Two years in the making, 1,770+ stakeholder responses, and one governance crisis later, the most consequential rulebook in corporate climate is final. What V2.0 requires, every material change from the November draft, how to apply it — and the first cut of our VCM Demand Model run on the final text, including the Category A/B census of who actually carries the new obligations.
Our model puts annual Category A VCM demand at 1.0–6.2 GtCO₂e by 2050 under the final text (2.7 Gt Base case) — carried by the 37% of SBTi companies that are Category A by count, but ~93% by emissions. The standard itself turns the SBTi from an ambition-validator into an implementation framework: two company categories, required five-year scope 1+2 cycles (scope 3 for Category A), best-efforts assessment, a sanctioned role for book-and-claim market instruments — and a three-level Ongoing Emissions Responsibility program that becomes a removals mandate for Category A from 2035. Credits still never count toward targets. Validation opens Q1 2027; V2.0 becomes mandatory for submissions after 31 January 2028.
The headline shift is philosophical before it is technical. V1 asked one question: is your ambition aligned with 1.5°C? V2.0 asks five: is your governance set up to deliver; is your base year current; are your targets matched to the levers you actually control; are you implementing through credible actions; and are you transparently assessing progress and resetting? In SBTi’s own words, the Standard is now, in SBTi’s words, “an action framework” — built to help companies make decisions and deliver — and the organisation an implementation partner rather than a validator of promises.
Targets are pursued on a best-efforts basis: a company that misses a target but can show it used every available lever, disclosed its barriers, and reset credibly stays inside the framework. CEO David Kennedy’s launch-day framing: “You can’t have a binary approach to meeting targets in the real world of uncertainty and dependency.”
Category A — large companies from all countries, plus medium-sized companies from high-income countries — carries the full obligations: scope 3 near-term targets, transition plan disclosure at validation (with up to 15 months’ flexibility), limited assurance of base-year data, and the post-2035 removals requirement. Category B — small companies everywhere, plus medium-sized companies from lower-income countries — gets a lighter on-ramp, with those obligations optional but “strongly encouraged”. Classification uses World Bank income categories (by the ultimate parent’s jurisdiction) and consolidated group thresholds across turnover, employees, balance sheet and emissions, averaged over the two most recent financial years — locked for each five-year cycle and redetermined at renewal.
Three structural facts set the frame. First, near-term five-year targets are the backbone: scope 1 and scope 2 targets are required for every company, scope 3 for Category A — while long-term targets and the overarching net-zero target itself are now optional. Kennedy again: “Companies are often reluctant to make commitments that go 20 years into the future. That isn’t common business practice, which is why we’re not requiring it.” Second, the Standard consolidates and replaces both the Corporate Near-Term Criteria and all earlier versions — one rulebook now anchors the framework, alongside the sector standards. Third, fossil fuel companies cannot validate targets until dedicated sector methods are finalised, under a formalised Fossil Fuel Policy.
The process behind the document is its legitimacy claim: two public consultations (18 March 2025 and 6 November 2025) drawing 1,770+ stakeholder responses, pilot testing with 370+ companies, five expert working groups, approval by the independent Technical Council, and adoption by the Board of Trustees. Over 11,000 companies hold validated SBTi targets — the population this rulebook now governs.
If your V2 readiness plan was built on the second consultation draft — as most teams’ were — here is exactly where the final text moved. Six changes matter; the rest is drafting polish.
| Area | Second draft (Nov 2025) | Final standard (11 Jun 2026) |
|---|---|---|
| Transition plans | Publish within 12 months of Initial Validation (Category B: optional) | Expected at validation, with up to 15 months’ flexibility (Category B: optional, as in the draft). Company categories themselves: unchanged — A and B in both versions |
| OER recognition | Two tiers: Recognised (1%, $20 floor) and Leadership (40%, $80 floor) | Three levels: Engaged (≥1%), Advanced (100% S1+2, ≥10% of total, $20 budget), Leadership (100% of total, $80 budget + volume-matched credits) |
| Neutralization durability | Fixed 41% long-lived / 59% short-lived split | 41/59 dropped. GHG-type rule: long-lived GHGs → long-lived removals, phased 10% → 100% from 2035 to the net-zero year |
| Scope 2 electricity | Hourly matching mandatory from 2030 (≥10 GWh); 10-year plant age limit, tightening to 5 years by 2035 | Hourly reporting mandatory (≥10 GWh) + voluntary recognition (50% → 75% → 90%); 15-year age limit; call for evidence on hourly matching |
| Long-term targets | Expected as standard architecture | Optional in most cases — required only where scope 1 uses intensity or asset-transition methods. Net-zero targets optional for all |
| Post-2035 responsibility | Mandatory from 2035, percentages open | Category A only: eligible removals from 1% (2035) rising linearly to 100% by the net-zero year; criteria flagged for review in V3 |
Carbon credits still never count toward target progress — SBTi restated it flatly on launch day. The 1.5°C anchor and the net-zero-by-2050-at-latest endpoint hold. Residual emissions stay low — around 10% under the scope 3 overarching method, pathway-determined elsewhere. And the question that triggered the 2024 governance crisis was settled the way the draft settled it: contributions live in a recognition layer, never in target accounting.
