Climate | ~4 min read
SBTi 2.0 - rethinking the route to net zero
The latest version of the Corporate Net Zero Standard from the Science Based Targets Initiative (SBTi) reflects a shift in thinking, with a more inclusive approach to affecting transition.
Rather than enforcing stricter emissions targets, it actually aims to bring more companies into the journey by recognising that the path to net zero will look very different across sectors and geographies and is unlikely to be linear.
The Science Based Targets initiative (SBTi) was launched in 2015 and since then it has become a recognised standard for investors assessing corporate climate credibility. The number of companies submitting targets for validation has grown over the years, reaching over 11,000 companies in 2026.
This matters in the context of a growing realisation that limiting warming to 1.5°C – in line with the Paris agreement – may not be a perfectly smooth trajectory as we have previously noted. Many scenarios now suggest a likely temporary overshoot, before CO2 is removed from the atmosphere at scale to bring temperatures back down over time. Against this backdrop, the challenge is not only ambition, but delivery under real-world constraints.
SBTi 2.0 reflects this reality. It introduces more flexibility, allowing companies to set targets that are shaped by their operational context, while placing greater emphasis on transparency and implementation. It also introduces voluntary recognition for companies that choose to go further, not just reducing their own emissions, but contributing to the broader transition by financing carbon reduction or removal efforts beyond their direct value chain.
We see this mindset as a parallel to the case for transition finance: supporting not only the leaders, but also the hardest-to-abate sectors where incremental progress can deliver outsized impact.
SBTi’s new view on carbon credits illustrates this shift. While previously excluded, they are now recognised as a complement, not a substitute, for residual emissions reductions. This marks a shift toward explicitly acknowledging the role of carbon removals and broader climate contributions alongside direct decarbonisation.
We see SBTi 2.0 as a pragmatic evolution of the standard: the transition is no longer about defining the destination but navigating a more complex and uneven journey toward it.
Balancing pragmatism and credibility:
Positives:
- Reflects real-world constraints (infrastructure limits, supply chains, sector differences).
- Brings more companies into the transition, not just the current leaders.
- Shifts focus from setting targets to actually delivering emissions reductions.
Critiques:
- Risk of weakening credibility and enabling greenwashing.
- Ongoing reliance on accounting mechanisms (like renewable electricity certificates). rather than real-world emissions reductions.
- Less emphasis on strict 1.5°C pathways, at a time when warming may already exceed this threshold.
- Increased reporting burden.
In summary, we see this as the SBTi navigating a classic credibility trade-off: maintaining uptake versus preserving rigor.
