Science Based Targets initiative
Science Based Targets initiative - Corporate Net-Zero Standard · Science Based Targets initiative (SBTi)
SBTi is the body that validates whether a company's emissions targets are consistent with climate science. It is voluntary, but for many Singapore companies it is effectively demanded by customers, lenders and investors. Corporate Net-Zero Standard Version 2.0 was published on 11 June 2026 and changes the rules substantially, including basing Scope 2 emissions targets only on the physical, location-based inventory.
What this means in Singapore
For Singapore companies, Version 2.0 lands harder than it does in most markets, and the reason is the grid.
1. Location-based-only Scope 2 targets remove the easy lever. Singapore generated about 94 per cent of its electricity from natural gas in 2024, and the grid emission factor has drifted from 0.409 kgCO2/kWh in 2019 to 0.402 in 2024. Under Version 2.0, a Scope 2 emissions target is measured on that physical, location-based inventory. Buying energy attribute certificates no longer moves the number. Real reduction has to come from consuming less electricity, or from the separate low-carbon electricity alignment target route. Any Singapore company whose decarbonisation plan was built on certificate purchases needs to rebuild it.
2. Mandatory limited assurance arrives years before the law requires it. Category A companies must obtain limited assurance over inventories and target-setting metrics. Singapore's own mandatory assurance requirement over Scope 1 and 2 does not begin until FY2029 for listed issuers and FY2032 for large non-listed companies. So an SBTi-committed Singapore company will be assured well ahead of the regulatory deadline - which is not necessarily bad news, since the FY2028 comparative for an FY2029 assured report has to be defensible anyway.
3. Check which category applies. The Category A and B split turns partly on geography and turnover. Singapore small and medium enterprises, and Singapore subsidiaries of global groups, should confirm their category before assuming Version 1 obligations carry across.
4. Timing is a decision, not a default. A company that wants to lock in Version 1.3.1 criteria must submit before 31 January 2028. A company that would rather not re-baseline twice may prefer to wait for the Version 2.0 portal in Q1 2027. Either way it is worth deciding deliberately rather than drifting into the deadline.
5. How it interacts with the mandatory regime. SBTi is not part of Singapore's regulatory stack. But the two systems share plumbing: both rest on the GHG Protocol Corporate Standard (2004) for measurement, both care about the consolidation approach, and both will scrutinise the base year and its recalculation policy. A company doing IFRS S2 reporting properly has most of what SBTi validation needs, with one important exception - SBTi now wants the physical Scope 2 inventory as the target basis, which is the same location-based figure IFRS S2 requires, so the two are pulling in the same direction.
6. Scope 3 will be the binding constraint. For Singapore financial institutions, category 15 dominates. For refiners, petrochemical exporters and bunker suppliers, category 11 does. The significance-based Scope 3 boundary in Version 2.0 means a company cannot quietly leave out the category that matters most, and the named optional exclusions do not cover categories 11 or 15.
7. Watch the direction of travel on instruments. SBTi has moved market instruments into an implementation hierarchy behind direct reductions, and GHG Protocol's Actions and Market Instruments workstream is proposing to report instruments in a separate statement rather than inside the physical inventory. These are two expressions of the same shift. Singapore corporates, which lean heavily on certificates for Scope 2 and on carbon credits for carbon tax purposes, should plan on the assumption that instruments will increasingly be reported alongside the inventory rather than netted into it.
How the framework works
What SBTi does, and what it does not do
SBTi does not collect disclosures and does not set accounting rules. It takes a company's targets and checks them against reference pathways derived from climate science, then validates or rejects them. The measurement underneath still comes from the GHG Protocol.
That makes it a different kind of framework from the ISSB or GRI. Nothing in Singapore law requires an SBTi target. What drives adoption is commercial: procurement questionnaires, supplier codes, lender and insurer expectations, and investor engagement.
Version 2.0 - what changed
SBTi published Corporate Net-Zero Standard Version 2.0 on 11 June 2026. The transition is staged rather than immediate:
- The validation portal is expected to open for Version 2.0 submissions in Q1 2027.
- From Q1 2027, companies may submit against either Near-Term Criteria Version 5.3 and Corporate Net-Zero Standard Version 1.3.1 or Version 2.0.
- After 31 January 2028, Version 2.0 becomes mandatory for all target submissions.
There is no separate "effective date" milestone in January 2027, despite claims to that effect in circulation. The two dates that matter are Q1 2027 (opens) and 31 January 2028 (mandatory).
The headline changes:
Company categorisation replaces the separate small-company route. Version 2.0 introduces formal Category A and Category B with differentiated obligations, based on turnover, geography, emissions and employee thresholds, with distinct approaches for small and medium enterprises and for companies in lower-income countries.
Separate Scope 1 and Scope 2 targets replace the combined Scope 1 plus 2 target. Scope 1 targets cover 100 per cent of direct emissions; Scope 2 targets cover 100 per cent of purchased electricity, heat, steam and cooling.
