks and take responsibility for historical emissions.

Bottom line for business: direction is clear, call to action is clear

Although much of the SBTi standard is still under consultation, the direction is clear: greater ambition, earlier action, and stronger accountability lie ahead. Companies should not wait for the final version to begin aligning their strategies with emerging requirements.

The draft also introduces stronger requirements for data quality, emphasizing improved traceability of emission data over time. Category A companies will need to obtain third-party assurance on their GHG emission inventories, including relevant Scope 3 emission sources.

Now is the time to assess your classification, revisit your Scope 3 strategy, plan for carbon removals, and ensure your transition plan is robust and transparent. These shifts will not only change how climate targets are set, but will also reshape climate leadership beyond compliance.