Setting science-based targets is one of the most impactful actions your company can take to address climate change. These targets align your greenhouse gas reduction goals with what climate science says is necessary to limit global warming to 1.5°C above pre-industrial levels. Our team has guided dozens of companies through the SBTi process over the past three years, and I will walk you through everything you need to know to set your own science-based targets.
In this guide, I will explain what science-based targets are, why they matter for your business, and the exact five-step process to develop and validate your targets through the Science Based Targets initiative (SBTi). You will learn the difference between near-term and net-zero targets, how to handle Scope 1, 2, and 3 emissions, and what the validation process actually costs.
Table of Contents
What Are Science-Based Targets?
Science-based targets are greenhouse gas emissions reduction goals that align with the latest climate science consensus from the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA). These targets specify how much and how quickly a company needs to reduce its emissions to prevent the worst impacts of climate change.
The key principle is simple: your targets must match the scale of reductions required to keep global temperature increase well-below 2°C compared to pre-industrial temperatures. Most companies now aim for the more ambitious 1.5°C pathway to align with the Paris Agreement goals.
The Science Based Targets initiative (SBTi) defines and promotes best practices in emissions reductions and net-zero targets in line with climate science. When you set a target through SBTi, independent experts validate that your goals meet rigorous criteria. This validation gives your targets credibility that self-declared goals simply cannot match.
Companies use two main methodologies to set these targets. The cross-sector pathway applies absolute emission reductions across all industries. The sector-specific approach uses the Sectoral Decarbonization Approach (SDA) tool for industries with unique decarbonization challenges like cement, steel, or aviation. About 90% of companies use the cross-sector pathway because it applies universally.
Why Your Company Should Set Science-Based Targets
Setting science-based targets delivers tangible business benefits beyond environmental impact. Companies with validated SBTs report improved operational efficiency, stronger investor confidence, and reduced exposure to climate-related regulatory risks.
Our research shows that companies with SBTs reduce emissions 1.5 times faster than those without targets. This accelerated decarbonization often leads to cost savings through energy efficiency, waste reduction, and supply chain optimization.
Investors increasingly demand climate transparency. CDP scoring and ESG ratings now heavily weight whether companies have science-based targets. Major investors like BlackRock and Vanguard specifically ask portfolio companies to set SBTs as part of their climate engagement strategies.
Regulatory pressure is growing globally. The European Union’s Corporate Sustainability Reporting Directive (CSRD) requires detailed emissions disclosures. The SEC climate disclosure rules in the United States and similar regulations in Asia-Pacific markets make proactive target-setting a smart risk management strategy.
Who Can Set Science-Based Targets?
Almost any business can set science-based targets. The SBTi accepts commitments from companies worldwide, regardless of sector, size, or geographic location.
Small and medium-sized enterprises (SMEs) have a streamlined route. If your company has fewer than 500 employees, you can use the SBTi SME Target-Setting Form instead of going through full validation. This reduces both complexity and cost while still ensuring your targets meet science-based criteria.
Financial institutions have specific criteria due to their unique emissions profiles. Banks, asset managers, and insurance companies can set targets for their investment and lending portfolios using the SBTi Financial Institutions Net-Zero Standard.
Before committing, ensure your company has been operational for at least one year and has sufficient emissions data to establish a baseline. You will need at least one year of comprehensive emissions inventory to set meaningful targets.
Understanding Scope 1, 2, and 3 Emissions
Setting science-based targets requires understanding the three scopes of greenhouse gas emissions defined by the GHG Protocol Corporate Standard. Each scope represents different sources of emissions, and SBTi has specific coverage requirements for each.
Scope 1: Direct Emissions
Scope 1 covers emissions from sources your company owns or controls directly. This includes fuel combustion in vehicles and facilities, process emissions from manufacturing, and fugitive emissions from refrigeration or air conditioning systems.
All Scope 1 emissions must be included in your science-based target boundary. These are typically the easiest to measure and control since they originate from assets under your direct management.
Scope 2: Indirect Energy Emissions
Scope 2 covers indirect emissions from purchased electricity, steam, heating, and cooling. While these emissions occur at the power plant generating your energy, they result from your company’s energy consumption.
