SBTi Corporate Net-Zero Standard V2.0: What Canadian Companies Need to Know

The Science Based Targets initiative has released Corporate Net-Zero Standard Version 2.0, marking one of the most important updates to corporate climate target setting since the original Net-Zero Standard was launched.

For companies, this update matters because SBTi is moving beyond climate commitments and placing greater emphasis on implementation, accountability, transition planning, assurance, and credible claims.

In simple terms, setting a net-zero target is no longer enough. Companies will need stronger emissions data, clearer governance, practical decarbonization plans, transparent reporting, and better documentation to show how progress is being delivered.

For Canadian businesses, this update is especially important. Larger companies, suppliers, manufacturers, retailers, project developers, and organizations with complex value chains may face growing expectations around greenhouse gas inventories, Scope 3 data, electricity procurement, supplier engagement, and climate-related disclosures.

SBTi V2.0 does not remove the need for direct decarbonization. Instead, it creates a more detailed framework for how companies should reduce emissions, support climate action, and communicate their progress responsibly.

Key Dates for SBTi V2.0

SBTi Corporate Net-Zero Standard V2.0 was published in June 2026.

Target validation under V2.0 opens in Q1 2027. During the transition period, companies may continue submitting targets under Near-Term Criteria V5.3 and Corporate Net-Zero Standard V1.3.1 until January 31, 2028.

From February 1, 2028, Corporate Net-Zero Standard V2.0 becomes mandatory for all new corporate submissions.

This gives companies a transition window to decide whether to submit under the current framework or begin preparing directly for V2.0.

For companies with existing validated targets, the update does not necessarily require immediate action. However, it does create a strong reason to begin preparing early, especially for organizations that will need stronger Scope 3 data, assurance, transition planning, and climate contribution strategies.

Why SBTi Updated the Corporate Net-Zero Standard

The original SBTi Corporate Net-Zero Standard helped establish a common framework for credible corporate net-zero targets. It gave companies a science-based approach to reducing emissions in line with global climate goals.

However, as more companies began setting targets, practical implementation challenges became clearer.

Many organizations struggled with limited Scope 3 data, complex supplier networks, long-lived assets, technology constraints, regional infrastructure limits, capital planning timelines, and uncertainty around how to communicate climate action without overstating claims.

SBTi V2.0 responds to these challenges by making the standard more implementation focused.

The update is not just about setting targets. It is about showing how those targets will be delivered.

That includes stronger governance, better emissions inventories, clearer transition plans, more practical Scope 3 approaches, stronger assurance, and improved rules around market instruments and climate contributions.

The main shift is this:

Corporate climate action is moving from ambition to evidence.

1. Company Categorization Replaces the Separate SME Route

One of the major changes in SBTi V2.0 is the introduction of formal company categorization.

Instead of treating small and medium-sized enterprises through a separate route, V2.0 introduces two company categories: Category A and Category B.

These categories are based on factors such as company size, geography, emissions profile, turnover, and number of employees.

Category A companies face more extensive requirements. These may include stronger obligations around Scope 3 targets, transition planning, third-party assurance, disclosure, and future responsibility for ongoing emissions.

Category B companies have differentiated requirements intended to make the standard more practical and accessible for smaller companies and companies operating in different economic contexts.

For Canadian companies, this matters because many organizations may be affected directly or indirectly. Larger companies may face more formal requirements, while smaller suppliers may still be asked by customers to provide emissions data, product information, energy data, or transition-related documentation.

In other words, even if a company is not required to validate targets under SBTi, it may still feel the effects through procurement, supply chain expectations, investor requests, and customer requirements.

2. Governance and Transition Planning Become Central

SBTi V2.0 places much stronger emphasis on governance.

Companies are expected to integrate climate targets into business decision-making. This means targets should not sit only inside a sustainability report. They should connect to leadership accountability, corporate strategy, financial planning, procurement, operations, and capital allocation.

Transition planning is also more clearly embedded into the standard.

