SBTi Guide

What is SBTi?

SBTi stands for Science Based Targets initiative.

It develops standards, tools, and guidance that companies can use to set emissions reduction targets in line with climate science.

In simple terms, SBTi helps companies answer:

• How much do we need to reduce emissions?
• How fast do we need to reduce them?
• Which emission scopes should be included?
• What target year should we choose?
• How do we show that our target is credible?
• How do we track progress over time?

SBTi is not the same as greenhouse gas accounting. GHG accounting measures emissions. SBTi target setting uses those emissions data to define reduction targets.

Why SBTi matters

SBTi helps companies move from general climate ambition to measurable climate action.

It supports:

• Climate credibility — targets are based on science-based pathways, not only internal ambition.
• Clear direction — companies know what level of emissions reduction is expected.
• Transition planning — targets help companies plan actions, investments, and responsibilities.
• Stakeholder trust — customers, investors, employees, and business partners can better understand climate commitments.
• Risk management — companies can prepare for regulation, market changes, energy transition, and climate-related risks.
• Progress tracking — targets create a clear reference point for measuring emissions reductions over time.

Key terms

Science-based target

A greenhouse gas emissions reduction target is science-based when it is aligned with what climate science says is needed to limit warming and reach net-zero emissions.

Near-term target

A near-term target focuses on emissions reductions over a shorter period. Under current SBTi guidance, near-term targets usually cover 5 to 10 years from submission.

Long-term target

A long-term target shows the level of emissions reduction needed by the net-zero target year. Long-term targets usually look toward 2050 or earlier.

Net-zero target

A net-zero target combines near-term targets, long-term targets, deep emissions reductions across Scope 1, Scope 2, and Scope 3, and neutralization of residual emissions at the net-zero target year.

Residual emissions

Residual emissions are the small amount of emissions that remain after a company has reduced emissions as far as possible in line with science-based pathways.

Neutralization

Neutralization means using removals to counterbalance residual emissions at the net-zero target year.

Carbon credits and offsets

Carbon credits can support broader climate action, but they should not replace reducing emissions inside the company’s own operations and value chain. Offsets should not be counted as direct emissions reductions toward science-based targets.

Scope 1, Scope 2, and Scope 3

Scope 1

Direct emissions from sources owned or controlled by the company.

Examples include fuel used in company facilities, company vehicles, process emissions, and refrigerant leaks.

Scope 2

Indirect emissions from purchased electricity, steam, heat, or cooling used by the company.

Examples include purchased electricity, purchased heating, purchased cooling, and purchased steam.

Scope 3

Other indirect emissions in the company’s value chain.

Examples include purchased goods and services, transport and distribution, business travel, employee commuting, waste, use of sold products, end-of-life treatment, leased assets, supplier emissions, and customer-related emissions.

For many companies, Scope 3 is the largest and most difficult part of target setting.

What companies need before setting SBTi targets

Before setting science-based targets, companies usually need:

• A complete Scope 1 and Scope 2 GHG inventory
• A Scope 3 screening or inventory
• A clear organizational boundary
• A clear base year
• A clear target year
• Reliable activity data
• Emission factors
• Understanding of subsidiaries and group structure
• Understanding of value chain emissions
• Information on renewable electricity use
• Sector-specific guidance, if applicable
• Management support
• A plan for reducing emissions

SBTi and GHG Protocol

SBTi target setting depends strongly on GHG accounting.

Companies should prepare their GHG inventory using the GHG Protocol Corporate Standard, Scope 2 Guidance, and Scope 3 Standard where relevant.

The GHG inventory provides the baseline for target setting. The target explains the future emissions reduction pathway.

Base year and target boundary

Base year

A base year is the reference year used to measure emissions reduction. Companies should choose a base year with reliable and representative emissions data.

A base year may need to be recalculated if major changes happen, such as mergers, acquisitions, divestments, major changes in business activity, methodology changes, discovery of significant errors, or major changes in Scope 3 relevance.

Target boundary

The target boundary defines which emissions are included in the target and should align with the GHG inventory boundary.

Near-term SBTi targets

Near-term targets help companies reduce emissions quickly.

Typical near-term target considerations include:

• Scope 1 and Scope 2 targets should be aligned with 1.5°C pathways.
• Targets should normally cover 5 to 10 years from submission.
• Scope 1 and Scope 2 targets should cover most company-wide emissions.
• Scope 3 targets may be required when Scope 3 emissions are significant.
• Companies should use approved SBTi methods and sector guidance where relevant.

Common near-term methods include absolute emissions reduction, sector-specific pathways, renewable electricity targets, supplier engagement targets, customer engagement targets, physical intensity targets, and economic intensity targets.

Long-term and net-zero targets

Long-term targets show how the company will reduce emissions toward the net-zero target year.

For net-zero, companies need deep emissions reductions across the value chain. A net-zero target should not rely mainly on offsets; the priority is direct decarbonization.

Corporate Net-Zero Standard V2.0

SBTi Corporate Net-Zero Standard V2.0 is the updated framework for corporate net-zero target setting.

