How to Set SBTi Targets: A Comprehensive Guide for Businesses

In today's climate-conscious business landscape, setting Science Based Targets has become a critical step for organisations committed to meaningful climate action. The Science Based Targets initiative (SBTi) provides a framework that enables companies to align their greenhouse gas reduction strategies with the latest climate science. This guide will walk you through the process of setting, validating, and implementing SBTi targets for your organisation.

What Are Science Based Targets?

Science Based Targets are greenhouse gas emission reduction goals that align with what the latest climate science deems necessary to limit global warming to well-below 2°C above pre-industrial levels, with efforts to limit warming to 1.5°C, as outlined in the Paris Agreement. These targets provide companies with a clearly defined pathway to reduce emissions, ensuring they contribute their fair share to addressing climate change.

The Science Based Targets initiative (SBTi) is a collaboration between CDP, the United Nations Global Compact, World Resources Institute (WRI), the We Mean Business Coalition, and the World Wide Fund for Nature (WWF). It serves as the gold standard for corporate climate action by validating and promoting science-based environmental target setting.

Why Your Business Should Set SBTi Targets

Setting Science Based Targets offers numerous benefits for businesses:

• Enhanced Reputation: Demonstrates genuine commitment to climate action, building trust with customers, investors, and employees
• Business Resilience: Future-proofs your organisation by aligning with the transition to a low-carbon economy
• Competitive Advantage: Drives innovation, efficiency, and potential cost savings
• Investor Confidence: Meets the growing demand from investors for credible climate strategies and disclosures
• Global Impact: Contributes meaningfully to achieving the Paris Agreement goals

Who Can Set SBTi Targets?

Before diving into the process, it's important to understand which organisations are eligible to set SBTi targets:

• Companies and Financial Institutions: The SBTi primarily validates targets for private sector businesses and financial organisations
• Parent Companies: Targets should ideally be set at the parent or group level, covering emissions from all subsidiaries
• SMEs: Small and medium-sized enterprises can access a streamlined route for setting both near-term and net-zero targets

The Five-Step Process to Setting SBTi Targets

Step 1: Commit to Setting Science-Based Targets

The journey begins with a formal commitment. This initial step signals your organisation's intention to set science-based emissions reduction targets.

How to commit:

1. Submit a commitment letter to the SBTi
2. This public commitment appears on the SBTi website, showing stakeholders your climate ambition
3. After committing, you have 24 months to develop and submit your targets for validation

This commitment stage requires leadership buy-in and sets the foundation for the work ahead.

Step 2: Develop Your GHG Emissions Inventory

A comprehensive and accurate greenhouse gas (GHG) emissions inventory is essential for setting meaningful targets. This step requires thorough data collection and analysis across your organisation's operations and value chain. Key requiremnets for your GHG inventory:

• Complete Scope Coverage: Calculate emissions across all relevant scopes:‍
  • Scope 1: Direct emissions from owned or controlled sources‍
  • Scope 2: Indirect emissions from purchased electricity, steam, heating, and cooling‍
  • Scope 3: All other indirect emissions occurring in your value chain‍
• Comprehensive GHG Coverage: Your inventory must cover all seven greenhouse gases required by the GHG Protocol Corporate Standard (CO₂, CH₄, N₂O, HFCs, PFCs, SF₆, NF₃)‍
• Minimal Exclusions: You cannot exclude more than 5% of total combined Scope 1 and 2 emissions, nor more than 5% of your total Scope 3 emissions‍
• Scope 3 Assessment: Conduct a thorough assessment of all relevant Scope 3 categories as defined in the GHG Protocol Corporate Value Chain Standard‍
• Base Year Selection: Choose a base year that is representative of your typical GHG profile and no earlier than 2015
  

Many companies find that Scope 3 emissions (those from the value chain) represent the largest portion of their carbon footprint, often accounting for more than 70% of total emissions. Properly assessing these emissions is crucial but can be challenging, as it requires data from suppliers, customers, and other third parties.

Step 3: Set Your Science-Based Target(s)

With your emissions inventory in hand, you can now define your targets. The SBTi distinguishes between near-term targets and long-term (net-zero) targets, both of which are required for a comprehensive climate strategy.

