SBTi Corporate Net Zero Standard v2: Raising the bar for climate transition plans

For companies, they're fast becoming the centrepiece of regulatory compliance, investor scrutiny and strategic resilience.

In our recent webinar, we explored how transition plans are evolving from broad commitments to detailed, operational strategies and what companies need to do now to stay ahead.

When the Science Based Targets initiative (SBTi) released version 1.0 of its Net-Zero Standard, the guidance around climate transition plans was relatively high level. Companies were encouraged to develop one, but there were no specific requirements for what it should include or when it should be published.

That's changed with the new draft of version 2.0, which significantly raises the bar. Transition plans are now positioned as a mandatory and central component of corporate climate action. Here are the key changes:

• Structure and scope: Companies must include specific elements—governance, strategy, financing, metrics, stakeholder engagement—transforming the plan into a comprehensive operational strategy.
• Timing: Plans must be published within 12 months of SBTi target validation, encouraging early accountability.
• Accountability: Annual reporting on implementation indicators such as progress on emissions reductions and climate-aligned capital allocation is now expected.
• Enabling levers: Companies must disclose how they will achieve targets—this includes internal levers like R&D and external actions like supply chain engagement and policy advocacy.
• Universality: The requirements apply to all companies, regardless of sector or size, ensuring consistency and comparability.

This evolution is a clear message: a climate transition plan is not a communications tool, it's a business plan for decarbonisation.

A credible climate transition plan cannot be owned solely by the sustainability function. To succeed, it must be embedded across finance, operations, and governance, ensuring that decarbonisation becomes a core part of how the business is run, not just how it reports.

Finance: funding the transition

Align budgets and forecasts with climate goals; use green finance tools and carbon pricing to fund the transition.

Operations: delivering low-carbon outcomes

Cut emissions, improve efficiency, shift to renewables, engage suppliers, and innovate low-carbon products.

Governance: setting the tone and ensuring accountability

Ensure board oversight, assign accountability, coordinate teams, and embed climate in key business decisions.

Getting started with a climate transition plan can feel complex, but it doesn't have to be. Whether you're building from scratch or strengthening what you have, following a clear, structured approach will help ensure your plan is credible, aligned with key frameworks and tailored to your business. Here are six practical steps to guide the process.

1. Set your objectives and priorities for developing a transition plan.
2. Choose your framework—ISSB, CDP, or TPT are common choices.
3. Assess current gaps relative to your selected framework.
4. Identify actions to address these gaps and drive alignment.
5. Engage stakeholders to build internal buy-in and refine priorities.
6. Develop a comprehensive, audience-ready plan that brings it all together.

With climate disclosure regulations accelerating globally, companies that invest early in robust, credible transition planning will be better positioned for compliance, resilience, and long-term success. The message is clear: climate transition planning is no longer optional—it’s a strategic imperative.