Science-Based Target Alignment

Targets must be consistent with limiting global warming to 1.5°C above pre-industrial levels. This requires a minimum annual linear reduction rate of 4.2% for Scope 1 and 2 emissions. Companies must model their trajectory using approved sector-specific pathways from the SBTi Cross-Sector Pathway or sector-specific guidance. The pathway defines the total cumulative carbon budget the company can emit before reaching net-zero.

A complete target submission must cover:

• Scope 1: Direct emissions from owned or controlled sources (e.g., company vehicles, on-site fuel combustion).
• Scope 2: Indirect emissions from purchased electricity, steam, heating, and cooling.
• Scope 3: All other indirect emissions in the value chain. If Scope 3 emissions represent over 40% of total emissions, a separate Scope 3 target is mandatory. This target must cover at least 67% of total Scope 3 emissions.

SBTi requires a two-tiered commitment structure:

• Near-Term Target: Must be achieved within 5-10 years from the submission date. This covers immediate decarbonization actions and typically requires a 42% reduction in Scope 1 and 2 emissions by 2030.
• Long-Term Target: A commitment to reduce emissions to a residual level consistent with net-zero by 2050 or sooner. At net-zero, any remaining emissions (typically <10% of base year) must be neutralized through permanent carbon removals.

Targets are expressed as a percentage reduction from a fixed base year. The base year must not be earlier than 2015 and must have verifiable, complete emissions data. Companies must use the GHG Protocol Corporate Standard for accounting. All targets must be recalculated if significant structural changes occur, such as acquisitions or divestitures, that alter the base year emissions by more than 5%.

SBTi explicitly prohibits the use of carbon credits or offsets to achieve near-term Scope 1 and 2 reduction targets. Emission reductions must come from direct operational changes, such as energy efficiency, renewable energy procurement, and process innovation. Offsets are only acceptable for neutralizing residual emissions in the long-term net-zero target, and only through permanent carbon removal credits, not avoidance credits.

Companies must publicly report their GHG inventory and progress against targets on an annual basis through platforms like the CDP or annual sustainability reports. The SBTi validation process itself involves a formal submission, a paid validation service, and a technical review. Once validated, the target is published on the SBTi Target Dashboard. Targets must be revalidated every 5 years or if the company's ambition level changes.

The formal five-step procedure by the Science Based Targets initiative to verify corporate emission reduction targets. Companies submit a commitment letter, develop a target within 24 months, undergo a rigorous technical review against the SBTi Criteria, publicly announce the approved target, and report progress annually. Targets must cover Scope 1 and 2 emissions at minimum, with Scope 3 inclusion required if those emissions exceed 40% of total footprint. The validation ensures alignment with a 1.5°C pathway using sector-specific methodologies from the International Energy Agency and Intergovernmental Panel on Climate Change.

The Greenhouse Gas Protocol classification system that defines emission ownership for target setting:

• Scope 1: Direct emissions from owned or controlled sources, such as company vehicle fleets and on-site fuel combustion
• Scope 2: Indirect emissions from purchased electricity, steam, heating, and cooling consumed by the reporting company
• Scope 3: All other indirect emissions in the value chain, including upstream purchased goods and services, transportation and distribution, business travel, and downstream product use

For most supply chain-intensive industries, Scope 3 represents 80-90% of total emissions, making it the critical focus for science-based target alignment.

Two primary methodologies approved by SBTi for target formulation:

• Absolute Contraction Approach: Requires companies to reduce absolute emissions at a linear annual rate (minimum 4.2% per year for 1.5°C alignment). This is the most common method and applies universally across sectors.
• Sectoral Decarbonization Approach (SDA): Allocates the global carbon budget to specific sectors based on physical intensity metrics (e.g., tonnes CO2e per ton of steel). Companies set intensity-based targets that converge toward a sector-specific pathway by 2050.

The SDA is particularly relevant for hard-to-abate sectors like cement, steel, and aviation where absolute reductions are constrained by growth trajectories.

SBTi distinguishes between two commitment horizons:

• Near-Term Targets: Cover a 5-10 year timeframe and require rapid, immediate emission reductions consistent with limiting warming to 1.5°C. These are the minimum requirement for SBTi validation.
• Long-Term Net-Zero Targets: Require companies to reduce emissions by at least 90% by 2050 or sooner, with the remaining residual emissions (maximum 10%) neutralized through permanent carbon removal credits.

The Corporate Net-Zero Standard mandates that companies set both near-term and long-term targets, ensuring immediate action is not deferred in favor of future promises.

The Forest, Land, and Agriculture (FLAG) Science Based Target Setting Guidance, released in 2022, provides a specialized methodology for companies with land-intensive operations. It requires:

• Separate accounting for land-based emissions including deforestation, land conversion, and agricultural methane
• A commitment to zero deforestation by 2025 across primary commodity supply chains
• Reduction of FLAG emissions by 30% by 2030 from a 2020 base year

This guidance is mandatory for companies in food, agriculture, and forestry sectors, or any company where FLAG emissions exceed 20% of total Scope 1, 2, and 3 emissions.

Validated companies must publicly report progress against their targets on an annual basis through platforms like the Carbon Disclosure Project (CDP) or their own sustainability reports. Key requirements include:

• Disclosure of absolute emissions across all in-scope boundaries
• Reporting against the base year established during target submission
• Explanation of any recalculations due to structural changes like acquisitions or divestitures
• Third-party assurance of emission data is strongly recommended but not mandatory

Failure to disclose or demonstrate progress can result in target removal from the SBTi dashboard, creating significant reputational risk for non-compliant organizations.