SBTi releases draft Net Zero Standard 2.0 for feedback

The Science-Based Targets Initiative (SBTi) has recently unveiled a draft of its anticipated Corporate Net-Zero Standard Version 2.0. This proposed update reinforces the critical 1.5C target, a fundamental aspect of The Paris Agreement, despite a brief exceedance of this threshold in 2024. The SBTi, widely regarded as the benchmark for climate action, has now surpassed 10,000 company commitments. This updated standard is poised to significantly influence global emission reduction targets.

Key updates in the draft standard

The new draft standard introduces several important changes:

• Differentiated requirements: Larger companies (Category A) will face more stringent requirements, while smaller companies (Category B) will have more flexibility.
• Separate targets for Scope 1 and 2: Companies must now set distinct targets for direct (Scope 1) and indirect (Scope 2) emissions.
• New Scope 2 goals: Companies need to set both location-based and market-based targets for Scope 2 emissions, accommodating zero-carbon electricity targets, including nuclear energy.
• Scope 3 targets: Mandatory for larger companies and optional for smaller ones, with a focus on the most emission-intensive emissions.

Implications for Australian Companies

These updates present challenges and opportunities for Australian businesses. Larger companies will need to enhance their emissions tracking and reporting capabilities, while smaller companies can benefit from the increased flexibility. The emphasis on zero-carbon electricity targets aligns well with Australia's growing renewable energy sector.

Public consultation and next steps

The updated SBTi standards represent a significant step forward in the fight against climate change. We encourage all companies to participate in the public consultation and start preparing for the upcoming changes.

The draft standard is open for public consultation until 1 June 2025. This is a crucial opportunity for businesses and stakeholders to provide feedback and shape the final standard, expected to be finalised in 2026 and implemented in 2027.

Together, we can make a meaningful impact on global emissions reductions.

How BDO can help

We are committed to helping companies navigate these changes. Our team of sustainability experts can assist with setting science-based targets, developing climate transition plans, and ensuring compliance with the new standards. We offer comprehensive services to support your journey towards net zero.