It introduces stronger focus on implementation, transition planning, company categories, Scope 1, Scope 2, and Scope 3 target setting, progress assessment, target cycles, data quality, assurance in specific cases, ongoing emissions responsibility, and clearer use of market instruments.

Important: SBTi states that validation under Version 2.0 begins in 2027. Companies submitting targets in 2026 should check current SBTi instructions and applicable transition rules.

Company categories under V2.0

Corporate Net-Zero Standard V2.0 introduces Category A and Category B companies.

Category A generally includes larger companies and certain companies with higher emissions or size thresholds.

Category B generally includes smaller companies and companies that do not meet Category A criteria.

Some requirements are stricter for Category A companies, such as Scope 3 target setting, transition plan disclosure, and assurance of certain base year data.

Transition plan

A transition plan explains how a company intends to implement its science-based targets.

A good transition plan should include target details, emission sources covered, actions to reduce emissions, timeframes, responsibilities, assumptions, dependencies, governance oversight, links to business strategy, and plans for emissions-intensive activities where relevant.

SBTi may check whether a transition plan exists and includes required elements, but the company remains responsible for the plan’s quality, feasibility, and implementation.

Target validation

Target validation is the process where SBTi Services checks whether submitted targets meet SBTi requirements.

SBTi validation is not the same as verification. Validation checks whether targets meet SBTi criteria and methodologies; verification checks whether historical emissions data are accurate and complete.

Companies submit targets through SBTi Services for validation.

Basic SBTi process

1. Check eligibility
2. Build a GHG inventory
3. Choose base year and target year
4. Select target methods
5. Develop targets
6. Prepare documentation
7. Submit for validation
8. Announce approved targets
9. Report progress
10. Review and update

SMEs and SBTi

Small and medium-sized enterprises may have a simplified route. SMEs generally have fewer resources than large companies, so SBTi provides a streamlined validation route.

However, SMEs still need to measure emissions and report progress.

Sector-specific guidance

Some sectors have specific SBTi requirements or pathways. Examples include power, buildings, FLAG, financial institutions, transport, steel, cement, aviation, maritime, automotive, and oil and gas or fossil fuel-related companies.

FLAG emissions

FLAG means Forest, Land and Agriculture. Companies with significant land-related emissions may need separate FLAG targets.

FLAG can include emissions and removals linked to land use, land-use change, agriculture, forestry, bioenergy, and food and agricultural commodities.

Renewable electricity and Scope 2

For Scope 2 emissions, companies may reduce emissions through electricity reduction and low-carbon or renewable electricity procurement.

Under current SBTi guidance, renewable electricity targets have commonly used milestones such as 80% renewable electricity by 2025 and 100% by 2030.

Common mistakes in SBTi preparation

Companies often face problems such as starting without a complete GHG inventory, using unclear organizational boundaries, ignoring Scope 3 emissions, using a weak or outdated base year, counting offsets as emissions reductions, mixing avoided emissions with inventory reductions, forgetting sector-specific requirements, not checking FLAG relevance, not documenting assumptions, using target wording that does not match SBTi requirements, submitting targets without enough evidence, treating validation as verification, claiming SBTi approval before validation, and not planning how targets will actually be implemented.

Simple SBTi preparation checklist

• Have we completed a Scope 1 and Scope 2 inventory?
• Have we screened all relevant Scope 3 categories?
• Have we selected a clear organizational boundary?
• Have we chosen a reliable base year?
• Have we checked whether Scope 3 is significant?
• Have we checked whether FLAG applies?
• Have we checked whether sector guidance applies?
• Have we selected the correct target method?
• Have we prepared target wording?
• Have we documented assumptions and exclusions?
• Have we checked whether offsets are excluded from target reductions?
• Have we prepared a transition plan?
• Have we assigned internal responsibility?
• Have we reviewed the latest SBTi criteria?
• Have we checked whether we are using the correct standard version?
• Have we prepared for validation through SBTi Services?

Important note

This guide is for general educational purposes only.

It does not provide legal, audit, assurance, certification, target validation, accounting, or official SBTi advice. Companies should confirm their target-setting approach with qualified climate, sustainability, accounting, legal, audit, assurance, or SBTi-specialist professionals.

SBTi standards, criteria, validation processes, sector guidance, timelines, and transition rules may change over time. Companies should always check the latest official SBTi guidance before preparing or submitting targets.

References and disclaimer

This guide was prepared using SBTi documents reviewed for EcoGradeX and official SBTi source information.

Main references include:

• SBTi Corporate Net-Zero Standard Version 2.0
• SBTi Corporate Manual
• SBTi Getting Started Guide for Developing Science-Based Targets
• SBTi Corporate Net-Zero Standard official webpage
• SBTi Corporate Net-Zero Standard Version 2.0 official webpage
• SBTi Validation Services information
• SBTi How to Set Science-Based Targets information

The supporting documents were used to simplify and structure the guide content for general educational understanding. They should not be treated as legal, audit, assurance, certification, validation, or official target-setting advice.