A credible transition plan should explain how the company intends to deliver emissions reductions over time. It should identify key actions, dependencies, timelines, assumptions, risks, and business functions involved in implementation.

A strong transition plan should answer practical questions such as:

• What emissions sources are most material?

• What actions will reduce emissions?

• Who inside the company is responsible?

• What capital investments are required?

• Which suppliers or customers need to be engaged?

• What external barriers could affect progress?

• How will progress be measured and reported?

For Category A companies, transition plan disclosure becomes more formal. These companies are expected to publish transition plan information within a defined period after target validation.

For Canadian businesses, this reinforces the need to connect climate strategy with operational reality. A target that is not connected to procurement, energy use, capital planning, fleet management, facility upgrades, supplier engagement, or product strategy will be difficult to defend.

3. Scope 1, Scope 2, and Scope 3 Targets Are Treated More Separately

Under previous versions of the standard, companies often set combined Scope 1 and Scope 2 targets. SBTi V2.0 introduces more separation between emissions scopes, especially for larger companies.

Scope 1 covers direct emissions from sources owned or controlled by the company. This may include fuel combustion, fleet emissions, process emissions, or other direct operational sources.

Scope 2 covers emissions from purchased electricity, heat, steam, and cooling.

Scope 3 covers broader value chain emissions, including purchased goods and services, transportation, business travel, use of sold products, waste, investments, and other indirect emissions.

By treating these scopes more separately, V2.0 creates more transparency. It helps prevent strong performance in one area from hiding weak performance in another.

For example, a company may make progress on Scope 2 by improving electricity procurement, but still need a separate strategy for natural gas use, fleet emissions, purchased materials, distribution, or product use.

The practical result is that companies will need more detailed emissions inventories and more targeted reduction strategies by scope.

4. Scope 2 Moves Toward Low-Carbon Electricity and Stronger Documentation

SBTi V2.0 updates how companies approach Scope 2 emissions.

The standard shifts from a narrow focus on renewable electricity toward broader low-carbon electricity. It also places more emphasis on the physical greenhouse gas inventory and the quality of market instruments.

Market instruments such as energy attribute certificates and power purchase agreements may still play a role, but they must meet stronger integrity criteria. Companies will need to consider documentation, matching, traceability, timing, and whether the instrument credibly supports electricity system decarbonization.

This matters because Scope 2 claims are increasingly scrutinized.

Companies cannot rely only on broad statements about renewable energy purchases. They need to understand what was purchased, where it was generated, how it was matched, how it was tracked, and what claim can responsibly be made.

For companies with large electricity demand, Scope 2 strategy should include energy efficiency, demand reduction, on-site generation where feasible, credible electricity procurement, and transparent reporting.

5. Scope 3 Becomes More Practical, but Not Less Important

Scope 3 is one of the most important areas of change in SBTi V2.0.

The new standard moves away from fixed-percentage coverage thresholds and toward a significance-based approach. Companies are expected to focus on Scope 3 categories that individually represent 5% or more of total Scope 3 emissions in categories 1 to 14, based on the physical greenhouse gas inventory.

This is a practical improvement. It allows companies to focus on material emissions sources and areas where they can credibly take action.

However, this does not mean Scope 3 is becoming optional or less important.

For many companies, Scope 3 remains the largest part of their total footprint. What has changed is the way companies are expected to identify, prioritize, and act on material value chain emissions.

SBTi V2.0 also expands target-setting options beyond simple absolute emissions reduction. Companies may use approaches linked to supplier alignment, customer alignment, product use, product end-of-life, and other commercially relevant metrics.

This is especially relevant for companies with large supplier networks, distribution systems, product portfolios, or downstream use-phase emissions.

For Canadian suppliers, this is important because larger customers may increasingly ask for data and evidence. Companies that can provide credible emissions information may have a competitive advantage in procurement and partnership conversations.

