The recent release of the Science Based Targets Initiative (SBTi) Corporate Net-Zero Standard Version 2 comes at a pivotal moment in corporate climate action. For years, a common challenge across sustainability frameworks has been the gap between ambitious target-setting and tangible progress. We are now entering an era that demands rigorous execution, transparent transition planning, and measurable action to meet the level of decarbonization necessary to limit the worst effects of climate change.
The updated SBTi standard aims to shift the focus from merely establishing goals to actively proving how your organization is meeting them.
Here are the key takeaways from V2 and how they impact your decarbonization strategy.
From Pledges to Transition Plans
Under Version 1, the primary focus was on defining ambition. Version 2 shifts this dynamic. Companies are now expected to deliver against their targets through a comprehensive transition plan.
The standard introduces an explicit "best-efforts" framework. It acknowledges that companies face real-world barriers outside their direct control. You are expected to deploy every lever within your operational reach, transparently report on implementation barriers, and demonstrate ongoing corrective actions.
This is supported by a new implementation hierarchy that prioritizes how you reduce emissions:
- Direct Actions: Engaging suppliers and reducing emissions at the source.
- Activity-Pool Actions: Intervening in shared systems like energy grids or supply sheds when direct action is constrained.
- Sector-Level Actions: Taking broader sector initiatives when structural barriers exist.
Decoupled Scopes and Granular Target Setting
Target setting is now more structured and specific. Instead of combined goals, you must establish separate targets for Scope 1, Scope 2, and Scope 3, making each independently accountable. Previously, many companies relied on renewable electricity to cover both their Scope 1 and 2 emissions under combined targets. They will now need to focus independently on their Scope 1 emissions even if Scope 2 is at zero.
- Updated Baselines: Base years will now be defined by your most recent physical footprint year, ensuring your targets reflect your current operational reality rather than outdated historical data.
- Scope 2 Rigor: Scope 2 targets are now standalone, requiring 100% coverage. Heavy electricity users (consuming over 10 GWh annually) will need to shift toward hourly matching for low-carbon electricity, pushing procurement strategies beyond annual RECs purchases.
- Scope 3 Flexibility: Scope 3 target setting offers expanded pathways. You can choose overarching absolute emissions reductions, supplier alignment, or category-specific targets tailored to the most significant sources of your value chain. Scope 3 target setting is only required for large, international organizations (Category A).
Hourly Matching: A New Frontier in Scope 2 Accountability
Hourly matching moves beyond the traditional annual REC model by aligning electricity consumption with renewable energy production on an hour-by-hour basis. Rather than relying on aggregated annual procurement, this approach requires organizations to match their actual energy use with clean energy generation at every hour of the day. For example, solar and wind resources produce power during specific windows of the day, while organizational energy demand fluctuates continuously. This new model delivers a far more granular and credible measure of renewable energy accountability.
For organizations consuming more than 10 GWh of electricity annually, hourly matching will become a mandatory component of Scope 2 strategy under the evolving SBTi framework. Within these larger consuming organizations, the 10 GWh “activity pool” may be a site, group of sites, region, etc., depending on the geographic deliverability network.
Companies will need to adopt procurement solutions and technologies capable of ensuring verifiable, hour-by-hour alignment between their energy consumption and renewable energy generation.
Meeting this standard requires the right tools and strategies in place. Organizations looking to implement hourly matching effectively should consider the following:
- Real-time Energy Tracking: Deploy platforms that measure and verify renewable energy production and consumption on an hourly basis.
- 24/7 Power Purchase Agreements (PPAs): Pursue time-matched procurement agreements that align renewable energy delivery with actual consumption patterns.
- Energy Storage Integration: Incorporate battery storage to capture excess renewable energy and bridge supply gaps during low-generation periods.
The final version of the new framework does not require a specific level of hourly matched renewable energy but requires these large users to report on the percentage of their electricity that is matched.
Tiered Accountability and Data Integrity
Aligning closely with the heightened data quality requirements of regulations like the CSRD, SBTi V2 introduces tiered requirements based on company size (Category A and Category B).
Companies are classified into categories based on size and geography:
· Category A are companies from any country with a turnover ≥ €450 million OR ≥ 1,000full-time employees
· Category A companies are also companies from high-income countries with Scope 1+2emissions greater than 10,000 tCO2e OR at least 2 of the following
o Balance sheet: ≥ €25 million
o Net turnover: ≥ €50 million
o FTE: ≥ 250
· Category B is any company that does not meet the Category A criteria
For Category A companies, the standard now mandates third-party limited assurance on annual progress reports. Your climate transition plan must be published at validation or within 15 months. This ensures that your sustainability data is credible, improving internal data consolidation and building trust with your stakeholders.
Real World Applications and Value
The SBTi Corporate Net-Zero Standard V2 should not just be a reporting update; but act as an operational mandate. The most meaningful update may lie in how we define and encourage “best efforts”; are companies able to truthfully share issues and have real conversations within their spheres of influence to bring about real progress? Will companies with the power and financial resources make decisions within their spheres of influence work to really extend their best efforts, not just agree to meet their own goals?
We have similar conversations with our clients often, clients who are running into real hurdles and need to be creative in their solutions, find innovation, and switch priorities while helping to create market conditions to solve these decarbonization problems. This is the real work to be done, and we hope this new version of the SBTi Net-Zero Standard can help facilitate this movement in the right direction.