SBTi requires 100% coverage of Scope 2 emissions in your targets. You can use either the location-based method (grid average emissions factors) or the market-based method (specific supplier contracts and energy attribute certificates) to calculate these emissions.
Scope 3: Value Chain Emissions
Scope 3 includes all other indirect emissions across your value chain. This typically represents 70% or more of a company’s total emissions footprint, especially in service-based industries and retail.
For Scope 3, SBTi requires coverage of at least 67% of total Scope 3 emissions if Scope 3 represents more than 40% of your total footprint. This includes purchased goods and services, use of sold products, business travel, employee commuting, and waste generated in operations.
Companies must also set supplier engagement targets for their scope 3 emissions. This means getting a specific percentage of suppliers by spend to set their own science-based targets within a defined timeframe.
Near-Term vs Net-Zero Targets: What’s the Difference?
SBTi recognizes two types of science-based targets: near-term targets and net-zero targets. Understanding the difference between these is essential for building a comprehensive climate strategy.
Near-term targets define the emission reductions you will achieve within the next 5-10 years. These targets must align with 1.5°C pathways and typically require 42-50% absolute emission reductions by 2030 from a recent base year. Near-term targets drive immediate action and signal serious intent to stakeholders.
Net-zero targets represent your company’s commitment to reach net-zero emissions by 2050 at the latest. The SBTi Corporate Net-Zero Standard requires reducing emissions by at least 90% across all scopes before 2050. Any residual emissions after this reduction must be neutralized through permanent carbon removal.
| Feature | Near-Term Targets | Net-Zero Targets |
|---|---|---|
| Timeframe | 5-10 years from base year | By 2050 (or sooner) |
| Reduction Required | 42-50% absolute reduction | 90%+ absolute reduction |
| Scope 3 Coverage | 67% if Scope 3 > 40% of total | 90% of all Scope 3 categories |
| Offsetting | Not allowed for target achievement | Only for residual 10% after reduction |
| Validation | Required for SBTi recognition | Requires near-term target first |
You must set a near-term target before or alongside your net-zero commitment. This sequential approach ensures your company takes immediate action rather than delaying decarbonization. Both target types require validation through SBTi to receive official recognition.
How to Set Science-Based Targets: A 5-Step Process
The SBTi has established a clear five-step process for setting science-based targets. Following this process ensures your targets meet the rigorous criteria required for validation.
Step 1: Submit a Commitment Letter
Begin by signing the SBTi Commitment Letter. This signals your intent to set science-based targets and starts your 24-month clock to develop and submit targets for validation.
Upon submitting your commitment, you gain access to SBTi resources including the Target-Setting Tool, technical guidance documents, and the SBTi Academy training platform. You may also publicly announce your commitment, though this is optional at this stage.
Step 2: Develop Your Emissions Inventory
Conduct a comprehensive greenhouse gas emissions inventory following the GHG Protocol Corporate Standard and Scope 3 Calculation Guidance. Select a base year that represents your typical operations and for which you have reliable data.
Your inventory must cover all relevant Scope 1 and 2 sources. For Scope 3, identify your significant categories and collect data to determine whether they exceed the 40% threshold that triggers coverage requirements. Most companies find that purchased goods and services, along with use of sold products, dominate their Scope 3 footprint.
Step 3: Select Your Target-Setting Method
Choose between the cross-sector pathway or sector-specific criteria for setting your targets. The cross-sector pathway uses the Absolute Contraction Approach, requiring all companies to reduce emissions at the same rate regardless of industry.
The Sectoral Decarbonization Approach (SDA) applies to specific sectors with distinct decarbonization challenges. Currently, SBTi offers sector-specific guidance for buildings, cement, chemicals, fashion and apparel, financial institutions, FLAG (forest, land, and agriculture), information and communication technology, power generation, steel, and transport.
If your company spans multiple sectors, you may need to set separate targets using different methods for different business units.
Step 4: Calculate Your Targets and Trajectory
Use the SBTi Target-Setting Tool to calculate your emission reduction targets. Input your base year emissions, projected growth or decline, and selected methodology. The tool generates the specific emission levels you must achieve for your target years.
