V2.0 takes effect on 1 February 2027, with V1.3.1 remaining valid for target submissions through 2027 and V2.0 becoming mandatory for all new target submissions from 1 February 2028.

V1 was primarily a target-setting framework. V2.0 is an action framework. The shift matters because setting a target and actually decarbonizing are two different things, and the new standard is designed to close that gap.

What actually changed

Two company categories replace a one-size-fits-all approach. Classification uses three inputs: annual turnover (small <€50M, medium €50–450M, large ≥€450M), full-time employees (small <250, medium 250–999, large ≥1,000), and the World Bank income group of the country of headquarters.

• Category A covers large companies and medium-sized companies from high-income countries.
• Category B covers small companies and medium-sized companies from lower-income countries.

Scope 3 targets and transition plan disclosure are mandatory for Category A but optional for Category B. This is the first time SBTi has formally incorporated a country income group as an input for categorization.

Transition plans are now mandatory for everyone. Every company must have a written transition plan covering key decarbonization actions and their dependencies. Category A companies must disclose it at target validation, with up to 15 months of flexibility. For Category B, disclosure is optional and transition planning requirements are proportionately lighter. SBTi will verify that the plan includes required elements, not just that it exists. Previously, transition plans were encouraged but not verified.

Targets run on five-year rolling cycles. Near-term targets reset every five years. If you miss your target, your next cycle requires steeper reductions. Higher emissions at the end of a cycle translate directly into a more ambitious next target. This continuous improvement mechanism replaces the older model where a company could set a single long-horizon target and track progress loosely.

Actions must follow a hierarchy. This is the most structurally significant change. Companies must first prioritize direct emissions reductions in their operations and value chains before using market instruments like renewable energy certificates or book-and-claim systems. Certificates are still valid, but only after direct action options have been genuinely addressed. Using RECs as a first resort rather than last resort is no longer acceptable.

Ongoing Emissions Responsibility replaces the Beyond Value Chain Mitigation. OER is a tiered voluntary recognition program that becomes mandatory from 2035. Companies can engage at three levels: covering 1% (Engaged), 10% (Advanced), or 100% (Leadership) of their ongoing Scope 1, 2, and 3 emissions through verified mitigation or financial contributions. From 2035 onward, Category A companies face a mandatory minimum supporting carbon removals of at least 1% of ongoing emissions, and rising to 100% by their net-zero year.

Progress gets checked, not just claimed. Each five-year cycle now closes with end-of-cycle assessments by SBTi-recognized validation bodies. Category A companies must obtain third-party assurance on their progress data. Companies that fall short of their targets must explain the barriers and commit to steeper reductions next cycle.

What this means in practice

The good news is that V2.0 is genuinely more flexible than V1 in several ways. The three Scope 1 target options (absolute reduction, intensity reduction, or asset transition) give companies more room to choose an approach that fits their capital structure. Scope 3 exclusions are now codified, which reduces the ambiguity companies faced when trying to justify omitting categories with limited data or operational control. The best-efforts framing explicitly acknowledges that companies do not control everything.

The challenging news is that the accountability mechanisms are much stronger. A verified transition plan, independent end-of-cycle assessment, third-party assurance, and a rolling cycle that punishes missed targets are all meaningful increases in rigor. Companies that set targets under V1 without building the underlying data systems and governance to back them up will find V2.0 more demanding.

What this means for Indonesian companies specifically

Category classification matters a lot here. Indonesia sits in the middle-income bracket, which may qualify medium-sized Indonesian companies for Category B status, exempting them from mandatory Scope 3 targets and transition plan disclosure. This would be a significant reduction in compliance burden. However, the exact revenue and country-income thresholds will be confirmed in SBTi’s accompanying Methods and Pathways documentation, so companies should not assume Category B status without checking.

The grid remains the hardest Scope 2 problem. V2.0 requires low-carbon electricity procurement within the same deliverability region as consumption. Indonesia’s grid is still heavily coal-dependent, and renewable supply within most regional grids is insufficient to meet corporate demand through local PPAs or certificates. V2.0 does allow sector-level actions where structural supply barriers are documented, but this requires explicit justification. The situation will improve if the nation’s renewable electricity roadmap advances, but the near-term constraint is real for most companies.

Agricultural supply chains face a data problem, not just a compliance problem. For Indonesian companies in palm oil, rubber, paper, or aquaculture, Scope 3 Category 1 emissions from purchased goods often dominate their footprint. V2.0’s category-specific target option helps by allowing focused targets on the highest-emitting procurement categories. But credible measurement in these supply chains requires data from smallholders and third-party suppliers who rarely have emissions records. Supplier alignment targets (requiring a growing share of suppliers to set their own SBTs) may be more operationally realistic in the near term.

Indonesian regulatory alignment is broadly positive. Companies already reporting under SPARING, PROPER, or OJK’s sustainability reporting regulation (SEOJK 21/2023) will find that V2.0’s base year assessment and GHG inventory requirements align closely with GHG Protocol principles already embedded in Indonesian regulation. The marginal burden is lower for companies that have already built compliant GHG systems.

Indonesia’s carbon market could benefit from the OER mandate. As OER becomes mandatory from 2035, global corporate demand for high-integrity carbon removal and mitigation will increase. Indonesian projects in forestry, peatland restoration, blue carbon, and renewable energy are well-positioned to supply this demand, provided they meet V2.0’s integrity criteria on additionality, temporal alignment, and unique attribution. The domestic IDX Carbon exchange will need to develop the rigor and transparency that international corporate buyers will require.

The bottom line

SBTi V2.0 is harder to game than V1. It is also more realistic about the barriers companies actually face. That combination is a net improvement for the credibility of corporate climate commitments.

Indonesian companies that have invested in GHG systems, supplier engagement, and governance will find V2.0 a natural extension of existing work. Companies beginning their SBTi journey now should build directly to V2.0’s architecture: rolling cycles, implementation hierarchy, and a verified transition plan from day one.