SBTi Corporate Net-Zero Standard V2 is here. What does it mean for the carbon market?

After two years of stakeholder consultation, the Science Based Targets initiative (SBTi) has published its Corporate Net-Zero Standard Version 2.0 (CNZS V2.0). For the carbon market, the headline finding is significant: carbon credits are no longer peripheral to corporate net-zero strategies — they are formally embedded in the framework, and for large companies, their use will become mandatory from 2035.

This blog focuses on what the new standard means specifically for carbon credits, how the rules work, and what to expect from the market.

What's changed — and why

CNZS V2.0 represents a substantial revision of SBTi's approach. Nearly 40% of the Standard V2 is entirely new compared to the previous version; the other 60% represents modifications to the previous approaches. 

The SBTi has repositioned itself as a "transition partner," moving from a framework focused on target ambition to one that also provides guidance on implementation. This shift reflects feedback the SBTi received during consultation: that absolute decarbonization across all emissions scopes is difficult to deliver — not due to a lack of commitment, but to factors largely outside companies' control, from supply chain opacity to the slow commercial scaling of low-carbon technologies.

The practical result is that carbon credits are now recognized as a legitimate part of the corporate net-zero toolkit — both voluntarily today, and mandatorily from 2035 onwards.

The Ongoing Emissions Responsibility (OER) framework

The centerpiece of the changes for carbon credits is the new Ongoing Emissions Responsibility (OER) program. OER recognizes companies' climate contributions toward covering their "ongoing emissions" — emissions across all scopes that continue to be released within the target timeframe, beyond what companies are required to mitigate through their validated targets.

The OER operates in three sequential phases and distinguishes expectations for Category A companies (large companies, and medium-sized companies from high-income countries) and Category B companies (small companies, and medium-sized companies from lower-income countries).

1. Optional recognition program.

Companies that choose to participate are recognized across three tiers:

• Engaged: Mitigate at least 1% of ongoing Scope 1–3 emissions by either establishing a contribution budget or supporting verified mitigation outcomes (VMOs). 
• Advanced: Mitigate 100% of ongoing Scope 1–2 emissions, plus additional Scope 3 emissions, so that total coverage reaches at least 10% of total ongoing Scope 1–3 emissions — via a contribution budget of $20/tCO₂e or VMOs.
• Leadership:
  
  • Category A companies: Mitigating 100% of total ongoing Scope 1-3 emissions by (1) establishing a contribution budget equal to $80/ton, (2) using the contribution budget to purchase verified mitigation outcomes equal to the volume of emissions covered, and (3) using any remaining contribution budget to purchase additional verified mitigation outcomes and/or support further eligible climate action.
  • Category B companies: Mitigating 100% of ongoing Scope 1-2 emissions, and additional scope 3 emissions as necessary, so that total coverage equals at least 10% of total ongoing Scope 1-3 emissions by (1) establishing a contribution budget equal to $80/ton, (2) using the contribution budget to purchase verified mitigation outcomes equal to the volume of emissions covered, and (3) using any remaining contribution budget to purchase additional verified mitigation outcomes and/or support further eligible climate action.

Companies that establish contribution budgets must support any of the following climate action categories with the funds:

1. Verified mitigation outcomes
2. Ex-ante mitigation funding
3. Low- or zero-carbon research and innovation
4. Mitigation-enabling outcomes
5. Adaptation and resilience funding
6. Loss and damage funding

Companies that choose not to participate in the optional phase are required to submit an explanation to the SBTi at Target Validation — an implicit signal that participation is considered expected practice.

2. Mandatory carbon removals from 2035 (Category A companies).

From 2035, large companies must cover at least 1% of their Scope 1–3 emissions through eligible carbon removals, rising linearly to 100% by their net-zero target year (2050 at the latest). VMOs already used toward the optional OER recognition program cannot be double-counted toward this requirement.

Of those covered emissions, at least 10% of those attributable to long-lived GHGs (CO₂, N₂O, and halogens) must be covered by long-lived removals — those capable of storing carbon for centuries to millennia. This share also increases linearly to 100% by the net-zero year. Emissions from short-lived GHGs may be covered by any combination of short-lived and long-lived removals.

It is important to note that the percentage set for 2035 is an illustrative requirement to set the intention for companies to gradually take responsibility for the impact of their ongoing emissions from 2035 onwards. SBTi will review criteria in the next major revision of the Corporate Net-Zero Standard (Version 3) to reflect the best available science at the time.

3. Net-zero neutralization (all companies, at their net-zero target year).

At the net-zero target year and thereafter, all companies — both Category A and B — must reduce Scope 1–3 emissions to zero or residual levels, and neutralize any remaining residual emissions through eligible carbon removals. Long-lived GHG residuals must be neutralized with long-lived removals; remaining residuals may use short-lived, long-lived, or a combination.

Companies are required to disclose whether the removal credits used for neutralization have received host-country authorization and are subject to corresponding adjustments (CAs). SBTi recommends that companies use removals not simultaneously claimed against NDCs and apply corresponding adjustments where available. 

What counts as a carbon credit under V2?

