Proposed changes to the Corporate Net-Zero Standard will shift requirements and flexibility for companies. Here’s a breakdown

The Science Based Target initiative (SBTi) has been aiding companies and financial institutions worldwide to combat the climate crisis. Its Corporate Net-Zero Standard provides the necessary guidance companies need to set Science-Based Net-Zero targets. In March 2025, SBTi proposed revisions to this guidance in its draft Corporate Net-Zero Standard (V2), open for public feedback until June 1, 2025.  

Along with a series of blogs, Trio will touch on key proposed changes of this draft standard, through which companies will have insight into how it impacts their net-zero pathways.  

What changes to target requirements have been proposed? Is there flexibility offered to companies around these changes?   

Below is a summary of these changes and the benefits or challenges they provide:  

• The proposed draft standard provides more tailored requirements for companies based on their size and geography and introduces two categories of companies: Category A -large and medium-sized companies operating in higher-income geographies and Category B - small and medium-sized companies operating in lower-income geographies. The draft offers increased flexibility to Category B companies by making some criteria optional (see below). 
• Category A companies are required to set long-term targets for scopes 1 and 2, supported by near-term targets for scopes 1, 2, and 3 if the timeframe for long-term targets exceeds five years.  
  However, Category B companies may continue to set near-term targets for scopes 1 and 2 only.  
• The new draft standard proposes separate scopes 1 and 2 target-setting methods. For Scope 2, all companies must set location-based targets, alongside either market-based targets or zero-carbon electricity targets.  
• Zero-carbon electricity targets are introduced as a method for companies to address their energy purchase, acquisition, and consumption, focusing on sourcing renewable electricity at a rate consistent with science-based emissions reductions. 
• Setting Scope 3 targets is mandatory for Category A companies, while this is optional for Category B companies. 
• Scope 3 targets in the current Corporate Net-Zero Standard (V1.2) require a minimum percentage coverage threshold. The revised standard adopts a more focused approach, empowering companies to prioritize Scope 3 targets on the most emission-intensive activities. 
• When it comes to Scope 3 target-setting methods, the revised standard places greater emphasis on alignment metrics and methodologies. These include measures such as the share of procurement allocated to net-zero-aligned suppliers and activities, as well as the share of revenue derived from net-zero-aligned activities. However, companies can choose from multiple methods including absolute, intensity, or alignment methods, to accommodate different business models and varying levels of data availability and maturity. 
• Companies must require Tier 1 suppliers to align with net zero as a way to leverage companies’ direct influence over Tier 1 suppliers to drive climate action.  
• The revised draft prioritizes direct mitigation actions linked to specific emission sources in a company's value chain. When traceability to specific emissions sources isn't possible, companies can use emissions data at the ‘activity pool' level. This refers to emissions sources that supply the reporting entity, but where it's not feasible to trace back to the exact physical sources used by the entity. If traceability remains unfeasible, indirect mitigation measures are allowed as temporary solutions.  
• Companies will also be required to assess and communicate their progress against targets at the end of each target cycle, evaluate their performance level against net zero benchmarks and set new targets to continue their transition to net zero. 

The proposed draft introduces significant changes compared to the current version of the standard (V1.2). These changes aim to:  

• Provide more tailored requirements that consider the size and geography of companies 
• Prioritize the most emission-intensive Scope 3 activities 
• Require distinct targets for scopes 1 and 2 emissions 
• Encourage sourcing renewable electricity to align with Science-Based decarbonization 
• Enhance accountability and transparency by requiring companies to assess and communicate their progress against targets regularly  

While these changes provide increased flexibility, and enhance accountability and transparency, they also add some complexity to the implementation and tracking of targets. As a result, smaller companies might face challenges to find the necessary resources to meet the new criteria. Additionally, allowing for temporary indirect mitigation measures when direct traceability is unfeasible might delay direct action in some cases.  

Large companies will need to address the significant challenge of reducing indirect emissions from their value chain. This includes setting targets for green procurement and revenue generation. It is essential that Procurement departments take an active role in aligning procurement practices with sustainability targets. Revenue generation targets, however, might call for marketing team involvement, along with product development, sales and finance. In order to set and achieve targets, companies need to involve a diverse group of stakeholders and ensure targets are integrated into all aspects of the business.   

Companies will also be required to enhance their reporting and tracking mechanisms to ensure transparency and accountability in their progress towards net-zero targets. 

Although this draft is still under consultation, it is likely that the final version of the draft will contain significant changes when compared to the current Corporate Standard V1.2.  

What are the next steps for companies to prepare for these changes?  

• Start by thoroughly reviewing the draft version of the Standard to understand its requirements and implications in your company. (CNZS V2.0_Consultation Draft) 
• Participate in the public consultation process before June 1, 2025, by providing feedback to ensure that the final Standard is practical and effective. (Corporate Net-Zero Standard Version 2.0 Public Consultation Survey) 
• Conduct a comprehensive assessment of current emissions, with a focus on Scope 3 emissions, and evaluate existing targets to identify gaps and areas for improvement 
• Create a detailed plan to transition to the new Standard, including setting interim targets, investing in green procurement, and enhancing tracking and reporting mechanisms 
• Explore opportunities to invest in climate finance and carbon removal projects to address residual emissions and support broader climate goals 
• Engage with key stakeholders, including suppliers, customers, and investors, to ensure alignment and support for the new targets and initiatives 

As you begin to plan for the transition, Trio is here to help. Get in touch with our team of experts to discuss your company’s next steps: information@trioadvisory.com.