Setting carbon reduction targets has become a basic requirement for companies worldwide to address climate risks, and the Science Based Targets initiative (SBTi) is currently the most authoritative organization and standard in this field. However, with the release of the draft of the new SBTi standard, both companies that have already completed target setting and those that have yet to begin are facing increased pressure.
Starting from January 1, 2028, companies will be required to submit targets in accordance with SBTi version 2.0, marking a new threshold for sustainability transformation. The new Corporate Net-Zero Standard V2 is grounded in science while balancing innovation and practical feasibility, addressing the key needs and challenges companies face when implementing net-zero commitments.
For companies, gaining an early understanding of the differences between the new standard and the previous version, and assessing gaps in current strategies and data capabilities, will be critical actions to proactively plan net-zero transformation and reduce operational risks.
According to the latest SBTi Trend Tracker 2025, more than 8,200 companies worldwide have set science-based carbon reduction targets. By the end of 2024, companies with SBTi-approved targets or commitments accounted for 41% of total global market capitalization, indicating that sustainability is no longer a slogan, but a key reference for corporate strategy and investment decisions.
From a regional perspective, the number of Asian companies setting targets increased by 134% compared to 2023, growing from 1,228 to 2,874 companies. China, Thailand, Japan, and Taiwan all recorded significant growth in 2024. In Taiwan alone, approximately 200 companies have committed to or set SBTi targets, reflecting the Asia-Pacific region’s strong emphasis on science-based decarbonization. From an industry perspective, the industrial sector had the highest number of companies setting targets in 2023, accounting for around one-third of the global total.
For companies that have yet to keep pace with the SBTi trend, failing to assess and plan their decarbonization roadmap and strategy in a timely manner may result in declining market competitiveness and reduced investor attention.
As global sustainability transitions accelerate, companies are under pressure to transform their decarbonization intentions into measurable, trackable actions. The Science Based Targets initiative (SBTi) provides a clear, science-driven framework to help organizations do just that.
The SBTi was jointly launched by CDP, the United Nations Global Compact (UNGC), the World Resources Institute (WRI), and the World Wide Fund for Nature (WWF). Its mission is to help companies define emission reduction pathways aligned with the Paris Agreement, ensuring that the global temperature rise is limited to 1.5°C above pre-industrial levels.
Setting SBTi targets is not merely a statement of environmental intent—it is a strategic business action driven by three key forces:
1.Brand and Customer Expectations ― Global brands and major buyers are tightening decarbonization requirements for their suppliers. SBTi-aligned targets are increasingly becoming a prerequisite for supply chain collaboration. For example, Apple requires its supply chain to achieve carbon neutrality by 2030, encouraging all partners to set science-based targets as part of qualification criteria.
2.Investor Demands ― With the rapid rise of ESG investing and sustainable finance, investors view science-based targets as a critical indicator of risk management and long-term competitiveness.
3.Regulatory Requirements ― In Taiwan, the Greenhouse Gas Reduction and Management Act, together with the Financial Supervisory Commission’s (FSC) adoption of IFRS S1/S2 climate disclosure standards, requires listed companies to measure and disclose emissions data. Setting SBTi targets helps companies proactively respond to policy shifts, reduce regulatory risks, and enhance transparency—meeting the expectations of both governments and international markets.
Companies must define emission reduction targets across three scopes:
Targets are established using scientific models and industry benchmarks to ensure feasibility and measurability.
The SBTi target-setting process includes five stages:
Companies must first register an account on the SBTi Services Portal to submit near-term or net-zero targets. The platform provides emission calculators, sectoral benchmarks, and operational guidelines to support data quantification and pathway planning. Once submitted, SBTi’s technical team reviews and validates the targets to ensure alignment with the 1.5°C scenario under the Paris Agreement. Through this official process, companies can manage targets systematically, enhance scientific rigor and credibility, and strengthen trust among investors, customers, and supply chain partners.
The latest SBTi standard is the second draft version released in November 2025. As there are several differences between the new draft and the previous version, we anticipate that the standard may still be adjusted prior to its official release. Therefore, this article is based solely on information currently available.
The previous Version 1.3 standard remains a credible and mature framework for companies worldwide to set science-based carbon reduction targets. For companies that have not yet set targets by 2026, SBTi recommends starting as soon as possible, as efforts made under Version 1.3 will continue to hold reference value and provide a solid foundation for future alignment with Version 2.0.
Until December 31, 2027, companies may continue to set new targets under the current Corporate Net-Zero Standard (V1.3) and Near-Term Criteria (V5.3). Starting January 1, 2028, all companies will be required to apply Version 2.0.
Therefore, we recommend that companies which have not submitted targets by 2026 consider setting targets under the existing standard before 2028 to reduce uncertainties associated with the new standard. At the same time, companies should also begin preparing for the updated requirements of Version 2.0 to ensure a well-planned transition.
Existing near-term targets are expected to remain valid until the end of their target timeframe. However, when targets are updated in the future, companies will be required to adopt the Version 2.0 standard. SBTi will release transition guidance to provide further details.
Transition plans and mid-term disclosures―Category A companies must develop a climate transition plan within 12 months after target validation, i.e., a roadmap to net zero by 2050, and regularly disclose progress, including target details, actions, and costs, to strengthen transparency.
Third-party verification of emissions inventories―Category A companies must obtain limited assurance from an independent third-party organization for their greenhouse gas emissions inventories. Verification should at a minimum cover Scope 1, Scope 2, and material Scope 3 emission categories, and where feasible, include other relevant target-setting indicators to improve data reliability and external trust.
Separate target setting by scope―Companies must set decarbonization targets separately for Scope 1, 2, and 3 to improve strategic precision.