1. Near-Term Science-Based Targets

Near-term targets focus on immediate action within the next 5-10 years:

• ‍Coverage: Must include at least 95% of company-wide Scope 1 and 2 emissions‍
• Timeframe: Target year must be 5-10 years from submission date‍
• Ambition:
  • Scope 1 & 2 targets must align with 1.5°C pathways
  • Scope 3 targets must align with at least well-below 2°C pathways‍
• Scope 3 Requirement: If Scope 3 emissions represent 40% or more of total emissions, you must set Scope 3 targets covering at least 67% of these emissions

2. Long-Term (Net-Zero) Science-Based Targets

Long-term targets outline your path to net-zero emissions:

• Coverage: Must include at least 95% of Scope 1 & 2 emissions and 90% of Scope 3 emissions
• Timeframe: Target year must be no later than 2050 (some sectors have earlier deadlines)
• Ambition: Must align with 1.5°C scenario, typically requiring at least 90% emissions reduction across all scopes
• Residual Emissions: Any residual emissions at the net-zero target date must be neutralised through carbon removal and permanent storage

3. Methods for Setting Targets

The SBTi provides several methodologies for setting targets:

• ‍Cross-sector Absolute Reduction Approach:
  • For near-term Scope 1 & 2 targets: Minimum 4.2% annual linear reduction rate (for base years on or before 2020)
  • For long-term targets: Minimum 90% overall reduction for all scopes‍
• Sector-specific Pathways:
  • Using absolute reduction or intensity convergence methods based on your industry
  • Companies in the power sector must use sector-specific pathways
  • Companies with significant FLAG emissions (Forestry, Land, and Agriculture) must follow specific guidance‍
• Renewable Electricity Targets (for Scope 2):
  • 80% renewable electricity procurement by 2025
  • 100% renewable electricity procurement by 2030‍
• Supplier/Customer Engagement Targets (for Scope 3):
  • Setting targets for suppliers/customers to adopt their own science-based targets
  • Must be fulfilled within 5 years‍
• Intensity Targets:
  • Economic or physical intensity targets for some Scope 3 categories
  • Must lead to absolute emission reductions aligned with climate scenarios

4. Special Considerations

• FLAG Emissions: Companies with 20% or more of emissions from Forestry, Land, and Agriculture must set separate FLAG targets
• Transportation Emissions: Should be reported on a well-to-wheel basis (well-to-wake for aviation and maritime)
• Sector-Specific Guidance: Always follow requirements in any relevant sector-specific guidance
• Base Year Consistency: Use the same base year for both near-term and long-term targets

Step 4: Submit Your Target(s) for Validation

Once your targets are defined, it's time to submit them to the SBTi for official validation:

• Complete the Corporate Target Submission Form available on the SBTi website
  
• Provide supporting documentation, including:
  
  • Your GHG inventory data
  • Target calculation tools and methodologies
  • Justification for chosen approaches
  • Scope 3 screening assessment
• Pay the validation fee (which varies based on company size)
  

The SBTi will review your submission against their criteria and respond with one of three outcomes:

• Approved: Your targets meet all criteria
• Approved with recommendations: Your targets meet minimum criteria with suggestions for improvement
• Not approved: Your targets do not meet the criteria and require revision

The validation process typically takes 30 business days, though this may vary during busy periods. If revisions are needed, you can resubmit your targets with the necessary changes.

Step 5: Announce Your Target(s)

Once your targets are validated, it's time to share your achievement:

• Announce your approved targets publicly within 6 months of approval
• The SBTi will showcase your company on their website alongside other climate leaders
• Develop a comprehensive communications strategy to inform stakeholders about your commitments

This announcement represents a significant milestone in your climate journey and offers an opportunity to enhance your sustainability reputation.

Post-Validation: Implementation, Reporting and Review

Receiving validation is just the beginning. The real work lies in implementing your targets and tracking progress:

1. Implementing Your Targets

Develop a detailed implementation plan that outlines:

• Specific emission reduction initiatives
• Required resources and investments
• Timeline for implementation
• Roles and responsibilities
• Key performance indicators

Common emission reduction strategies include:

• Energy efficiency improvements
• Renewable energy procurement
• Fleet electrification
• Supplier engagement programs
• Product redesign and circular economy initiatives

2. Reporting Requirements

After target approval, you must:

• Publicly report your company-wide GHG emissions inventory annually
• Track and disclose progress against your published targets
• Separately report emissions and removals for transparency
• Ideally report through standardised platforms like CDP or in sustainability reports

3. Target Review and Recalculation

Your targets require regular review:

• Review all active targets at least every 5 years
• Targets approved in 2020 or earlier must be reviewed by 2025
• Recalculate and revalidate targets when significant changes occur:
  
  • Mergers, acquisitions, or divestments
  • Changes of 5% or more in base year emissions
  • Updates to SBTi criteria that affect your targets

Conclusion

Setting Science Based Targets represents a significant commitment to climate action. While the process requires thorough analysis and planning, the benefits extend beyond environmental impact to include enhanced reputation, business resilience, and competitive advantage.

By following the five-step process outlined in this guide—committing, developing your inventory, setting targets, validating, and announcing—your organisation can join the growing movement of businesses leading the transition to a low-carbon economy.

After setting targets, the focus shifts to implementation, tracking, and regular reviews to ensure your climate strategy remains ambitious and effective. With proper planning and commitment, your organisation can make a meaningful contribution to addressing the climate crisis while positioning itself for success in a carbon-constrained future.