Scope 2 emissions targets are based only on the physical, location-based inventory. The option to set Scope 2 emissions intensity targets is removed. Alignment targets remain but are reframed from renewable to low-carbon electricity. Category A companies whose electricity demand grows faster than 20 per cent a year must set emissions targets.
Market instruments move into the target implementation hierarchy, which prioritises direct emission reductions ahead of instruments. Voluntary recognition programmes exist for hourly matching of Scope 2 and for ongoing emissions responsibility.
Scope 3 target boundaries change shape. Fixed-percentage coverage thresholds are replaced by a significance-based approach requiring coverage of all Scope 3 categories representing 5 per cent of categories 1 to 14 emissions, with named optional exclusions in categories 3, 7, 8, 9, 10 and 14 where the company lacks practical ability to influence outcomes - each exclusion to be reported and justified.
Scope 3 target-setting options expand into supplier and customer alignment pathways, measuring the share of suppliers or customers that are in transition or net-zero aligned, plus new volume, product use and product end-of-life alignment methods. Economic and physical intensity methods were removed for lack of science-based reference pathways.
Long-term targets are required only for companies setting near-term Scope 1 emissions intensity or asset transition targets, and long-term Scope 3 targets become optional for everyone - a reversal from Version 1.
Limited assurance becomes mandatory for Category A companies, covering inventories and target-setting metrics. Net-zero governance and transition planning become mandatory criteria, covering board accountability, a transition plan and disclosure.
The target base year shifts from a historical base year to one based on the most recent comprehensive data available, with equivalence validation if a company wants to keep communicating against an earlier reference year. Category A companies must identify and quantify emissions-intensive activities and report those representing 5 per cent of Scope 3.
Neutralisation criteria for residual emissions are expanded, with a forward-looking requirement to support carbon removals from 2035 onwards. The mandatory five-year target review is retired - all targets are now set on a five-year basis - and replaced by continuous evaluation for significant changes.
What is not established
Several figures circulate about Version 2.0 that could not be traced to SBTi's own release or its Version 2 page: specific Technical Council approval and Board of Trustees adoption dates, the exact windows of the two public consultations, and the frequently quoted statistic that 42 per cent of Version 2.0 sections are entirely new. SBTi's release says only that the standard followed two rounds of public consultation and pilot testing before approval by its independent Technical Council and adoption by its Board of Trustees. Treat the sharper numbers as unverified.
Standards in this family
5 documents.
Published 11 June 2026. The validation portal is expected to open for Version 2.0 submissions in Q1 2027, and Version 2.0 becomes mandatory for all target submissions after 31 January 2028.
SBTi's release is titled The SBTi releases Corporate Net-Zero Standard V2.0 to accelerate corporate climate action and carries the date 11 June 2026.
The operative dates, in SBTi's own words. The validation portal "is expected to open for Version 2.0 target submission in Q1 2027", and companies "will be able to submit targets to SBTi Services using either Version 1.3.1 or Version 2.0 from Q1 2027 until January 31, 2028, after which, Version 2.0 will become mandatory for all target submissions."
Note what this does not say. There is no 31 January 2027 effective-date milestone, although that date appears in a good deal of secondary commentary. If you are planning a submission, plan around Q1 2027 and 31 January 2028.
Process. SBTi describes the standard as the product of two rounds of public consultation and pilot testing, before approval by its independent Technical Council and adoption by its Board of Trustees. The specific approval and adoption dates, the consultation windows and the often-quoted claim that 42 per cent of the standard's sections are entirely new are not stated in the release or on the Version 2 page, and should not be repeated as fact.
What to do now. Companies with existing validated targets should read the transition provisions rather than assume their targets are unaffected, because the base year treatment, the Scope 2 basis and the Scope 3 boundary have all changed. Companies without targets should decide deliberately whether to submit under Version 1.3.1 before the window closes or to wait for Version 2.0.
The existing route remains open. Companies may submit targets under Near-Term Criteria Version 5.3 and Corporate Net-Zero Standard Version 1.3.1 until 31 January 2028.
Until the window closes, a company can still be validated under the previous rules. Whether it should is a judgement call rather than an obvious yes.
Arguments for submitting under Version 1.3.1 before 31 January 2028. The criteria are known and the internal case has usually already been built. A company that is nearly ready to submit gains a validated target sooner. For companies whose Scope 2 strategy rests on energy attribute certificates, Version 1 treatment is more forgiving than Version 2's physical-inventory basis.
Arguments against. Any target validated under the old rules will eventually have to be re-set under Version 2.0, and that re-set touches the base year, the Scope 2 basis and the Scope 3 boundary. A company that submits in 2027 under Version 1.3.1 may find itself doing the whole exercise twice within a few years. The Version 2.0 base year approach, which uses the most recent comprehensive data rather than a historical base year, may also make the second exercise less comparable with the first.
Version 1 structures that Version 2.0 replaces, and which are therefore the things to check in any existing commitment: the combined Scope 1 plus 2 target; the separate small and medium enterprise route; Scope 2 emissions intensity targets; economic and physical intensity methods for Scope 3; mandatory long-term Scope 3 targets; and the mandatory five-year target review.