Read as a whole, the final traded headline stringency for participation in three places — long-term optionality, best-efforts assessment, the hourly-matching deferral — and tightened integrity in two: durability now scales to 100% for long-lived GHGs (directly answering the CDR sector’s loudest critique of the draft), and a formal Assurance Model now sits behind every progress claim.
Everyone has now read the same ~100-page standard. What nobody else has done is run them through a bottom-up demand model. Ours is built on Climate Decode’s coverage of ~487,000 credit retirements across nine active registries — Verra, Gold Standard, ACR, CAR, Puro, ART, GCC, Rainbow and ISO, with a tenth, ERS/EQ Earth, tracked at issuance — mapped against the SBTi target universe and run against the final V2.0 text: the OER levels, the 2035 removals ramp, and the durability rules as published. Because the post-2035 mandate (C45) binds Category A, the model is scoped to that cohort — 37% of SBTi companies by count, but roughly 93% of covered emissions. Three findings lead.
SBTi-aligned companies today retire credits equal to about 0.06% of their emissions on a gross-Scope-3 basis — one-sixteenth of the 1% “Engaged” floor — the lowest rung of the new recognition program, and itself still voluntary until the post-2035 mandate. On our deduplicated ~10 Gt emissions base (gross Scope 3 of ~34 Gt triple-counts shared value chains), it is ~0.2% — still a fivefold gap to the floor. Either way, V2.0 doesn’t nudge the market; it resets the baseline.
Figure. VCM demand by type to 2050 — Climate Decode VCM Demand Model, Base case, Category A scope, run on the final SBTi Corporate Net-Zero Standard V2.0 (June 2026). Avoidance, nature removals and durable/engineered CDR, stacked.
It re-composes; it doesn’t just grow. The avoidance base — REDD+, renewables, cookstoves — flatlines around 250–330 Mt a year. Every additional tonne of demand to 2050 is a removal, and most of it is durable. V2.0 changes what the market buys far more than how much.
2035 is the hinge. While Ongoing Emissions Responsibility is voluntary, demand stays modest — the curve barely lifts through the early 2030s. The moment removals become required, it turns near-vertical. The years to 2035 are the build-and-contract window, not the buying window.
The teal wedge is the scarce asset. Because long-lived CO₂ must be neutralised with durable removals, engineered CDR climbs to roughly 70% of all demand by 2050 — about 1.9 Gt a year — in our Base case. Nature-based removals plateau — repurposed onto the short-lived gases, methane and N₂O.
Demand is back-loaded and durable-heavy. The buyers who win secure engineered-CDR offtake — and recent-vintage supply — before the 2035 wave prices it.
The demand curve above has an owner. We classified the entire SBTi validated universe — 11,221 companies from the live target dashboard (11,030 after setting aside 191 financial institutions, which sit under the separate FINZ standard) — against the final standard’s category rules: organisation type crossed with World Bank income classification of the headquarters economy.
