Overview
Introduced: 2015
Effective from: Ongoing, with updates to standards and criteria periodically
Last modified: March 2024 (Corporate Net-Zero Standard V1.2, effective in 2025)
Region(s): Global
Learn more about the benefits of adopting SBTis in our blog.
About
The Science-Based Targets initiative (SBTi) is a global organization that provides companies and financial institutions with a framework to set greenhouse gas (GHG) emissions reduction targets aligned with climate science. The SBTi ensures that companies’ targets are consistent with the goals of the Paris Agreement, aiming to limit global temperature rise to well below 2°C, and ideally to 1.5°C.
As of 2024, SBTi has validated science-based targets (SBTs) for over 6,000 companies and is on track to approve targets for 10,000 companies by the end of 2025. The initiative is particularly focused on enhancing the scope and rigor of Scope 3 emissions reporting, recognizing that “the battle on climate change is going to be won or lost in the supply chain.”
Criteria for compliance
Entities covered
The SBTi framework is applicable to companies across all sectors and regions. Companies are required to set targets covering their entire value chain, with a heightened focus on Scope 3 emissions, which include all indirect emissions that occur in a company’s value chain.
Key requirements for Science-Based Targets
- Scope: Targets must cover at least 95% of company-wide Scope 1 and Scope 2 GHG emissions. If Scope 3 emissions represent 40% or more of total emissions, a Scope 3 target must be set.
- Timeframe: Targets must be set for a period of 5 to 15 years into the future, with both near-term and long-term targets required.
- Target Setting: Targets must align with the latest climate science, aiming to limit global warming to 1.5°C.
- Offsetting: The use of carbon offsets is not permitted for meeting the reduction targets but can be used to neutralize residual emissions after deep decarbonization.
Compliance timelines
- March 2024: Latest update to the Corporate Net-Zero Standard (V1.2) was released.
- 2025: The updated standards will take effect.
- Target submission: Companies must submit their targets for validation by the SBTi, following the development and internal approval of these targets.
Disclosure requirements
- Companies are required to publicly disclose their GHG emissions and progress against targets annually. This includes both the reduction of emissions within the value chain and any neutralization of residual emissions.
- Scope 3 focus: The SBTi has increased its emphasis on Scope 3 emissions, recognizing that these emissions often constitute the majority of a company’s carbon footprint. Companies must report comprehensively on these emissions and outline strategies for reduction.
- Revalidation: Targets must be reviewed, recalculated, and revalidated at least every five years to ensure they remain aligned with the latest climate science.
Third-party auditing
The SBTi has appointed an independent Technical Council to review and enhance the integrity of science-based targets. This includes closer scrutiny of the validation process and partnerships with other standards-setting organizations to improve the integration of sustainability strategies across different frameworks.
While third-party auditing is not mandatory for target validation, it is encouraged to ensure transparency and accuracy in public disclosures.
Penalties for non-compliance
The SBTi is a voluntary initiative, so there are no direct penalties for noncompliance. However, failure to achieve or maintain validated targets may result in reputational damage, loss of stakeholder trust, and potential exclusion from sustainability-focused investment indices or programs.