6. The Target Implementation Hierarchy Creates a Clearer Action Framework

SBTi V2.0 introduces a target implementation hierarchy.

This hierarchy helps companies determine what types of actions should be prioritized to deliver against their targets.

The priority remains direct emissions reductions within the company’s own operations and value chain. Companies should first reduce the emissions they can directly control or influence.

Where direct action is constrained, companies may be able to take broader activity pool or sector-level actions. However, these actions must meet specific criteria and be transparently reported.

This matters because companies often face real barriers. Examples include limited low-carbon technology availability, grid constraints, supplier limitations, infrastructure gaps, regional market constraints, or long investment cycles.

SBTi V2.0 recognizes that these barriers exist, but it does not treat them as a reason to delay action.

Companies must still demonstrate what they are doing, what barriers exist, how they are managing those barriers, and how their actions support real-world decarbonization.

The hierarchy gives companies a more practical way to move forward while maintaining credibility.

7. Stronger Integrity Criteria for Market Instruments and Projects

SBTi V2.0 introduces stronger criteria for actions, projects, and market instruments used to support target implementation.

This includes requirements related to:

• Measurable emissions reductions or removals

• Additionality

• Leakage assessment

• Temporal alignment

• Verifiability

• Secure tracking systems

• Double-counting prevention

• Transparent reporting

  
  

This is especially important for companies using energy attribute certificates, low-carbon commodity certificates, project-based interventions, or other instruments connected to emissions claims.

The message is clear: market instruments can support climate action, but only when they are credible, traceable, and properly accounted for.

For companies, documentation quality will matter more. It will not be enough to purchase a certificate or support a project. Companies will need to show how the instrument was issued, transferred, retired, tracked, and connected to the relevant climate claim.

This creates a stronger need for careful project selection, registry transparency, retirement documentation, and claims review.

8. Third-Party Assurance Becomes More Important

SBTi V2.0 places greater emphasis on independent assurance.

Category A companies are required to obtain independent third-party assurance of their target base year greenhouse gas inventory and associated metrics. This includes Scope 1, Scope 2, and Scope 3 emissions, low-carbon electricity calculations, emissions-intensive activities, and other metrics used for target setting.

For Category B companies, assurance is strongly encouraged.

This reflects a broader trend in climate reporting. Companies are increasingly expected to provide emissions data that is reliable, auditable, and decision-useful.

Poor data quality can weaken target credibility, create reporting risk, and make climate claims harder to defend.

Companies preparing for SBTi V2.0 should begin improving data systems now. This may include better utility data collection, supplier questionnaires, emissions factor documentation, calculation methods, internal controls, audit trails, and evidence management.

9. Ongoing Emissions Responsibility Creates a New Framework for Climate Contributions

One of the most discussed updates in SBTi V2.0 is the introduction of Ongoing Emissions Responsibility, often referred to as OER.

OER is a framework for companies that want to take responsibility for emissions that continue to occur while they transition toward net-zero.

This is important because companies will continue to emit during their transition period. Even with strong decarbonization plans, many organizations will need time to reduce emissions across operations, suppliers, products, logistics, and energy systems.

OER creates a way for companies to support climate action beyond their own value chain while they continue reducing their own emissions.

However, the distinction is critical:

OER does not replace emissions reductions.

Climate contributions made through OER cannot be counted toward Scope 1, Scope 2, or Scope 3 target achievement. They cannot be used to erase emissions from the company’s greenhouse gas inventory. They must be reported separately.

This means companies should avoid saying that OER “offsets” their operational or value chain emissions in a way that implies those emissions have been reduced.

A more credible framing is that the company is supporting verified climate action or broader climate finance while continuing to reduce its own emissions.

10. OER Is Broader Than Carbon Credits

OER is often discussed in relation to carbon credits, but it is broader than that.

Under SBTi V2.0, companies may support verified mitigation outcomes or other eligible climate actions. This can include verified emissions reductions, carbon removals, climate finance, low or zero-carbon research and innovation, mitigation-enabling outcomes, adaptation, resilience, and other eligible climate-related activities.