| Cohort | Companies | What V2.0 binds them to |
|---|---|---|
| Category A (firm) | 4,114 — 37% of the universe | Corporates in high-income economies. Scope 3 targets, transition-plan disclosure, assured base years, a public OER intent declaration at validation — and the 2035 removals mandate. |
| The swing pool | 718 — 7% | Corporates in lower-income economies — China (326), India (128), Brazil (43) lead. The large-vs-medium revenue test decides whether each lands in A or B. The decisive frontier for Asian demand. |
| Category B (floor) | 6,198 — 56% | SME-route companies. Near-term scope 1+2 cycles — but no scope 3 requirement, no mandated OER, no 2035 removals obligation. Everything heavier is voluntary. |
The asymmetry is the finding. Category A lands at 4,100–4,800 companies — 37–44% of the universe by count — yet carries an estimated ~93% of covered emissions (our Low/Base/High range is 90/93/96%, derived from SBTi’s own flag that 42% of target-setters are SMEs, the net-zero tracker confirming the large corporates as Category A, and a top-20%-of-firms-equals-89%-of-revenue concentration). That is how 37% of companies carry 100% of the mandated post-2035 removals demand — every tonne of the curve’s near-vertical climb. Roughly six in ten SBTi companies, the SME-route Category B floor, face no mandated demand at all. Within Category A, 1,694–1,945 companies already hold validated net-zero targets — the cohort bound to 100% removal neutralisation at their net-zero year under C46.
And it is, today, a European demand curve. The firm Category A cohort is 63% European, 18% North American, 15% Asian. Asia’s weight sits in the swing pool — which means category determination, a registration-stage test most companies have never run, will quietly decide where the 2030s demand curve is bought.
Source: Climate Decode VCM Demand Model — proprietary, built on our coverage of ten registries (nine with retirements; ERS/EQ Earth issuance-only to date) and the SBTi target universe, run on the final Corporate Net-Zero Standard V2.0. The model is scoped to Category A, which the C45 removals mandate binds; magnitude is driven linearly by the covered-emissions base (~10 Gt), universe growth (×2.2 Base) and the residual share (10%). All figures are scenario projections, not forecasts. Note the post-2035 responsibility criteria (CNZS-C45) are designated illustrative pending review in V3 — a policy risk the scenario range reflects. Category census: Climate Decode classification of the SBTi target dashboard export (11 June 2026) — organisation type × World Bank income group of headquarters economy; the large-versus-medium revenue test for lower-income corporates is not observable from public data, hence the ranges.
Target setting is where V2.0 does its heaviest engineering. Every company sets two or more near-term targets on a five-year cycle, from a forward-looking base year built on the latest data — not the historical base year of V1. What you must set depends on your category; how you set it depends on a method menu per scope. Here is the complete map.
| Target | Category A | Category B |
|---|---|---|
| Scope 1 near-term (5-yr) | Required | Required |
| Scope 2 near-term (5-yr) | Required | Required |
| Scope 3 near-term (5-yr) | Required | Optional — strongly encouraged |
| Long-term targets | Optional† | Optional† |
| Net-zero target + neutralization | Optional capstone | Optional capstone |
† Long-term targets become required where scope 1 uses the emissions-intensity or asset-transition method. All pathways converge on net-zero by 2050 at the latest.
Absolute reduction: a straight-line trajectory from the target base year to the net-zero year. The default route, and the simplest to govern.
Emissions intensity: sector intensity pathways (steel, cement, chemicals) for companies whose physics are sectoral, not linear. Triggers a mandatory long-term target.
Asset transition — new in V2.0: for companies whose capital stock does not turn over linearly. Trajectory defined through dated milestones (phase-out of investment in new GHG-emitting assets, retirement schedules) and/or a science-derived carbon budget, quantified in the transition plan. Also triggers a long-term target.
The quiet revolution: targets centre on low-carbon electricity — ≤0.048 kgCO₂/kWh, tightening to ≤0.024 in 2035 — a definition that includes renewables, nuclear, and CCS-fitted generation. Set emissions-reduction targets, low-carbon-share targets, or both.
Contract guardrails: plants no older than 15 years (longer PPAs where the plant is <36 months into operation); procurement in the same deliverability region (interconnection-rights and aggregated-load exceptions); existing contracts grandfathered for their duration.
Hourly layer: companies must calculate and report the hourly-matched share for any activity pool consuming ≥10 GWh, at the end-of-cycle assessment. Voluntary recognition at ≥50% now, ≥75% from 2030, ≥90% from 2035.
Boundary first: the draft-era 67%-coverage arithmetic is gone. Category A companies target material value-chain emissions with justified exclusions — categories individually under 5% of scope 3, fuel-and-energy-related activities already mitigated via scope 1/2 targets, and activities lacking practical influence.
Then choose: an overarching reduction target (linear contraction to ~10% residual by 2050); supplier/customer alignment targets (a growing share of tier-1 partners setting science-based targets of their own); or category- and activity-specific targets built around procuring lower-carbon commodities — the route that connects directly to market instruments.
