The Science Based Targets initiative (SBTi) is the gold standard for corporate climate action. In 2025, the launch of the second draft of the SBTi Net-Zero V2 (Corporate Net-Zero Standard) marks the most significant update since the standard’s inception. This revision is an essential response to the climate science demanding quicker action and a recognition of the real-world challenges companies face, particularly regarding Scope 3 emissions and the role of carbon removals.

This draft, open for net-zero V2 consultation, focuses on making target setting more focused, flexible, and robust, reinforcing the urgency of SBTi 1.5° C alignment.

Part 1: A Focused and Flexible Approach to SBTi Scope 3

The original Net-Zero Standard required companies to cover 67% of their Scope 3 emissions if they constituted 40% or more of the total footprint. Version 2 shifts to a “relevance-based” approach, designed to focus efforts where they have the greatest climate impact.

The Principle of Relevance-Based Scope 3

The new framework moves away from the rigid 67% threshold towards prioritizing “material” emission sources. This means companies will be required to concentrate their targets and reduction efforts on the highest-priority value chain emission sources, identified through a detailed materiality assessment.

– New Flexibility: The draft allows for exclusions of lower-impact activities and areas where a company’s influence is limited or data maturity is low. This is a pragmatic step to encourage participation while ensuring core material emissions are aggressively targeted.

– Action-Based Targets: Recognizing the difficulty of calculating emissions reductions in complex value chains, V2 proposes more options for setting action-based targets. This includes targets related to green procurement volume, supplier engagement, and the percentage of emission-intensive suppliers that have set their own SBTi-validated targets. This allows companies to demonstrate progress in areas where direct emissions data is scarce.

This change is critical for companies seeking SBTi target validation, allowing them to demonstrate meaningful progress in high-impact areas, rather than sacrificing ambition on hard-to-measure categories.

Part 2: Defining the Role of Beyond Value Chain Mitigation (BVCM)

The V2 draft addresses one of the most contentious topics in corporate climate strategy: the use of Beyond Value Chain Mitigation (BVCM), often including carbon removals and high-quality offsets.

While the core philosophy remains firmly fixed on deep decarbonization (reducing Scopes 1, 2, and 3 emissions), the draft standard introduces a framework to formally recognize and incentivize voluntary action to address ongoing emissions.

BVCM: Recognition, Not Replacement

The V2 draft makes it clear that BVCM cannot be used to meet a company’s emissions reduction targets. It must remain additive to, not a replacement for, deep cuts within the value chain.

– Incentivizing Action: The standard proposes a recognition mechanism to incentivize companies that take early, voluntary action to invest in high-quality carbon removals (e.g., direct air capture, durable nature-based solutions) to address their residual emissions. This allows companies to signal climate leadership by investing in projects that contribute to the global net-zero goal.

– New Reporting Requirements: Companies leveraging BVCM will face stringent transparency requirements to disclose their investments, ensuring these claims do not dilute the primary focus on internal reduction efforts.

Navigating the Transition: What to Do Now

The SBTi Net-Zero V2 is set to be finalized after the net-zero V2 consultation period closes. Companies with existing targets or those planning their submission must take immediate action:

1. Analyze Materiality: Conduct a detailed review to identify the 5% or more emission sources in Scope 3 that will likely be deemed material under the new relevance-based Scope 3 framework.
2. Plan for Assurance: V2 increases the requirements for the baseline inventory, suggesting mandatory assurance for Scope 3 data for large companies. Plan for the resources needed to obtain limited assurance on your baseline.
3. Develop a Robust Climate Transition Plan: The standard places greater emphasis on publishing a detailed climate transition plan within 12 months of target validation, outlining how targets will be met through operational and value-chain shifts.

The SBTi Net-Zero V2 standard sharpens the requirements for climate accountability. By proactively engaging with the consultation and aligning your data collection with the principles of relevance and transparency, your organization can successfully navigate the future of SBTi target validation and solidify its commitment to 1.5° C alignment.

PQSmitra helps organizations cut through SBTi complexity and translate Net-Zero V2 requirements into clear, defensible action.
From Scope 3 materiality to transition planning and assurance readiness, we focus on what auditors, stakeholders, and science will actually test.
If your climate targets can’t survive scrutiny, they’re not targets—PQSmitra ensures they do.