The Standard governs the use of "verified mitigation outcomes" (VMOs) — a defined subset of mitigation outcomes that are ex-post, independently third-party assured (e.g., verified under a carbon crediting standard), and permanently retired at the point of claim without being simultaneously claimed by other actors.

VMOs must derive from one or more of the following:

• Emissions reductions from sources outside the company's value chain
• Carbon sequestration or carbon dioxide removal
• Protection, restoration, or enhancement of natural carbon sinks

All VMO-generating activities must meet the following minimum integrity criteria:

• Documented project-level due diligence by the purchasing company
• Safeguards for human rights, biodiversity, and the rights of Indigenous Peoples and Local Communities (IPLC)
• No carbon lock-in
• Transparent reporting on methodologies, outcomes, and benefit-sharing arrangements
• Additionality
• Reversal risk safeguards
• Independent, accredited third-party assurance

SBTi plans to develop a formal process for recognizing established third-party frameworks and standards against these criteria, but the minimum criteria above apply.

What does this mean for the market?

Carbon credits are an expected part of corporate net-zero

The disclosure requirement for non-participation in the optional OER program sets a clear expectation: the SBTi considers carbon credits a standard component of credible net-zero strategies. This soft but meaningful signal is likely to shift stakeholder expectations — from investors, customers, and civil society — for companies following the NZS and beyond.

With mandatory removals phasing in for large companies from 2035, the market now has a clear, growing demand signal, anchored to a regulatory framework for the first time. Demand is expected to tick up significantly — especially as companies are not purchasing nearly enough to meet recognition thresholds, let alone neutralization needs. 

Sylvera modeling reveals that even in scenario of moderate adoption of the three new claims, a near 170% increase in SBTi-driven carbon credit demand can be expected by 2030. A more bullish scenario sees demand approaching 1.1 billion tonnes by 2035.

Nature-based solutions receive formal endorsement

The definition of VMOs warrants particular note — importantly, it extends beyond removals. There is explicit recognition of actions to “educe emissions from emission sources not located within the company’s

value chain”, and the inclusion of "protection, restoration, and enhancement of natural carbon sinks" is a significant endorsement of nature-based solutions (NBS). This is particularly notable given the SBTi's previous reluctance to recognize carbon credits, driven largely by integrity concerns about NBS projects that arose in 2023. By explicitly including nature, CNZS V2.0 opens a formally endorsed pathway for NBS investment within corporate net-zero strategies. 

The long-lived removals requirement from 2035 onward does create a preference for technology-based removals for long-lived GHG neutralization, but NBS retains clear eligibility across the voluntary phase and for short-lived GHG coverage.

This 'big tent' approach is a welcome shift; it demonstrates a respect for NBS, which are both vital for driving natural restoration and, crucially, offer the market more accessible, scalable, and cost-effective options.

Project-level due diligence raises the bar for quality

The monumental increase in the use of carbon credits must be underpinned by assurances of high integrity. Indeed, the SBTi minimum integrity criteria explicitly require companies to conduct their own “documented due diligence” at the project level. 

This goes beyond simply purchasing credits that carry a third-party certification label. It underscores the importance of independent project-level analysis — the kind of assessment that Sylvera's Ratings provide. Sylvera’s ratings framework, centered on analyzing project integrity across four key pillars — carbon accounting, additionality, permanence, and co-benefits — aligns with the SBTi’s minimum integrity standards, providing the due diligence mechanism that supports buyer and investor decisionmaking and identifying the right carbon projects to invest in.

Although there is an existing market preference for high-integrity credits, the Standard is expected to intensify this focus on quality. This shift places greater pressure on the supply side to enhance project standards.

Corresponding adjustments: a requirement on the horizon

The original draft proposed CAs as mandatory; this was walked back due to concerns over limited host country readiness and credit supply constraints. SBTi has indicated that this requirement will be reviewed in a future version of the standard, leaving open the possibility that CAs become mandatory in a later version of the CNZS.

The SBTi’s recommendation highlights a burgeoning alignment between voluntary and compliance markets. At the center of it are CAs. Although the VCM has historically operated independently of Article 6 mechanisms, the increasing preference for the "super credit"—representing peak eligibility and market versatility—is driving a new era of demand. In citing CAs, the CNZS V2.0 reinforces this trajectory. Their role within the VCM is stabilizing, which underscores the necessity of addressing host-country capacity while fostering a more integrated global marketplace.

For companies investing in carbon credits today, understanding which projects are likely to receive host-country authorization matters. Sylvera's Article 6 & CORSIA Hub tracks country-level likelihood of authorization and CAs across jurisdictions.

Conclusion

The formal integration of carbon credits into the SBTi's Corporate Net-Zero Standard is a landmark development for the VCM. It establishes carbon credits as a credible, expected component of corporate net-zero strategies and creates a structured demand pathway that will intensify through 2035 and beyond.

The standard's integrity requirements make clear that not all credits will qualify: project-level quality assessment, additionality, and third-party assurance are non-negotiable. For companies navigating which credits to buy, and for investors seeking to understand which project types will benefit most from this structural demand, the ability to evaluate credit quality at the project level will be essential.

For more on how we model carbon credit demand in light of CNZS V2.0, read Sylvera's demand analysis here. For our analysis of commodity certificates and environmental attribute certificates under the new standard, read here.