Science Based Targets Guide: SBTi Compliance

Overview

The Science Based Targets initiative (SBTi) provides a framework for companies to set greenhouse gas emission reduction targets consistent with limiting global warming to 1.5°C above pre-industrial levels—the most ambitious goal of the Paris Agreement. Founded in 2015 as a partnership between CDP, the United Nations Global Compact, the World Resources Institute, and the World Wide Fund for Nature, the SBTi has become the gold standard for corporate climate target-setting.

As of early 2026, over 8,000 companies have committed to or set validated science-based targets through the SBTi, spanning every major sector and geography. The initiative provides sector-specific methodologies, validates targets against climate science, and publicly tracks corporate commitments and progress. SBTi validation has become a key credential that investors, customers, and regulators use to assess the credibility of corporate climate commitments.

The SBTi's Corporate Net-Zero Standard, launched in October 2021, extends the framework beyond near-term targets to define what a credible corporate net-zero commitment looks like. This standard requires both near-term targets (5–10 year horizon) and long-term targets (by 2050 at the latest), with strict criteria around residual emissions, value chain engagement, and the limited role of carbon removal credits.

Who Does It Apply To?

The SBTi is voluntary and open to companies of all sizes and sectors. However, several factors create strong pressure for adoption:

• Large corporations: Investor expectations, CDP scoring criteria, and supply chain requirements increasingly treat SBTi validation as a minimum credible standard for climate commitments.
• Financial institutions: The SBTi's Financial Institutions (FI) framework provides specific guidance for banks, asset managers, and insurers to set portfolio-level targets.
• SMEs: The SBTi offers a streamlined target-setting route for small and medium enterprises with fewer than 500 employees, reducing the cost and complexity of validation.
• Companies with net-zero commitments: Any company that has publicly committed to net-zero is under pressure to validate that commitment through a recognized framework. The SBTi's Net-Zero Standard is the most widely accepted.
• Supply chain participants: Companies like Apple, Microsoft, and Walmart require key suppliers to set SBTi-validated targets, creating cascading adoption across value chains.

Key Requirements

1. GHG Inventory Completeness Targets must cover at least 95% of company-wide Scope 1 and 2 emissions. Scope 3 targets are required if Scope 3 emissions represent 40% or more of total Scope 1, 2, and 3 emissions—which applies to the vast majority of companies.

2. Near-Term Targets (5–10 years) Companies must set near-term emission reduction targets with a timeframe of 5–10 years from the date of target submission. Near-term Scope 1 and 2 targets must be consistent with 1.5°C pathways. Near-term Scope 3 targets must be consistent with well-below 2°C pathways at minimum.

3. Long-Term Net-Zero Targets (by 2050) Under the Net-Zero Standard, companies must set long-term targets to reduce Scope 1, 2, and 3 emissions by at least 90% by 2050 or sooner. The remaining residual emissions (no more than 10%) must be neutralized through permanent carbon removals.

4. Scope 3 Target-Setting Approaches For Scope 3, the SBTi accepts several target-setting approaches: absolute contraction targets, economic intensity targets, and supplier or customer engagement targets. The engagement approach requires companies to ensure that a specified percentage of suppliers or customers (by emissions) set their own SBTi-validated targets within a defined timeframe.

5. No Use of Offsets for Target Achievement The SBTi does not allow carbon credits (offsets) to count toward near-term target achievement. Emission reductions must come from actual changes in operations, energy procurement, and value chain practices. Carbon credits may play a role in neutralizing residual emissions under the long-term net-zero target, but only for the final 10% that cannot be abated.

6. Annual Reporting and Recalculation Companies must publicly report their emissions annually and track progress against validated targets. If structural changes (acquisitions, divestitures) affect the target boundary, recalculation is required to maintain target integrity.

7. Validation and Revalidation Targets must be validated by the SBTi through a formal assessment process. Validated targets are published on the SBTi website. Companies must update and revalidate their targets at least every five years to ensure continued alignment with the latest climate science.

Timeline & Milestones

Step-by-Step Compliance Roadmap

Step 1: Commitment and Scoping

Submit a commitment letter to the SBTi signaling your intent to set science-based targets. You have 24 months from commitment to submit validated targets. Conduct a comprehensive GHG inventory covering Scope 1, 2, and 3 emissions following the GHG Protocol. Determine whether Scope 3 exceeds the 40% threshold requiring a Scope 3 target.

Step 2: Base Year Selection and Pathway Analysis

Select a base year that represents a recent, representative year for your emissions profile. Analyze available decarbonization pathways for your sector using SBTi's target-setting tools (e.g., the Absolute Contraction Approach or Sectoral Decarbonization Approach). Model different target ambition levels and assess feasibility against your operational and financial planning horizons.

