SBTi | Corporate Net-Zero Standard v2.0

The Science Based Targets initiative's Corporate Net-Zero Standard Version 2.0 marks a structural shift in how companies set, validate, and deliver on climate commitments. The update moves corporate climate action from static target-setting toward continuous, verifiable accountability — introducing mandatory timelines, stricter quality criteria, and a new financial framework for ongoing emissions responsibility. For companies operating across global value chains, understanding the mechanics of CNZS v2.0 is now a strategic imperative.

This guide, co-authored with Cloverly, provides a comprehensive breakdown of the standard's key changes, the OER framework, carbon market implications, and actionable recommendations for companies navigating alignment with CNZS v2.0.

‍

(i) Introduction to SBTi

The Science Based Targets initiative now covers more than 11,000 companies globally, representing approximately 40% of listed equity market value across 86 countries. As the dominant reference point for credible corporate climate targets, changes to SBTi's framework carry direct consequences for companies, investors, regulators, and carbon markets.

(ii) Key changes in CNZS v2.0

CNZS v2.0 introduces a cyclical five-year validation model, replacing static lifetime targets with renewable commitments subject to base-year recalculation and third-party assurance at each renewal. Companies are no longer assessed on end-state ambition alone, they are assessed on how credibly they manage emissions during the transition.

(iii) OER Framework

The Ongoing Emissions Responsibility framework requires companies to take financial accountability for the emissions they continue to produce while reducing toward net-zero. Pre-2035, participation is voluntary under two tiers, Recognised status asks for responsibility over at least 1% of ongoing emissions, while Leadership status applies a minimum $80/tCO₂e internal carbon price across 100% of ongoing emissions, with at least 40% directed to verified carbon credits.

(iv) Neutralisation of residual emissions

Neutralisation is the final, mandatory compliance step at the net-zero target year, distinct from OER contributions made during the transition. Companies must offset 100% of their remaining residual emissions exclusively through Carbon Dioxide Removal, removals stored for more than 1,000 years — covering engineered methods such as direct air capture, BECCS, and geological storage.

(v) Implications for carbon markets

CNZS v2.0 converts discretionary climate spending into structured, compliance-driven procurement, tightening EAC eligibility for Scope 2, restricting Scope 3 bridging instruments to strict temporal and geographic rules, and mandating carbon removal as the only eligible instrument post-2035. Supply of verified, long-lived engineered CDR, the only instrument qualifying for post-2035 obligations, is currently a fraction of projected demand, with development timelines of five to ten years. Companies that delay procurement will enter a mandatory compliance market where pricing and availability are set by those who moved first.

(vi) Strategic recommendations

Based on our analysis of CNZS v2.0 and current market conditions, we set out eight actionable recommendations sequenced by time horizon — covering carbon credit portfolio restructuring, CDR forward procurement, OER activation, near-term target calibration, Scope 3 supplier accountability, value chain incentivisation, digital infrastructure investment, and transition plan governance. Each recommendation is designed to translate the standard's compliance architecture into concrete strategic decisions that reduce transition risk and build first-mover advantage.

‍