The Science Based Targets initiative published its Corporate Net-Zero Standard Version 2.0 in June 2026. For financial institutions, it introduces mandatory Scope 3 target-setting, board-approved transition plans with public disclosure obligations, and independent third-party assurance requirements. Here is what banks, insurers and investors need to know.
The Science Based Targets initiative published its long-awaited Corporate Net-Zero Standard Version 2.0 in June 2026. For financial institutions, it brings mandatory Scope 3 target-setting, board-level transition plan requirements, and independent assurance obligations — with immediate implications for how institutions approach climate commitments and regulatory positioning.
Version 2.0 of the Corporate Net-Zero Standard (CNZS V2.0) is not an incremental update. It consolidates and replaces both the earlier near-term criteria and previous versions of the Corporate Net-Zero Standard, introducing a more rigorous accountability architecture across the full target lifecycle — from initial validation through to end-of-cycle assessment.
For financial institutions specifically, the standard operates as one part of a two-standard framework. CNZS V2.0 establishes the foundational cross-sector requirements covering Scope 1 and 2 operational emissions, as well as Scope 3 Categories 1–14 (value chain emissions). The Financial Institutions Net-Zero Standard (FINS) then applies on top, covering Scope 3 Category 15 — financed emissions arising from loans, investments, and underwriting activities. Institutions must apply both; where FINS specifies different requirements, FINS governs. The two standards are designed to eliminate duplication: institutions do not need to set overlapping targets for the same emissions sources.
Any entity that generates 5% or more of its revenue from investment, lending, or insurance activities — including banks, asset managers, private equity firms, asset owners, and re/insurance companies — is captured under this definition.
V2.0 introduces a formal two-tier company classification that determines which requirements are mandatory versus recommended.
Category A: Large companies from all countries; mid-sized companies from high-income countries. Full suite of requirements apply.
Category B: Small companies globally; mid-sized companies from lower-income countries. Some obligations — including Scope 3 target-setting and transition plan disclosure — are optional but strongly encouraged.
The majority of banks, asset managers, and insurers operating at scale will be classified as Category A. Classification is assessed at registration, reconfirmed at Target Validation, and applies for the duration of the five-year target cycle using consolidated group figures.
Category A companies must set distinct near-term targets for each emissions scope, covering a five-year window. For financial institutions, this means separate operational emissions targets (Scopes 1 and 2) alongside financed emissions targets governed by FINS (Scope 3, Category 15). Near-term targets must cover all Scope 3 Categories 1–14 that individually represent 5% or more of total Scope 3 emissions. Exclusions are permitted only in defined, documented circumstances — and must be reported with quantification and a description of mitigating actions.
Every Category A institution must develop and maintain a transition plan demonstrating how validated targets will be implemented. The plan must include: all SBTi-validated targets; a description of near-term actions and a five-year forward-looking roadmap; a long-term pathway to net-zero by 2050; key assumptions and dependencies; and — where relevant — a commitment to phase out revenue linked to unabated fossil fuels in line with net-zero pathways.
The transition plan must be formally approved at board level (or equivalent highest governing body), integrated into corporate strategy, and published within 15 months of completing Target Validation. Plans must be reviewed and updated at least every five years.
Category A companies must obtain independent assurance — at minimum, limited assurance — for the GHG inventory data underpinning target-setting, and for progress assessments submitted at the end of each target cycle. This requirement introduces a direct quality-control mechanism into the SBTi framework, and aligns the standard's expectations more closely with emerging mandatory disclosure regimes such as CSRD and ISSB.
Progress must be reported annually against each validated target. At the end of each five-year cycle, an End-of-cycle Assessment is conducted by an SBTi-recognised validation body, based on the assured progress assessment. Minimum progress criteria for institutions seeking to set subsequent targets after their first cycle will be defined in the SBTi Assurance Manual — meaning that failure to demonstrate adequate progress will carry concrete consequences for continued participation in the framework.
Companies with any direct involvement in the exploration, extraction, mining, or production of oil, natural gas, or coal cannot currently validate targets under CNZS V2.0 — methods for the fossil fuel sector are not yet finalized. This directly affects financial institutions with energy subsidiaries or co-investment structures in fossil fuel operations.
More broadly, all institutions with relevant portfolio exposure must include within their transition plans a commitment to phase out revenue tied to unabated fossil fuels in line with net-zero pathways. Institutions should read this requirement in conjunction with FINS obligations regarding financed asset exposure and portfolio alignment methodologies.
Version 1 of the Corporate Net-Zero Standard remains open for new target submissions until the end of 2027, and certain V2.0 elements — including forward-looking target setting and progress assessment approaches — are available now under transitional arrangements. Institutions with existing 2030 targets should begin planning their next target cycle (2030–2035) from 2028, allowing the required 12–24 months of lead time.
The SBTi is also updating FINS for compatibility with V2.0. During this transition period, institutions continue to apply existing FINS requirements — but should anticipate the updated standard requiring alignment with the governance, assurance, and disclosure architecture introduced in V2.0.
Artamis supports financial institutions in interpreting and implementing evolving sustainable finance standards — combining senior practitioner expertise with AI-enabled regulatory intelligence. Whether your institution is preparing for first-time Target Validation, updating existing commitments, or building the governance and assurance infrastructure required under V2.0, our teams are available to support you.
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