The overarching net-zero target is now an optional crown: near-term plus long-term targets across scopes, plus a commitment to neutralize all residual emissions at the net-zero year. Optional — but companies that skip it also skip the claim, and the neutralization rules in Section 6 bind only companies that make one. Strategy question for boards: the claim’s value against a dated, audited 100%-removals obligation.
TerraNova is Climate Decode’s MRV and decarbonisation-planning workspace — build your V2.0 base-year inventory, model every eligible target route side by side, and carry the chosen trajectory straight into transition-plan and validation evidence.
V2.0 is the first version to define what credible target delivery looks like. Three rungs, in strict priority order:
Reduce emissions at source, at activity level: efficiency, fuel switching, electrification, and engaging suppliers and customers to cut their own emissions. Always first in line — and reflected directly in your inventory and company-level claims.
Where emissions sit in shared systems — electricity and gas grids, supply sheds, logistics networks — act within the system. This is where market instruments enter: certificates conveying low-carbon attributes for electricity, biomethane, steel, or cement.
Where activity and pool options are constrained, act at sector level — provided the action relates to the same activity type in a relevant geographic or system context, so it meaningfully addresses the emissions you are responsible for.
For the first time, SBTi formally sanctions book-and-claim and mass-balance market instruments — for electricity, biomethane, steel and cement — inside target implementation, under integrity criteria: project-level additionality, and issuing programs demonstrating system-level impact. The accounting boundary is precise: book-and-claim does not lower your reported scope 3 number; it supports a system contribution claim. It is a reversal of SBTi’s pre-2026 refusal to recognise green-gas and commodity certificates — and the demand signal the cement, steel and biomethane certificate ecosystems were built for.
Progress runs on a rolling rhythm: annual reporting, then an assured end-of-cycle assessment every five years under the new SBTi Assurance Model. Higher-than-trajectory emissions in a target year mean steeper required reductions in the next cycle — the standard’s answer to “what happens if we miss.” Minimum progress criteria for next-cycle targets will sit in the SBTi Assurance Manual.
Chapter 6 is where two years of carbon-credit controversy landed. The settlement: credits and contributions are a complement, never a substitute — separately accounted (no netting, no double counting, permanent retirement required), and never counted toward target progress. Every Category A company must declare at validation whether it intends to participate, or explain why not — making non-participation a disclosed choice on the SBTi Dashboard. Within that firewall, three recognition levels, assessed on cumulative coverage over the five-year cycle:
Cover ≥1% of total ongoing scope 1+2+3 emissions across the cycle — through verified mitigation outcomes matched tonne-for-tonne, or a contribution budget ($20/tCO₂e recommended). The visibility floor: cheap to enter, public to skip.
Cover 100% of scope 1+2, topped up with scope 3 so total coverage reaches ≥10% of ongoing emissions — volume-matched, or budgeted at $20/tCO₂e of covered emissions. The new middle tier the market asked for during consultation.
Cover 100% of total ongoing scope 1+2+3 — with a contribution budget of $80/tCO₂e and volume-matched verified mitigation, any remainder flowing to eligible climate actions. Full internalization of the cost of climate change.
SBTi is explicit that the dollar figures are contribution-budget benchmarks — “not intended to define best practice or prescribe market prices for mitigation instruments” — with the $80 Leadership level set at the lower end of science-based carbon-price estimates, both subject to periodic review. Coverage is calculated on the physical inventory (location-based for scope 2), and participants report a full scope 3 inventory annually. Scope 3 coverage can be shared with value-chain partners under written allocation agreements.
The draft’s fixed 41/59 durability split is gone — durability now follows the gas, not a ratio. For removals developers, the consequence is a dated, compulsory demand curve for the first time in SBTi’s history; for buyers, a procurement discipline that starts a decade before the mandate bites.
Applying V2.0 is a repeating five-year loop: register with the SBTi and confirm your category → govern (highest-level sign-off plus a transition plan) → assess the base year on the latest data (limited assurance for Category A) → set targets per the map in Section 4 → validate through SBTi Services → implement down the hierarchy → report annually and pass the assured end-of-cycle assessment → reset for the next cycle under minimum progress criteria. The calendar that governs all of it:
What is the SBTi Corporate Net-Zero Standard V2.0?