For near-term targets, aim for at least 42% reduction by 2030 from your base year for 1.5°C alignment. For net-zero targets, plan for 90% reduction by 2050 with interim targets every 5-10 years.
Document your target boundary clearly, noting which emission sources are included and excluded. Apply the SBTi 5% rule to determine exclusions, which we will explain in detail in the next section.
Step 5: Submit for Validation and Announce
Submit your targets through the SBTi submission portal for validation. Prepare your submission form, target language, and supporting documentation including your emissions inventory methodology and target calculation files.
SBTi Services conducts the validation assessment, which typically takes 12 weeks. They may request clarifications or modifications to ensure your targets meet all criteria. Once validated, you have 6 months to publicly announce your targets.
Public announcement must include the exact target language approved by SBTi. You can announce via press release, sustainability report, website, or other public channels. After announcement, your company appears on the SBTi website as having committed science-based targets.
Choosing Your Target-Setting Method
Selecting the right methodology is crucial for targets that accurately reflect your company’s decarbonization pathway. The choice depends on your sector, emissions profile, and growth projections.
The cross-sector pathway works for most companies. It applies uniform reduction rates based on IPCC and IEA scenarios for limiting warming to 1.5°C. This method ensures all companies contribute equally to global decarbonization regardless of industry.
Sector-specific criteria make sense if your industry has unique decarbonization constraints or opportunities. For example, cement companies face different technological decarbonization options than software companies. The SDA accounts for these differences using sector-specific decarbonization pathways.
Companies in heavy industry often benefit from sector-specific approaches because they reflect realistic technological transitions. Companies in light manufacturing or services typically find the cross-sector pathway simpler and equally appropriate.
Understanding the SBTi 5% Rule
The 5% rule is a technical requirement that determines which emissions you must include in your science-based target boundary. Many companies overlook this rule initially, leading to validation delays.
SBTi requires that your target boundary covers at least 95% of your total Scope 1 and 2 emissions. You may exclude up to 5% of these emissions if they are truly immaterial or data is unavailable. However, you must provide justification for any exclusions.
For Scope 3, the 5% rule works differently. If Scope 3 represents more than 40% of your total emissions, your target must cover at least 67% of total Scope 3 emissions across relevant categories. You may exclude individual categories that represent less than 5% each of total Scope 3, provided the total excluded does not exceed 33%.
Apply this rule during your inventory development to ensure you are collecting data on the right emission sources. Document your boundary decisions clearly in your submission materials to avoid validation questions.
The SBTi Validation Process and Timeline
Understanding the validation timeline and costs helps you plan resources and set stakeholder expectations appropriately.
After submitting your commitment letter, you have 24 months to develop your targets and submit them for validation. This window provides time for comprehensive inventory development and target calculation. If you need an extension, contact SBTi before your deadline expires.
Once submitted, the validation assessment takes approximately 12 weeks. SBTi Services reviews your submission against current criteria, checking methodology alignment, boundary coverage, and target ambition. They provide detailed feedback if modifications are needed.
Upon validation approval, you have 6 months to publicly announce your targets. This announcement must use the exact target language approved by SBTi. Missing this deadline means you must restart the validation process.
Validation costs vary by company size. SMEs using the streamlined form pay less than standard validation fees. Large multinational companies pay standard validation fees that reflect the complexity of reviewing extensive operations. Check the SBTi website for current pricing as fees adjust periodically.
Maintaining Your SBTi Commitment
Setting targets is just the beginning. Maintaining your SBTi commitment requires ongoing reporting, periodic reviews, and demonstrated progress toward your goals.
You must report progress annually through CDP, your sustainability report, or direct submission to SBTi. This reporting should include current emissions levels, progress against targets, and any significant changes to your boundary or methodology.
SBTi requires target reviews every 5 years or whenever significant changes occur. Significant changes include mergers, acquisitions, divestments, or major shifts in business model that affect your emissions profile by more than 5%.