Practical step. Whichever route is chosen, the underlying inventory work is the same - GHG Protocol boundaries, a documented base year recalculation policy and a defensible Scope 3 screen. That work is not wasted under either version.
Separate targets replace the combined Scope 1 plus 2 target, and Scope 2 emissions targets are based only on the physical, location-based inventory.
Separation. Version 2.0 requires separate Scope 1 and Scope 2 targets. Scope 1 targets cover 100 per cent of direct emissions; Scope 2 targets cover 100 per cent of purchased electricity, heat, steam and cooling. Combining them, as Version 1 allowed, let a strong result in one hide a weak one in the other.
The physical inventory basis. Scope 2 emissions targets are based only on the physical, that is location-based, inventory. The option to set Scope 2 emissions intensity targets is removed. Alignment targets are retained but revised from renewable electricity to low-carbon electricity. Category A companies whose electricity demand grows faster than 20 per cent a year must set emissions targets - a provision aimed squarely at rapidly expanding electricity users.
Market instruments move into the target implementation hierarchy, which prioritises direct emission reductions before instruments. Voluntary recognition programmes exist for hourly matching of Scope 2 and for ongoing emissions responsibility.
Why this is severe in Singapore. With a grid that is about 94 per cent natural gas and a factor improving only slowly, the location-based figure barely moves on its own. A Singapore company can no longer show Scope 2 progress by retiring certificates; it has to reduce consumption, or pursue the low-carbon electricity alignment route, or both. Efficiency measures that used to be a secondary story - chiller plant optimisation, controls, equipment replacement, demand management - become the primary one.
A point of alignment worth noting. IFRS S2 also requires the location-based Scope 2 figure, so the number SBTi now wants for target-setting is the same number the SGX regime requires for disclosure. That is one of the few places where the voluntary and mandatory systems have converged rather than diverged.
A significance-based boundary replaces fixed coverage percentages, and new alignment methods based on supplier and customer transition status are introduced.
Boundary. Fixed-percentage coverage thresholds are replaced by a significance-based approach: targets must cover all Scope 3 categories representing 5 per cent of categories 1 to 14 emissions. Optional exclusions are named for categories 3, 7, 8, 9, 10 and 14, available where the company lacks practical ability to influence outcomes, and each exclusion must be reported and justified.
Note what is not on the optional exclusion list: category 11 (use of sold products) and category 15 (investments). For Singapore those are precisely the two categories that dominate the two largest corporate archetypes - energy and chemicals exporters on one side, financial institutions on the other.
New target-setting options. Beyond absolute reduction, Version 2.0 adds supplier and customer alignment pathways that measure the share of suppliers or customers that are in transition or net-zero aligned, plus volume, product use and product end-of-life alignment methods. Economic and physical intensity methods were removed because of the lack of science-based reference pathways for those metrics.
The supplier alignment route is a meaningful change of posture: it measures whether a company is moving its value chain rather than only whether a modelled number has fallen.
Emissions-intensive activities. Category A companies must identify and quantify emissions-intensive activities and report those representing 5 per cent of Scope 3 emissions.
Long-term targets. Long-term Scope 3 targets become optional for all companies, a reversal from Version 1, while long-term targets generally are required only for companies setting near-term Scope 1 emissions intensity or asset transition targets.
What this means practically. A company cannot set a Scope 3 target until it knows which categories exceed the significance threshold, and it cannot know that without a screen across all fifteen. That is the same direction the draft GHG Protocol Scope 3 revision is heading with its 95 per cent inclusion threshold, so the screening work serves both.
Net-zero governance and transition planning become mandatory criteria, and Category A companies must obtain limited assurance over inventories and target-setting metrics.
Governance and transition planning become criteria, not good practice. Version 2.0 makes net-zero governance and transition planning mandatory criteria, covering board accountability, a transition plan and disclosure of both. A target is no longer a standalone artefact; it has to sit inside a governed plan.
Mandatory limited assurance. Category A companies must obtain limited assurance covering inventories and target-setting metrics. This is the provision with the largest practical consequence, because assurance is not something a company can arrange at the last minute. Limited assurance requires that the numbers be supportable on request: a single source of truth for activity data, an emission factor register with vintage control, documented boundary and consolidation policy, a written base-year recalculation policy with a stated significance threshold, and retained evidence for any instrument retirements.
Neutralisation. Criteria for residual emissions are expanded, with a forward-looking requirement to support carbon removals from 2035 onwards. Neutralisation applies to residual emissions after reduction, not as an alternative to reduction.
Target revision. The mandatory five-year target review is retired, since all targets are now set on a five-year basis, and is replaced by continuous evaluation for significant changes.
Base year. The target base year shifts from a historical base year to one based on the most recent comprehensive data available, with equivalence validation available if a company wants to keep communicating against an earlier reference year.
Singapore timing note. Mandatory limited assurance under SBTi arrives ahead of Singapore's own requirement, which begins in FY2029 for listed issuers and FY2032 for large non-listed companies. A company that builds an assurance-ready control environment for SBTi is, in effect, preparing early for the regulatory deadline as well - and the control environment, not the calculation, is where most of the work sits.