This matters because the role of carbon credits is becoming more specific.

Carbon credits may support OER where they meet the relevant criteria, but they do not replace direct decarbonization. They also do not count toward Scope 1, Scope 2, or Scope 3 target progress.

For companies purchasing carbon credits, this creates a need for stronger diligence.

Key questions include:

• Is the project verified?

• Has the credit been retired?

• Is there clear retirement documentation?

• Is the project additional?

• Is there a risk of double counting?

• Does the project have credible monitoring and verification?

• What claim can the company responsibly make?

• 
  

This is where quality, documentation, and communication become essential.

11. OER Recognition Levels

SBTi V2.0 introduces recognition levels for companies participating in the Ongoing Emissions Responsibility program.

These levels are based on the share of ongoing Scope 1, Scope 2, and Scope 3 emissions covered by climate contributions.

The recognition levels include:

Engaged: Covers at least 1% of total ongoing emissions.

Advanced: Covers at least 10% of total ongoing emissions, including 100% of Scope 1 and Scope 2 emissions.

Leadership: For Category A companies, covers 100% of total ongoing emissions. For Category B companies, covers 10% of total ongoing emissions, including 100% of Scope 1 and Scope 2 emissions.

This framework gives companies a more structured way to support climate action beyond their value chain.

It also reinforces the need for separate accounting. OER contributions should be reported as climate contributions, not as reductions in the company’s own footprint.

12. Carbon Credits Are Recognized, but Not as a Substitute for Decarbonization

SBTi V2.0 provides more clarity on the role of carbon credits.

Carbon credits may support climate contributions and Ongoing Emissions Responsibility, but they do not count toward Scope 1, Scope 2, or Scope 3 target achievement. They also cannot be netted from the company’s greenhouse gas inventory.

At the net-zero target date, companies must reduce emissions to zero or residual levels and neutralize residual emissions with eligible removals.

This creates three separate concepts that companies need to understand:

• Emissions reductions within the value chain

• Climate contributions beyond the value chain

• Neutralization of residual emissions at net-zero

This distinction is important for credible climate communication.

A company should not claim that it has reduced its own emissions simply because it purchased carbon credits outside its value chain. Instead, it can communicate that it is supporting verified climate action while continuing to reduce its own operational and value chain emissions.

This is a more accurate, transparent, and defensible approach.

13. Post-2035 Responsibility and the Growing Role of Removals

SBTi V2.0 also signals a stronger future role for carbon removals.

From 2035 onward, Category A companies are expected to face increasing responsibility related to ongoing emissions. At the net-zero target date, residual emissions must be neutralized with eligible removals.

This means companies should begin learning about removals now.

High-quality removals may involve different durability profiles, storage risks, monitoring requirements, verification standards, and pricing considerations. Waiting until the net-zero target year could expose companies to supply constraints, quality concerns, and higher costs.

The practical takeaway is that companies should start building internal knowledge of removals, verified mitigation outcomes, retirement documentation, and credible claims well before they are required.

What This Means for Canadian Companies

For Canadian companies, SBTi V2.0 creates both obligations and opportunities.

Larger companies may need stronger governance, Scope 3 analysis, third-party assurance, transition plans, and climate contribution strategies.

Smaller companies may face fewer direct requirements, but many will still be affected through supply chains. As large companies update their climate strategies, they may ask suppliers for emissions data, low-carbon product information, electricity data, waste data, transportation data, or evidence of climate action.

This creates an opportunity for Canadian businesses that prepare early.

Companies with credible emissions data, practical reduction plans, and well-documented climate actions may be better positioned to win customers, maintain supplier relationships, access capital, and communicate responsibly.

The update also creates a clearer role for high-integrity Canadian climate projects.

Carbon credits cannot replace direct decarbonization. However, verified Canadian projects may support climate contributions, Ongoing Emissions Responsibility, and broader climate finance where they meet integrity, verification, retirement, and claims requirements.

