On 11 June 2026 the Science Based Targets initiative published its Corporate Net Zero Standard Version 2, after a year of consultation. It takes effect on 1 February 2027. The headline is easy to state: SBTi has finally listened to the criticism from businesses, much of which we have also been making since 2022, mainly that a single, absolute, contract-or-fail model was never going to fit most businesses. That is a genuine and welcome retreat from dogma, and on its own terms an enormous improvement on V1. The catch is what replaced it. In place of one rigid rule, V2 gives us a lot of machinery: more routes, more categories, more cycles, more systems. And machinery is expensive to run and easy to game.
We have not been quiet about this. We have published on SBTi’s flaws, argued that the original standard was unsuitable for most of the economy, and predicted in a TEDx talk that 90% of companies signed up to Net Zero would fail under the rules as written. So, we’d like to give credit where it is due, and cover where V2 still falls short.
The Big Concession
The single most important change in V2 is that absolute contraction is no longer the only route. For Scope 1, a company can now choose an absolute reduction target, a sector emissions-intensity target, or an asset transition target. Scope 2 now has option of low-carbon electricity or absolute contraction. This matters more than any other line in the document. The old standard forced a growing business into a structural conflict between commercial success and climate alignment: every new hire, every extra production line, every contract won pushed your absolute emissions up and your compliance down. We called that out repeatedly. V2 does not abolish the conflict, but it gives a growing company a route to stay aligned while it grows. For a scaling manufacturer or a high-growth firm, that is the difference between a standard you can live with and one you cannot.
The second real improvement is the Category A and Category B split. Category A captures large corporates, broadly those above 250 employees in the UK. Category B is everyone else, which by number is the overwhelming majority of businesses. We argued in our whitepaper, How SBTi Is Not for the Little Guy, that applying identical absolute-contraction rules to a 15-person consultancy and a FTSE 100 manufacturer was not rigour but ideology, and that it excluded perhaps 90% of businesses from meaningful participation. Category B now brings simplified reporting, lighter verification, and exemption from certain Scope 3 obligations. Its Board took a lot of stick from the eco-purists for doing so, and deserves credit for seeing it through.
There is a third, quieter improvement. Third-party assurance of the base-year inventory is now required for Category A and encouraged for Category B. Voluntary disclosure without verification is precisely how greenwashing spreads. Requiring sign-off does not end the problem, but it raises the floor, and that is progress.
Flexibility, but with Complexity
Now, the trouble with how SBTi fixed its rigidity. It did not really simplify, it added options. Every option carries its own rules, its own evidence, its own modelling. The freedom to choose a target-setting route is also the obligation to select, justify and model the right one. Flexibility, delivered this way, is complexity in a friendlier form.
Consider what V2 layers on. Scope 3 is now materiality-led: you assess which categories matter and target those. Sensible in principle, but it hands every company a judgment to make, with real consequences for getting it wrong. Five-year cycles bring mandatory review, recertification, and re-baselining to the latest data, so any shortfall rolls into a steeper target next time.
The set-and-forget era is over, which is good for rigour and trust. On top of that sits a new Ongoing Emissions Responsibility programme governing credits and removals, and a long-term Net-Zero target that is now optional rather than the fixed end point it once was. None of this existed in V1. Each element may be defensible on its own, but the accumulation is a different animal: heavy, slow, and hard to navigate without dedicated resources or outside help.
Complexity Is Never Neutral. It Favours the Big.
Complexity is not neutral: it has a bias, and the bias runs towards size. Every additional system, route and assessment is a fixed cost, and fixed costs fall hardest on the smallest. A FTSE 100 firm with a ten-person sustainability team and a six-figure consulting budget will work through the materiality assessment, the route selection and the recertification cycle without breaking stride. A smaller business will not. The same rulebook that a large corporate experiences as manageable detail, a small one experiences as a wall.
Worse still, complexity invites gaming, and it rewards the players best resourced to do it. Materiality-led Scope 3 is the clearest case. For a company that wants to do the work, it is a tool for focusing effort. For a company that does not, it is a tool for deciding what to leave out, and the guardrails on what counts as a material category are not yet tight enough to stop creative interpretation. We flagged exactly this risk in our analysis of the draft in November 2025, and the final version has not closed it.
The cleverest move in V2 is the one that looks like a huge concession. Category B is not required to set Scope 3 targets, so on paper the SME is spared the hardest part of SBTi. But the exemption is conditional. Large companies must set near-term Scope 3 targets, and one of their routes is a supplier alignment target: increasing the share of tier 1 suppliers that are in transition or Net-Zero aligned. A large buyer can discharge its own obligation by leaning on its suppliers to align, and those suppliers will likely be SMEs.
So, the big take-away for SMEs is that Scope 3 is optional for you, but near-term Scope 1 and Scope 2 targets are not if you want to sell to a large SBTi-aligned company. Every company, however small, must set them, and set them on a Net-Zero-aligned trajectory. This does provide a clear commercial reason for an SME to be SBTi aligned, but in practice this means you’ll have to track your own direct emissions, maintain credible near-term targets and show visible progress towards them.
What V2 Still Gets Structurally Wrong
Beyond the complexity, two structural flaws survive untouched.
The first is that the intensity option is the wrong intensity. We argued for output-based intensity, emissions per unit of revenue, which tracks whether a business is decarbonising as it grows. What V2 added is physical, sector-based intensity. That suits some heavy industries, but it is not the metric most businesses need, and the one we asked for is still not permitted.
The second is the climate-tech paradox, unresolved and, remarkably, undiscussed. Take a company making high-efficiency solar panels or electric vehicles. It contributes measurably to the low-carbon transition. But if it scales fast, as successful climate-tech firms must, its own absolute emissions rise even as its effect on the wider system is overwhelmingly positive.
V2, like V1, gives no target-accounting credit for the emissions a company helps avoid elsewhere, and there will be many. As our entire production and resource model is redesigned, the tens of thousands of companies that build the transition, directly or indirectly, will see their own emissions rise to enable carbon reductions downstream.
The new routes separate a growing manufacturer from a declining coal plant to a degree, but a business whose products cut emissions across the economy still gets no recognition for it inside its own target. That is not a rough edge. It is a structural failure to measure the thing that matters.
Where This Leaves You
Strip away the detail and the verdict is straightforward. V2 is an enormous improvement on V1, and also a mixed bag. For a large organisation with the resources to run the machinery, it is more robust and accountable than V1.
SMEs (called ‘Category B’) are spared the worst of the complexity, but the supply-chain route can pull the smallest firms into SBTi without their ever choosing it, requiring them to decarbonise their own operations to keep their largest customers. That is reasonable in principle, but only if it has the tools i.e., low-cost verification and targets built around how real companies operate, not another system to maintain.
SBTi has dropped some of its dogma and added a great deal of machinery. The standard has improved; whether it reaches all the companies the SBTi wants it to will be the real test.
Chris Hocknell, Director
Chris brings over 18 years’ experience of supporting the built environment and corporate world with their sustainability goals. Specialising in sustainability strategy development, Chris works closely with clients to assess and understand their carbon and environmental footprint.
