Science Based Targets initiative (SBTi): An Overview and Recent Developments

What is the SBTi?

Who is behind the SBTi?

The SBTi was established in 2014 as a collaboration between:

• CDP
• United Nations Global Compact (UNGC)
• World Resources Institute (WRI)
• World Wide Fund for Nature (WWF)

What Are SBTi Targets?

Science-based targets are specific goals set by companies to reduce their greenhouse gas emissions in line with what climate science deems necessary to meet the goals of the Paris Agreement and limit global temperature rise to 1.5°C or 2°C above pre-industrial levels.

Companies setting these targets commit to reducing their emissions across their entire value chain. This includes:

• Direct emissions (Scope 1)
• Indirect emissions from energy use (Scope 2)
• Other indirect emissions (Scope 3), which often represent the largest portion of a company’s carbon footprint.

How Are SBTi Targets Set?

Companies looking to set their science-based targets can follow the below 5 steps:

1. Commit: Publicly commit to setting science-based emissions reduction targets that align with the goals of the Paris Agreement.
2. Develop Targets: Conduct a thorough inventory of GHG emissions, including Scope 1, 2, and 3. Use the SBTi's criteria and methodologies to develop short-term and long-term targets that align with science-based pathways.
3. Submit for Validation: Submit the developed targets to the SBTi for official validation. The SBTi reviews the targets to ensure they are robust, credible, and aligned with a 1.5°C or 2°C pathway.
4. Communicate: Announce the validated targets to all relevant stakeholders, ensuring transparency and alignment with broader sustainability goals.
5. Implement and Disclose: Implement the targets across the organisation, including strategies like energy efficiency and renewable energy transitions. Regularly monitor progress and disclose it annually to stakeholders, maintaining accountability and adjusting as necessary.

You can visit the SBTi website for more information on this. You can also read the guide to Science-Based targets by the European Covenant of Companies for Climate and Energy to assist you with setting your company’s science-based targets.

What is net zero according to the SBTi?

Net zero refers to a state where a company has reduced its GHG emissions across its value chain to as close to zero as possible, and any remaining emissions are neutralised by removing an equivalent amount of carbon from the atmosphere.

The SBTi’s Net-Zero Standard requires companies to:

• Set Near-Term Targets: Companies must set immediate targets (5-10 years) to significantly reduce emissions in line with a 1.5°C pathway.
• Long-Term Targets: These targets should aim to achieve deep decarbonisation of at least 90-95% across all scopes before 2050.
• Carbon Removal: Only after achieving maximum reductions should companies offset residual emissions through credible carbon removal projects, such as reforestation or technological carbon capture and storage.

The SBTi’s approach to achieving net zero emphasises that companies should prioritise reducing their emissions instead of relying solely on offsets to meet their net zero goals.

Examples of Companies with SBTi Targets

Many leading companies across various sectors have committed to SBTi targets, showcasing their dedication to climate action. Examples include:

• Bayer AG, who have a near term target of 1.5ºC by 2029, along with a Net Zero commitment.
• BMW Group, who have a near term target of 1.5º/Well-below 2ºC by 2030, along with a Net Zero commitment.
• Lufthansa Group, who have a near term target of well-below 2ºC by 2030, along with a Net Zero commitment.

Over 5,000 other businesses across various regions and industries have set emissions reduction targets through the SBTi. These companies are part of a growing movement of businesses that recognise the importance of aligning their climate strategies with science-based targets to ensure long-term sustainability and resilience to meet the recommended 1.5°C pathway.

Recent Developments to the SBTi Framework

As the climate crisis intensifies, the SBTi has introduced several key updates to its framework, reflecting the latest scientific insights and global climate commitments. These updates focus on the role of carbon credits, the management of Scope 3 emissions, and the criteria for setting net-zero targets.

SBTi updates on carbon credits and Beyond Value Chain Mitigation (BVCM)

One of the significant updates from the SBTi concerns the role of carbon credits in achieving net-zero targets. The SBTi has clarified that while carbon credits can be a valuable tool for addressing residual emissions, they should not replace the need for deep decarbonisation within a company’s value chain. The SBTi emphasises that companies must focus on reducing their emissions in line with science-based targets before considering carbon credits.

In addition, the SBTi has recognised the importance of Beyond Value Chain Mitigation (BVCM), encouraging companies to support high-quality projects that contribute to climate mitigation beyond their direct emissions. These projects are not included within a company’s Scope 1, 2, or 3 emissions balance sheet but are crucial in contributing to global climate action. The SBTi encourages companies to engage in BVCM to complement their internal emissions reductions, helping scale climate solutions beyond their immediate operations.

Given the urgency of the climate crisis, the SBTi recommends that all companies take action to deliver BVCM as they transition to net-zero.

–Source: Beyond Value Chain Mitigation

SBTi updates on Scope 3 Emissions

Scope 3 emissions, which include all indirect emissions that occur in a company’s value chain (such as those from suppliers, product use, and employee travel), have been a major point in recent updates from July 2024. The SBTi now requires companies to set Scope 3 targets if these emissions make up more than 40% of their total GHG emissions. On average, Scope 3 represents 80% of a company's emissions, aside from specific industries such as oil and gas. As a result, most companies are impacted by this update.

This highlights the importance of addressing the entirety of a company's impact, and not just direct emissions (Scopes 1 and 2). The updated framework provides specific guidance on how to measure, manage, and reduce Scope 3 emissions, recognising the complexities involved while also stressing their importance in achieving overall climate targets. More information about this can be found in the SBTi’s Scope 3 discussion paper.

Key Takeaways

• Overview: The Science Based Targets initiative is a globally recognised framework that helps companies set science-based climate goals aligned with the Paris Agreement, aiming to limit global warming to 1.5°C.
• Implementation Steps: Companies follow a five-step process—Commit, Develop Targets, Submit for Validation, Communicate, and Implement and Disclose—to set and achieve their science-based targets.
• Net Zero Requirements: The SBTi’s Net-Zero Standard mandates deep decarbonisation of 90-95% of emissions, with carbon credits used only for residual emissions that cannot be eliminated.
• Recent Updates to the SBTi:
  • Carbon Credits and BVCM: The SBTi emphasises that carbon credits should complement, not replace, direct emissions reductions. Companies are encouraged to engage in Beyond Value Chain Mitigation (BVCM) to support climate projects beyond their immediate operations.
  • Scope 3 Emissions: Companies must set Scope 3 targets if these emissions exceed 40% of their total GHG emissions, ensuring comprehensive coverage of their carbon footprint.