SaaS Company Sets Science-Based Targets

Challenge

A B2B SaaS company with $380 million in annual recurring revenue and 2,500 employees had built a strong brand around responsible business practices. However, its sustainability commitments were mostly qualitative — renewable energy messaging, volunteer programs, and a basic carbon footprint estimate that the VP of marketing had commissioned from an online calculator. When the company's largest enterprise customer (a Fortune 100 financial services firm) began requiring SBTi-validated targets from strategic vendors, the leadership team realized it needed a rigorous, defensible climate strategy.

The company's emissions profile was unusual for its size. With no manufacturing, minimal office space (primarily remote workforce with co-working hubs), and cloud-hosted infrastructure, its Scope 1 and 2 emissions were relatively modest — approximately 4,200 tCO2e annually. But its Scope 3 footprint, once properly measured, was twelve times larger: 52,000 tCO2e driven by cloud data center energy consumption, purchased hardware for employees, business travel, and employee commuting.

Approach

Emissions Inventory (Months 1-3)

We built a GHG Protocol-compliant inventory covering all three scopes. Scope 1 was minimal (leased vehicles, backup generators at two co-working hubs). Scope 2 was straightforward (purchased electricity for offices, calculated using both location-based and market-based methods).

Scope 3 required careful methodology. We focused on the four material categories: Category 1 (purchased goods and services — primarily cloud hosting, which represented 38% of total Scope 3), Category 6 (business travel — 22%), Category 7 (employee commuting — 18%), and Category 2 (capital goods — primarily employee laptops and monitors — 12%).

For cloud emissions, we worked directly with the company's cloud providers (AWS and Azure) to obtain customer-specific carbon footprint data rather than relying on spend-based estimates. This produced a significantly more accurate picture and revealed that the company's cloud workload was running in regions with carbon-intensive grids.

Target Setting (Months 3-6)

We developed SBTi-aligned targets using the absolute contraction approach for Scope 1 and 2 (42% reduction by 2030 from a 2023 base year, consistent with 1.5°C) and the SBTi's Scope 3 requirements (a minimum of two-thirds of Scope 3 emissions covered by engagement targets or absolute/intensity reduction targets).

For Scope 3, we set a supplier engagement target requiring that 67% of suppliers by emissions (primarily cloud providers and top service vendors) would have their own SBTi-validated targets by 2027. We also set an absolute Scope 3 reduction target of 25% by 2030 — aggressive for a growing company, but achievable given the identified reduction levers.

Reduction Roadmap (Months 4-8)

The roadmap targeted three major levers:

Cloud optimization: Migrating workloads to the lowest-carbon cloud regions (reducing cloud emissions intensity by 45%), right-sizing instances (eliminating overprovisioned compute capacity that wasted energy), and implementing auto-scaling and serverless architectures for variable workloads.

Renewable energy: Procuring renewable energy certificates for all Scope 2 consumption and advocating with cloud providers for 24/7 carbon-free energy matching (beyond annual RECs).

Travel and commuting: Implementing a sustainable travel policy with carbon budgets by department, mandatory rail for trips under 500 miles, and enhanced video conferencing infrastructure. For commuting, providing EV charging at co-working hubs and subsidized transit benefits.

SBTi Submission and Validation (Months 6-12)

We prepared the SBTi target validation submission, including the full methodology documentation, emissions inventory, target boundary justification, and reduction roadmap evidence. The submission entered the validation queue and was approved after one round of clarifying questions.

Results

• SBTi near-term targets validated within 10 months of engagement start — 42% Scope 1+2 absolute reduction and 25% Scope 3 absolute reduction by 2030
• Scope 1 and 2 reduced 85% in the first year through renewable energy procurement (100% market-based) and office electrification
• Cloud carbon footprint reduced 52% through region migration, instance right-sizing, and architecture optimization — also reducing cloud spend by $2.1 million annually
• Total emissions reduced 30% in absolute terms over two years, while revenue grew 45% — demonstrating complete decoupling
• Business travel emissions cut 41% through the sustainable travel policy and enhanced virtual meeting infrastructure
• Enterprise customer contract retained and expanded — the SBTi validation directly satisfied the vendor requirement and was cited in the customer's own Scope 3 reporting
• 12 suppliers representing 67% of procurement emissions committed to setting their own SBTi targets within the engagement timeline
• CDP score of B achieved in the first disclosure year, positioning the company competitively for enterprise sales where CDP scores are increasingly reviewed
• Employee engagement scores improved — the climate program was cited as a top-3 factor in the annual employee satisfaction survey

Key Takeaways

Cloud is the new fleet. For SaaS companies, cloud infrastructure is typically the largest single emissions source. The good news: cloud emissions are highly actionable through region selection, architecture optimization, and provider engagement — often with cost savings attached.

Scope 3 engagement targets are achievable. The SBTi's supplier engagement requirements sound daunting, but for tech companies with concentrated vendor spend, getting a handful of large cloud and service providers to commit to SBTi represents a feasible path that covers the majority of Scope 3.

Decoupling is possible and demonstrable. A 30% absolute emissions reduction during a period of 45% revenue growth provided powerful evidence that growth and decarbonization are compatible — useful for both investor relations and customer conversations.

Make it a commercial asset. The most compelling ROI from SBTi validation was customer retention and acquisition. Enterprise procurement teams increasingly use SBTi status as a qualifying criterion for strategic vendors. The validation paid for itself through a single contract renewal.