Scope 1: All companies must set near-term targets for Scope 1 emissions, using either an alignment-based or emissions-based approach. Long-term targets are mandatory only for heavy industry and transport sectors, and must use absolute emissions reductions.
Scope 2: For near-term targets, the updated draft requires companies to set low-carbon electricity procurement targets; if heat, steam, or cooling sources account for more than 5% of a company’s Scope 2 location-based emissions, targets must also be set for these sources. For long-term targets, companies must set emissions targets for electricity, heat, steam, and cooling (using either the location-based or market-based method).
Scope 3: Companies must assess which Scope 3 categories account for more than 5% of their total emissions and set targets for those categories. In addition, companies must set individual targets for “priority raw materials” that account for at least 5% of emissions within that category in the supply chain.
To address the diversity of value chain emissions profiles, the draft standard proposes three target-setting approaches: the emissions intensity approach, the activity alignment approach, and the counterparty alignment approach, which include tiered supply chain engagement and emissions reduction.
November 2025: Release of the second draft
2026-2027: Companies may set near-term targets under the previous version
From 2028 onward: Newly set near-term and long-term targets must be developed in accordance with Version 2.0
Although SBTi provides a clear science-based framework, companies still face multi-layered challenges when implementing it in practice. The introduction of the new 2.0 standard further highlights the difficulty of complying with SBTi requirements.
SBTi 2.0 introduces new requirements such as company categorization, transition plan disclosures, third-party verification, and zero-carbon electricity strategies. Companies must fully understand these requirements and adjust their strategies accordingly, which poses a significant challenge for smaller companies or those still taking a wait-and-see approach. In addition, SBTi periodically releases sector-specific standards—such as the automotive sector standard issued in 2025—placing additional pressure on companies.
Under the updated SBTi requirements, corporate greenhouse gas emissions inventories must undergo limited assurance by an independent third-party organization. However, third-party verification resources have become increasingly constrained in recent years, leading to intense competition for verification schedules. As a result, companies must plan verification activities early to avoid compressed timelines for emissions inventories and ensure smooth completion of the verification process.
Previously, SBTi focused primarily on target setting. Under SBTi 2.0, companies are further required tond producing relevant strategies. According to SBTi 2.0 requirements, transition plans should include: the definition of specific decarbonization targets and related assumptions; where feasible, timelines for transitioning operations to low-carbon fuels; plans for retrofitting or converting assets and phasing them out at the end of their useful life; strategies to phase out and reduce the use of and support for fossil fuels; and for Scope 3 emissions, corresponding decarbonization actions, including activity-level measures and the proportion of supplier or value-chain partner engagement.
Therefore, companies must adopt a longer-term perspective when planning their decarbonization roadmap, while establishing appropriate governance structures to ensure strategic coherence and effective implementation.
Before setting SBTi targets, a comprehensive and reliable greenhouse gas emissions inventory is a prerequisite. This is particularly true for Scope 3 emissions, which cover a wide range of indirect emissions from suppliers, logistics, and product use. Data completeness and consistency are critical for target setting and subsequent verification outcomes. As such, companies should establish systematic carbon management and data collection processes early on to ensure transparency and traceability across all scopes, laying a solid foundation for the development and implementation of science-based targets.
The new standard prohibits the use of consolidated targets, requiring companies to develop distinct decarbonization strategies for each scope and to apply appropriate mitigation approaches accordingly. This significantly increases the resources needed for strategic planning and execution.
SBTi 2.0 introduces new requirements for low-carbon electricity procurement, based on three core principles: purchased electricity must be accompanied by environmental attribute certificates; it must come from newly built or repowered generation facilities within the past ten years; and it must be located within the same “physical deliverability” region as the company’s electricity consumption. In addition, for large electricity consumers, the generation profile of purchased electricity must be time-matched with consumption. These principles are aligned with the RE100 and 24/7 frameworks and are expected to become key reference points for future updates to the GHG Protocol Scope 2 accounting methodology. Together, these stringent requirements significantly increase the complexity of low-carbon electricity procurement.
Companies should define complete inventory boundaries, clearly identify emissions data sources, and apply reasonable estimation methods for data that are difficult to obtain, ensuring data completeness and accuracy while applying appropriate emission factors. To improve efficiency and reliability, companies can implement carbon management systems to automate the collection, calculation, and tracking of emissions data, and regularly update emission factors to enable real-time monitoring and long-term management. This not only accelerates the inventory process but also allows companies to plan verification timelines earlier.
Beyond setting separate targets for each scope, companies must break down net-zero goals into measurable annual actions. This requires establishing cross-functional collaboration mechanisms, defining clear roles and responsibilities, and tightly linking short-term actions with long-term net-zero ambitions to create a traceable decarbonization pathway.
After setting SBTi targets, translating them into real-world emissions reductions becomes a key challenge. Companies can assess their current energy use and emissions profiles, design practical implementation strategies, and adopt a multi-pronged approach. Examples include procuring low-carbon electricity that complies with the latest SBTi requirements, establishing energy management systems to continuously track and optimize energy use, and improving production energy efficiency through process optimization, equipment upgrades, and green building retrofits. These actions not only help companies achieve science-based targets but also lay a solid foundation for long-term net-zero transformation.
As global attention to net-zero commitments continues to grow, SBTi has become a key international benchmark for climate action and supply chain collaboration. With the launch of SBTi 2.0, companies are now facing standards that are more science-based, granular, and practical.
Delta’s sustainability consulting team supports companies in addressing the latest SBTi requirements by providing end-to-end services—from commitment and gap analysis to target setting. The team also helps companies translate commitments into concrete actions by establishing comprehensive emissions inventories and data management systems, developing transition plans, and driving on-the-ground decarbonization initiatives. Through science-based and systematic decarbonization strategies, companies can align with international standards while strengthening brand trust and investor confidence.
