How to Set Science-Based Targets

What Science-Based Targets Are

Science-based targets (SBTs) are greenhouse gas reduction goals aligned with what climate science says is necessary to limit global warming to 1.5°C above pre-industrial levels. The Science Based Targets initiative (SBTi), a UK charity developed with CDP, the United Nations Global Compact, the We Mean Business Coalition, World Resources Institute, and WWF, sets the criteria; its subsidiary SBTi Services validates targets against them.

As of September 2026, more than 12,000 companies had validated targets and more than 14,000 had targets or commitments. Reporting standards also ask about target credibility: ESRS E1 asks whether GHG targets are science-based and compatible with 1.5°C, and IFRS S2 asks whether a third party has validated them. Many investors treat SBTi validation as a credibility benchmark for corporate climate strategy.

Step 1: Commit to the SBTi

Register with SBTi Services, then decide whether to commit publicly. A commitment is optional (companies ready to submit can go straight to validation, and SMEs cannot commit), but it publicly signals your intent and gives you 24 months to submit targets for validation. Validation fees depend on annual turnover: as of January 2026, $1,250–$2,000 for SMEs and $13,000–$26,000 for a corporate near-term validation, with discounts for companies headquartered in lower-income countries.

Once you commit, your company name appears on the SBTi's public tracker. There's no going back quietly — treat this as a binding public pledge.

Step 2: Complete Your GHG Inventory

You cannot set credible reduction targets without a robust emissions baseline. Complete a GHG inventory covering:

• Scope 1: Direct emissions from owned or controlled sources (fuel combustion, process emissions, fugitive emissions, fleet vehicles)
• Scope 2: Indirect emissions from purchased electricity, heat, steam, and cooling (report both market-based and location-based)
• Scope 3: All 15 categories per the GHG Protocol Corporate Value Chain Standard. Screen for relevance, then calculate.

Your inventory must follow the GHG Protocol Corporate Standard. Choose a base year that is representative of your typical emissions profile — avoid years with anomalies (COVID-19 years, major acquisitions, etc.).

Critical threshold: If your Scope 3 emissions are 40% or more of total emissions (Scopes 1+2+3), you must set a Scope 3 target. For most companies, this threshold is easily exceeded. Under Corporate Net-Zero Standard V2.0 (open for validation from February 2027), all Category A companies (large companies, and medium-sized companies in high-income countries) must set Scope 3 targets regardless of this threshold.

Step 3: Choose Your Target Type

SBTi offers two target timeframes:

Near-Term Targets (required)

• Cover 5-10 years from submission (or use a 2030 target year); V2.0 moves to five-year targets
• Must reduce Scope 1 and 2 emissions in line with 1.5°C pathways
• Scope 3 target required if Scope 3 ≥ 40% of total
• Methods: absolute contraction approach or sectoral decarbonization approach (SDA)

Net-Zero Targets (optional but increasingly expected)

• Long-term target covering Scope 1, 2, and 3
• Most companies must reduce emissions by at least 90% before using any neutralization (carbon removal)
• Residual emissions (≤10%) must be neutralized through permanent carbon removal
• Net-zero by 2050 at the latest, with near-term targets as the interim milestones

Many companies start with near-term targets and add net-zero targets later.

Step 4: Select a Target-Setting Method

Absolute contraction approach: Reduce total emissions by a fixed percentage. The minimum ambition for 1.5°C alignment is a 4.2% linear annual reduction for Scopes 1 and 2. This is the simplest and most common method.

Sectoral decarbonization approach (SDA): Available for specific sectors (power generation, cement, steel, aluminum, pulp/paper, transport). Targets are set based on sector-specific decarbonization pathways and expressed as emissions intensity metrics (e.g., tCO₂e per MWh generated).

For Scope 3: Under the current criteria, absolute near-term Scope 3 targets need at least a 2.5% linear annual reduction, and your Scope 3 targets together (reduction targets, supplier or customer engagement targets, or a mix) must cover at least 67% of Scope 3 emissions. Engagement targets commit a share of suppliers or customers, by emissions or spend, to set their own SBTs within 5 years.

Step 5: Model Your Reduction Pathway

Build a decarbonization model that maps your current emissions to your target:

1. Baseline emissions (base year inventory)
2. Business-as-usual projection (expected emissions growth without intervention)
3. Reduction levers — identify specific actions:
   • Energy efficiency improvements
   • Renewable electricity procurement (PPAs, RECs, on-site generation)
   • Fleet electrification
   • Process changes and fuel switching
   • Supplier engagement and procurement shifts
   • Product redesign for lower use-phase emissions
4. Abatement potential of each lever (estimated tCO₂e reduction per year)
5. Gap analysis — does the sum of your levers close the gap to the target?

