SBTi Net-Zero Standard V2.0: Implications for Corporate Use of Carbon Credits and RECs/EACs

The Science-Based Targets initiative (“SBTi“) has published Version 2.0 of its Corporate Net-Zero Standard (“V2.0“) on 11 June 2026, formally recognising carbon credits as a credible corporate decarbonisation tool. V2.0 raises the integrity bar on the use of energy attribute certificates (“EACs“) for Scope 2 emissions reduction. The new standard applies to companies preparing to renew or planning to set new science-based climate targets from 2028 with a transition period throughout 2027. 

This update shifts the expectations in climate transition planning and sets the tone for science-based pathways undertaken by companies. Other developments happening in tandem include the public consultation by the International Organization for Standardization (ISO) on its Net Zero Aligned Orgnizations Standard and an anticipated revision to the Greenhouse Gas Protocol for corporate reporting of Scope 2 and Scope 3 emissions. Companies can take heed from V2.0 to prepare themselves for the opportunities in corporate climate governance.

Ongoing Emissions Responsibility (“OER”) Programme

 A voluntary new three-tier recognition framework is available for companies setting their sights to deliver climate contributions beyond their required value chain targets. Companies will be able to address ongoing emissions via verified carbon credits using the tonne-for-tonne approach or carbon price for a money-for-tonne approach. Ongoing emissions refer to the emissions a company continues to generate over a near-term target timeframe as it progresses to net zero,

The recognition levels and their minimum criteria are summarised here:

1. Engaged:  Companies that cover at least 1% of total ongoing Scope 1-3 emissions via verified carbon credits or a carbon price.
2. Advanced:  Companies that cover 100% of Scope 1 and 2 emissions plus additional Scope 3, reaching at least 10% of total ongoing emissions, through verified carbon credits or by establishing a contribution budget at a carbon price of US$20/tonne (subject to periodic review).
3. Leadership: Companies that cover 100% of total ongoing Scope 1-3 emissions at US$80/tonne carbon price to establish a contribution budget for fulfilment of tonne-for-tonne delivery of verified credits at first, with remaining funds supporting other eligible climate solutions.

Clear Market Signals

The US$20 and US$80 benchmarks provide externally credible anchors for internal carbon pricing.

The low entry point (1% coverage) is achievable for most companies, and the reputational cost of opting out will rise as peers opt in.

New Scope 3 flexibility allows companies to share emissions coverage with value chain partners reporting the same emissions, enabling co-funded climate contribution arrangements.

Building a Diversified, Portfolio Approach

V2.0 requires high-integrity solutions spanning reductions and removals (nature-based and engineered), with clear criteria on additionality, verification and safeguards.

Commodity certificates using chain-of-custody models are formally recognised, enabling certificate-based Scope 3 pathways.

Credits must be ex-post and independently verified. SBTi will develop criteria for recognising relevant third-party frameworks, widely expected to align with standards such as the Integrity Council for the Voluntary Carbon Market (ICVCM)’s Core Carbon Principles.

Tightened EACs/Renewable Energy Certificates (“RECs”) Requirements

Companies must set a location-based Scope 2 target plus a procurement-based target via direct procurement of low-carbon electricity or high-integrity EACs/RECs, aiming for 100% low-carbon electricity over time. This raises the ambition for Scope 2 emissions reduction compared to the earlier standard, where Scope 2 emissions were bundled with Scope 1 under a single target and were not having to be addressed separately.

Instruments must match the grid region where electricity is consumed; facilities must be commissioned or re-powered within the past 15 years.

Larger users of electricity must report hourly-matched share; optional SBTi recognition programme rewards ≥50% hourly-matching, rising to 90% by 2035.

Removal Procurement

From 2035, supporting carbon dioxide removals (“CDRs“) becomes mandatory for larger companies:

1. Starting at 1% of ongoing emissions, scaling to 100% by net-zero target year; and
2. Share of durable, long-lived CDRs starts at 10%, also rising to 100%.

The supply of high-quality durable CDRs remains structurally constrained. Early movers will lock in price, volume and credibility.

Implications for SBTi-aligned Corporate Buyers

Companies applying the Sustainability Disclosure Standards by the International Sustainability Standards Board (ISSB) to meet climate reporting requirements under the Accounting and Corporate Regulatory Authority (ACRA) or Singapore Exchange Regulation (SGX RegCo) can take guidance from V2.0 in setting science-based climate targets and credible implementation plans to reduce emissions. The introduction of mandatory CDRs and location and time-matched RECs in V2.0 serves as a transition risk signal that companies should pay attention when evaluating climate opportunities across time horizons. Corporate climate governance expands into operationalised climate risk management and capital allocations. Companies with existing RECs or power purchase agreements may want to have them reviewed.   

Companies moving towards, if not already, reporting a full Scope 3 inventory will be able to make further progress and incorporate carbon credits within their decarbonisation toolbox, in alignment with the new standard and OER Framework. In V2.0, the emphasis remains that all feasible emissions abatement efforts are to be taken before carbon credits are used to address remaining emissions. The Guidance on Role of Carbon Credits in Corporate Decarbonisation issued by Singapore’s National Climate Change Secretariat, the Ministry of Trade and Industry, and Enterprise Singapore provides further guidance. Please refer to our July 2025 Legal Update titled “Feedback Sought for Draft Voluntary Carbon Market Guidance by 20 July 2025” and October 2025 NewsBytes article titled “Available Government Initiatives and Grants to Develop Carbon Market in Singapore” for the published guidance. Companies looking to structure carbon projects funds and investments can seek our sustainability Partners for advice. 

Singapore enterprises or investors looking to secure decarbonisation projects can tap on our environmental, social, and social governance (ESG) legal fee subsidy under the Sustainability Legal Catalyst Programme with Enterprise Singapore. Terms and conditions apply. You can reach out to us at [email protected].

For details, please refer to Climate Impact X’s media release titled “SBTi Corporate Net-Zero Standard V2.0: What does it mean for your carbon credit and REC/EAC strategy?“.

For regional Sustainability matters, please see Rajah & Tann Asia’s Sustainability Practice for more information.