This is especially relevant for companies looking to support climate action close to home while maintaining transparent and defensible documentation.

How Companies Should Prepare Now

Companies do not need to wait until 2028 to begin preparing.

A practical preparation plan should include the following steps.

1. Determine Your Likely Company Category

Companies should assess whether they are likely to fall under Category A or Category B and what that means for target setting, assurance, Scope 3, transition planning, and disclosure.

2. Improve Your Greenhouse Gas Inventory

SBTi V2.0 places greater emphasis on physical inventory, target base year quality, Scope 3 significance, low-carbon electricity metrics, and auditable documentation.

Companies should improve emissions data collection, calculation methods, source documentation, and internal controls.

3. Review Scope 3 Emissions

Companies should identify which Scope 3 categories are material and determine where they have influence.

This may include supplier engagement, product design, logistics, business travel, waste, use of sold products, or end-of-life impacts.

4. Develop a Practical Transition Plan

Climate targets should be connected to operations, procurement, finance, facilities, fleet management, product strategy, and supplier relationships.

A transition plan should be realistic, documented, and connected to business decisions.

5. Review Electricity Procurement and Scope 2 Claims

Companies should review how they purchase electricity, whether they use market instruments, how those instruments are tracked, and what claims they can responsibly make.

6. Separate Carbon Credit Strategy From Target Achievement

Companies using carbon credits should clearly distinguish between emissions reductions, climate contributions, Ongoing Emissions Responsibility, and neutralization of residual emissions.

This is essential for avoiding unclear or overstated climate claims.

7. Strengthen Documentation and Retirement Records

For companies supporting carbon projects, documentation matters.

Retirement records, project information, verification details, registry data, additionality evidence, and claims language should be carefully reviewed and retained.

PeriCarbon’s Perspective

SBTi V2.0 reinforces an important principle:

Credible climate action requires both ambition and evidence.

The next phase of corporate climate leadership will not be defined by broad net-zero claims alone. It will be defined by measurable emissions data, practical transition plans, credible project selection, transparent documentation, and responsible communication.

For companies purchasing carbon credits or supporting climate projects, this update raises the bar. Buyers will need to understand what they are purchasing, how it is verified, whether it is additional, how it is retired, and what claims can responsibly be made.

At PeriCarbon, we help organizations navigate this complexity by supporting carbon project selection, offset procurement, retirement documentation, and practical climate strategy.

Our focus is on helping companies take credible action while avoiding unclear or overstated environmental claims.

SBTi V2.0 does not eliminate the role of carbon credits. It clarifies the role they can credibly play.

The priority remains direct decarbonization. But companies can also support verified climate projects, carbon removals, and broader climate finance in a way that is transparent, documented, and aligned with emerging best practice.

Conclusion

SBTi Corporate Net-Zero Standard V2.0 marks a major evolution in corporate climate action.

The update moves companies from ambition toward implementation. It strengthens governance, transition planning, assurance, Scope 3 prioritization, target implementation, market instrument integrity, and climate contribution reporting.

For companies, the takeaway is simple: prepare early.

Build better emissions data. Understand your Scope 3 exposure. Strengthen governance. Create a practical transition plan. Review your carbon credit strategy. Make sure climate claims are supported by credible documentation.

The companies that prepare now will be better positioned for the next phase of corporate climate accountability.

Call to Action

Need support understanding how SBTi V2.0 affects your carbon strategy?

PeriCarbon helps organizations assess carbon credit options, review project quality, support retirement documentation, and communicate climate action responsibly.

Contact PeriCarbon to learn how your organization can take credible, transparent, and well-documented climate action.

Publication Disclaimer

This article is for educational purposes only and does not constitute legal, financial, accounting, or verification advice. Companies should review the official SBTi documents and seek qualified professional advice before making formal climate claims, submitting targets, or relying on carbon credits, climate contributions, or removals for corporate reporting.