If reduction levers don't reach your target, you need to revisit your strategy — not lower your ambition. Common gaps are closed through accelerated renewable procurement, deeper supplier engagement, or business model adjustments.

Step 6: Draft Your Target Language

SBTi has specific formatting requirements. Examples:

• "[Company] commits to reduce absolute Scope 1 and 2 GHG emissions 42% by 2030 from a 2022 base year."
• "[Company] commits to reduce absolute Scope 3 GHG emissions from purchased goods and services and use of sold products 25% within the same timeframe."
• "[Company] commits that 67% of its suppliers by emissions covering purchased goods and services will have science-based targets by 2030."

Ensure your target language specifies: scope coverage, boundary, reduction percentage, base year, and target year.

Step 7: Submit for Validation

Prepare your submission package:

• Target submission form (from SBTi portal)
• GHG inventory data (base year and most recent year)
• Target calculation workbook showing methodology
• Supporting documentation (boundary definitions, exclusions, recalculation policy)

SBTi Services delivers corporate validation results within 40 business days of the service start date (SMEs get a tailored service without a fixed timeframe). Reviewers may come back with questions or request modifications. Common issues include incomplete Scope 3 inventories, boundary mismatches, and targets that don't meet minimum ambition thresholds.

Step 8: Implement and Track Progress

Once validated, integrate your targets into:

• Annual sustainability reporting (disclose progress against targets)
• Executive compensation metrics
• Capital expenditure planning (e.g., renewable energy investments)
• Procurement policies (supplier engagement requirements)
• Product development processes

Report progress annually through CDP and your sustainability report. SBTi expects companies to publicly report emissions data at least annually.

Step 9: Recalculate When Necessary

Recalculate your base year emissions when:

• Structural changes occur (mergers, acquisitions, divestitures)
• Methodology changes significantly affect comparability
• Errors are discovered in the base year inventory

The GHG Protocol requires a base year recalculation policy, and the SBTi requires a significance threshold of 5% or less: a change of 5% or more in the base year emissions a target covers triggers a target recalculation.

Frequently Asked Questions

How much does SBTi validation cost?

Fees are tiered by annual turnover. Companies with less than 10,000 tCO2e of Scope 1 and location-based Scope 2 emissions that also pass SBTi's size tests (such as fewer than 250 employees and under €50 million in turnover) can use the streamlined SME route for $1,250–$2,000. Other companies pay $13,000–$26,000 for near-term validation or $17,000–$34,000 for a near-term and net-zero package (fees effective January 2026), with discounts for companies headquartered in lower-income countries. Check SBTi Services for current pricing.

Can we exclude certain Scope 3 categories from our target?

You can exclude categories that are genuinely not relevant to your business, but under the current criteria your Scope 3 targets must together cover at least 67% of total Scope 3 emissions. If you exclude material categories, SBTi reviewers will challenge the exclusion. Under V2.0, Category A targets must instead cover every category that makes up 5% or more of Scope 3 emissions, with a short list of optional exclusions.

What happens if we miss our target?

SBTi doesn't currently penalize companies for missing interim milestones, but your progress (or lack thereof) is publicly visible through CDP disclosures and your annual reporting. Persistent underperformance risks reputational damage and investor scrutiny. If your business has fundamentally changed, you can resubmit updated targets. Targets set under V2.0 will face an end-of-cycle assessment of progress, and the SBTi intends to add minimum progress criteria for revalidation.

Do renewable energy certificates (RECs) count toward Scope 2 reductions?

Yes, under the market-based accounting method per the GHG Protocol Scope 2 Guidance. SBTi accepts market-based Scope 2 accounting for target tracking. However, the quality and credibility of RECs matters — bundled PPAs and on-site generation are viewed more favorably than unbundled RECs by investors and rating agencies. The rules may tighten: the GHG Protocol consulted from October 2025 to January 2026 on revising its Scope 2 Guidance, including hourly matching.

How often do SBTi criteria change?

SBTi updates its criteria periodically. Major updates came in 2021 (the Corporate Net-Zero Standard) and June 2026 (Corporate Net-Zero Standard V2.0, which opens for validation on February 1, 2027; the current versions remain available until January 31, 2028). Companies with existing validated targets may need to revalidate if criteria tighten. Monitor SBTi announcements and plan for revalidation every 5 years at minimum.