V2.0 is the final version of the SBTi’s flagship framework for corporate net-zero target setting, published on 11 June 2026 after two public consultations, pilot testing with over 370 companies, Technical Council approval and Board of Trustees adoption. It reframes the standard as an action framework built on five pillars — net-zero governance, target base year assessment, target setting, target implementation, and reporting and progress assessment — plus a voluntary Ongoing Emissions Responsibility recognition program.
When does V2.0 take effect and become mandatory?
Validation against V2.0 opens in Q1 2027, with an effective date of 1 February 2027. Companies can submit targets under either V1.3.1 or V2.0 from Q1 2027 until 31 January 2028, after which V2.0 becomes mandatory for all new target submissions. V1 remains open for target setting until the end of 2027 — and SBTi encourages companies planning 2026 submissions to proceed under it now.
What are Category A and Category B companies?
The final standard keeps the draft’s two company categories, A and B, with the same structure. Category A covers large companies from all countries and medium-sized companies from high-income countries; Category B covers small companies from all countries and medium-sized companies from lower-income countries — classified using World Bank income categories and consolidated group thresholds for turnover, employees and emissions, averaged over the two most recent financial years. Several Category A requirements — transition plan disclosure, base-year assurance, scope 3 target setting — are optional for Category B.
What changed between the November 2025 draft and the final?
Six changes matter: three company categories became two (A and B); the two-tier Recognised/Leadership OER design became three levels — Engaged (1%), Advanced (10% of total with a $20/tCO₂e budget option) and Leadership (100% with an $80/tCO₂e budget plus volume-matched credits); the fixed 41/59 long-lived/short-lived neutralization split was dropped in favour of GHG-type-driven durability with a phased 10%-to-100% long-lived ramp; the scope 2 hourly-matching mandate became mandatory hourly reporting plus voluntary recognition; the contract plant-age limit moved from 10 years (5 by 2035) to 15 years; and long-term targets became optional in most cases.
Do carbon credits count toward SBTi targets under V2.0?
No. SBTi’s position is unchanged — and was restated on launch day: carbon credits do not count toward science-based target progress. Credits and other climate contributions sit in the separate, voluntary Ongoing Emissions Responsibility program, are accounted for separately from the inventory, and cannot be netted against it. From 2035, supporting eligible carbon removals becomes a requirement for Category A companies — still outside target accounting.
How does the Ongoing Emissions Responsibility (OER) program work?
OER is a voluntary recognition program with three levels assessed over the five-year cycle: Engaged — cover at least 1% of ongoing scope 1+2+3 emissions through volume-matched verified mitigation or a contribution budget; Advanced — cover 100% of scope 1+2 and at least 10% of total, with a $20/tCO₂e budget option; Leadership — cover 100% of total ongoing emissions with an $80/tCO₂e budget plus volume-matched verified mitigation. Category A companies must declare whether they intend to participate. From 2035, Category A companies must support eligible carbon removals covering 1% of ongoing emissions, rising linearly to 100% by their net-zero year, with long-lived removals phasing from 10% to 100% of the long-lived-GHG share — checked at end-of-cycle assessments after 2035, so retirement stays effectively voluntary until each company’s first end-of-cycle assessment after 2035.
What does V2.0 require for scope 2 and electricity?
Scope 2 targets centre on low-carbon electricity, defined as generation at or below 0.048 kgCO₂/kWh (tightening to 0.024 in 2035) — which includes renewables, nuclear and CCS-fitted generation. Contracts qualify for plants up to 15 years old, procurement must generally sit in the same deliverability region as consumption, existing contracts are grandfathered, and companies consuming 10 GWh or more must report their hourly-matched share — with voluntary recognition at 50%, 75% and 90% thresholds over time.
How do companies apply the standard in practice?
The cycle runs: register with the SBTi and confirm company category; secure board-level sign-off and a transition plan; build a latest-data target base year inventory (limited assurance for Category A); set near-term five-year targets for scope 1 and scope 2 (all companies) and scope 3 (Category A), with optional long-term and net-zero capstones; validate via SBTi Services from Q1 2027; implement through the action hierarchy, using qualifying market instruments where needed; report annually and undergo an assured end-of-cycle assessment; then set next-cycle targets subject to minimum progress criteria.
Every requirement cited above is verifiable against the published standard and its supporting documents; launch-day reporting is listed where quoted.
Section 3’s analysis is one cut from the Climate Decode VCM Demand Model. The full Market Outlook — trajectories by year, project type, vintage and sector — lands next week. Subscribers get it before public release. Stay tuned.
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