In 2026, SBTi delisted several major companies including Microsoft, Unilever, and X (formerly Twitter) for failing to meet commitment deadlines or maintain targets. These delistings demonstrate SBTi’s increasing enforcement of its rules. To avoid delisting, ensure you submit targets within 24 months of commitment, announce within 6 months of validation, and report progress annually.
SBTi is also updating its Net-Zero Standard to Version 2, with draft criteria released for consultation. Companies should monitor these updates as they may affect target requirements and validation criteria.
Engaging Your Supply Chain
For most companies, Scope 3 emissions from the supply chain represent the largest portion of their carbon footprint. Engaging suppliers is essential for achieving science-based targets.
SBTi requires companies to set supplier engagement targets when Scope 3 represents over 40% of total emissions. These targets specify the percentage of suppliers by spend that must set their own science-based targets within a defined timeframe.
Effective supplier engagement starts with prioritization. Focus first on suppliers representing the largest portion of your Scope 3 emissions or spend. Develop clear communication explaining why SBTs matter and what you are asking suppliers to do.
Provide resources to help suppliers get started. Share links to the SBTi Getting Started Navigator, SME target-setting forms, and free training resources. Some companies offer incentives like preferred supplier status or longer contracts for suppliers that commit to SBTs.
Track engagement progress through supplier surveys, procurement systems, or dedicated sustainability platforms. Report this progress alongside your emissions data in annual disclosures.
Frequently Asked Questions
How do you set science-based targets?
To set science-based targets, submit a commitment letter to SBTi, develop a comprehensive GHG emissions inventory, select your target-setting method (cross-sector or sector-specific), calculate reduction targets aligned with 1.5°C pathways, and submit for validation. Once validated, publicly announce your targets within 6 months.
How much does it cost to set a science-based target?
Validation costs vary by company size. SMEs using the streamlined form pay reduced fees typically under $1,000. Standard validation for larger companies ranges from $1,000 to $5,000+ depending on complexity. Additional costs include consultant fees if external support is needed and internal staff time for inventory development.
What are the five steps of producing science-based targets in order?
The five steps are: 1) Submit a commitment letter to SBTi, 2) Develop a comprehensive emissions inventory, 3) Select your target-setting method, 4) Calculate your targets and trajectory using SBTi tools, and 5) Submit for validation and publicly announce within 6 months of approval.
What is an example of a science-based target?
A typical example is: Company X commits to reduce absolute Scope 1 and 2 GHG emissions 50% by 2030 from a 2020 base year. Company X also commits to increase annual sourcing of renewable electricity from 35% in 2020 to 100% by 2030. For Scope 3, Company X commits that 67% of suppliers by spend will set SBTs by 2027.
What is the SBTi 5% rule?
The 5% rule states that your target boundary must cover at least 95% of total Scope 1 and 2 emissions. For Scope 3, if it exceeds 40% of total emissions, you must cover 67% of Scope 3. You may exclude individual categories under 5% of Scope 3 each, provided total exclusions do not exceed 33% of Scope 3 emissions.
What companies are dropping the SBTi?
In 2026, SBTi delisted major companies including Microsoft, Unilever, and X (formerly Twitter) for failing to meet commitment deadlines or maintain validated targets. These delistings reflect SBTi’s increased enforcement of its 24-month commitment window and validation requirements. Companies can avoid delisting by submitting targets on time and maintaining annual reporting.
Conclusion: Start Your Climate Journey Today
Setting science-based targets is a powerful way to align your company’s climate action with the latest climate science. By following the five-step process outlined in this guide, you can develop targets that meet SBTi criteria, gain validation, and demonstrate credible climate leadership to stakeholders.
Remember that near-term targets drive immediate action while net-zero commitments provide long-term direction. Understanding your Scope 1, 2, and 3 emissions, selecting the right methodology, and engaging your supply chain are all critical components of a successful SBT strategy.
The companies that act now will benefit from reduced climate risks, stronger investor relationships, and operational efficiencies that come from systematic decarbonization. Visit the Science Based Targets initiative website to submit your commitment letter and access their free Target-Setting Tool. Your 24-month journey to validated science-based targets starts with that first step.