Step 3: Target Development

Define specific, quantified targets for Scope 1 and 2 (and Scope 3 if applicable) that meet SBTi's criteria. For near-term targets, specify the percentage reduction, base year, and target year. For net-zero targets under the Net-Zero Standard, set both near-term and long-term targets. If using the Scope 3 engagement approach, define the coverage percentage and timeline for supplier/customer target adoption.

Step 4: Validation Submission

Submit your targets to the SBTi for validation. The submission includes your GHG inventory, target specifications, methodology documentation, and supporting evidence. The SBTi validation team assesses targets against their criteria and may request clarifications or modifications. The validation process typically takes 6–12 months. Once validated, targets are published on the SBTi website.

Step 5: Implementation, Reporting, and Revalidation

Develop and execute a detailed emission reduction roadmap. Implement operational changes, energy procurement strategies, and value chain engagement programs. Report emissions and progress annually through CDP or equivalent platforms. Revalidate targets at least every five years, or sooner if there are significant changes to your emissions profile or the SBTi updates its criteria.

Common Pitfalls

Setting targets without a credible reduction roadmap. Validation confirms that targets meet the mathematical criteria for 1.5°C alignment. It does not confirm that the company has a plan to achieve them. Companies that set ambitious targets without corresponding operational strategies risk missing targets publicly—a significant reputational liability.

Ignoring the Scope 3 threshold test. Many companies are surprised to learn that their Scope 3 emissions exceed 40% of their total footprint, triggering mandatory Scope 3 targets. Conduct the threshold test early and begin building Scope 3 measurement and engagement capabilities immediately.

Relying on offsets as a primary strategy. The SBTi's exclusion of offsets from near-term target achievement catches some companies off guard. If your decarbonization strategy relies heavily on purchasing carbon credits, it is not SBTi-compatible. Focus reduction efforts on operational changes, energy transition, and supply chain engagement.

Underestimating the five-year revalidation requirement. As climate science evolves and the SBTi tightens its criteria, revalidation may require companies to increase their ambition. Build target-setting flexibility into your planning and avoid locking in strategies that cannot be accelerated.

How Council Fire Can Help

Council Fire partners with organizations to develop science-based targets that are both scientifically credible and strategically achievable. We go beyond the mathematical target-setting exercise to build comprehensive decarbonization roadmaps that connect climate targets to business strategy, capital allocation, and stakeholder communication.

Our expertise in Scope 3 measurement and supply chain engagement is particularly valuable for companies grappling with value chain targets. We design supplier engagement programs that drive real emissions reductions while strengthening commercial relationships—turning a compliance requirement into a competitive advantage.

For organizations in ocean-dependent and natural resource sectors, Council Fire integrates the SBTi's FLAG guidance into target-setting, ensuring that land use, agriculture, and marine-related emissions are properly accounted for and addressed.

Council Fire's storytelling expertise helps clients communicate their science-based targets in ways that resonate with investors, customers, and employees. A validated target is a powerful signal—but only if stakeholders understand and believe in the strategy behind it.

Frequently Asked Questions

What happens if we miss our science-based target?

The SBTi does not currently impose penalties for missing targets, but the reputational consequences are significant. Progress against validated targets is publicly tracked. Companies that fail to demonstrate progress risk investor scrutiny, CDP scoring downgrades, and stakeholder credibility loss. If your emissions trajectory suggests you will miss a target, proactive communication and strategy adjustment are essential.

Can financial institutions set science-based targets?

Yes. The SBTi has a dedicated Financial Institutions (FI) framework that covers banks, asset managers, asset owners, and insurance companies. The FI framework requires targets for financed and facilitated emissions (portfolio emissions) using specific sectoral decarbonization approaches. Financial institutions must align their lending and investment portfolios with 1.5°C pathways, which has significant implications for capital allocation decisions.

How does the SBTi handle carbon removals?

Under the Corporate Net-Zero Standard, carbon removals play a specific, limited role. Companies must first reduce emissions by at least 90% across all scopes. The remaining residual emissions (≤10%) must be neutralized through permanent carbon dioxide removal (CDR). The SBTi distinguishes between avoided emissions (offsets), which cannot count toward targets, and carbon removals, which can only address residual emissions in the long-term net-zero target. This framework ensures that removals supplement rather than substitute for deep decarbonization.

What is the difference between a commitment and a validated target?

A commitment is a public pledge to set science-based targets within 24 months. It signals intent but does not involve SBTi assessment of specific targets. A validated target has been assessed and confirmed by the SBTi as meeting their criteria for 1.5°C alignment. Only validated targets carry the SBTi's stamp of credibility. Companies that commit but fail to validate within 24 months are removed from the SBTi's committed companies list.