Reporting ESG

The power of science-based targets (SBTs): Achieving sustainability goals

Apr. 4, 2023

The Science-Based Targets initiative (SBTi) is an international organization that supports businesses and financial institutions in establishing greenhouse gas (GHG) emissions reduction objectives. These so-called science-based targets (SBTs) shall be consistent with the most recent findings in climate science. The initiative aims to drive corporate climate action to achieve the EU's established climate targets: a 55% reduction in greenhouse gas emissions by 2030 and climate neutrality by 2050.

The initiative was formed through a collaboration between CDP, the United Nations Global Compact, the World Resources Institute (WRI), and the World Wide Fund for Nature (WWF). Over 2,300 companies have developed science-based targets in line with the SBTi’s requirements as of March 2023.

The SBTi has three main missions:

  1. It identifies and fosters best practices for emissions reductions and net-zero targets in accordance with climate science.

  2. It provides methods and resources to develop science-based targets.

  3. Its expert teams independently evaluate and validate science-based targets set by companies.

What are science-based targets (SBTs)?

Science-based targets are an approach to determining emissions reduction targets for companies. Specifically, SBTs may not exceed the amount of GHG emissions that must be reduced to meet the goals of the Paris Agreement. This means that each target must be in line with the EU climate goal of keeping global warming well below 2°C – and pursuing efforts to limit global warming to 1.5°C. The targets must be set using the most recent methods and techniques approved by the Science-Based Targets initiative.

The GHG Protocol’s scope 1, 2, and 3 emissions are of primary importance when developing a new SBT.

Interested in learning more about scope 1, 2, and 3 emissions, as well as the GHG Protocol? Read more in our Insight article.

How to develop a new science-based target

Criteria and recommendations for setting science-based targets

The latest update of the criteria to set a science-based target (version 5.0) applies since July 15, 2022.

The list of criteria and recommendations for the definition of SBTs is divided into cross-sector criteria for near-term science-based targets and net-zero targets, as well as sector-specific criteria.

The SBTi defines 27 cross-sector criteria (C1 to C27) and, additionally, 13 recommendations (R1 to R13) to be considered in the formulation of science-based targets.

The criteria for defining SBTs include, among others:

  • Parent companies must integrate the emissions of all subsidiaries in their target submission. (C1)

  • The targets must cover all relevant GHGs as defined in the GHG Protocol Corporate Standard. (C2)

  • The targets must include company-wide scope 1 and scope 2 emissions, as defined by the GHG Protocol Corporate Standard. (C3)

  • If a company’s relevant scope 3 emissions are 40% or more of total scope emissions, a scope 3 target is required. Companies operating in the sale or distribution of natural gas and/or other fossil fuels must define scope 3 targets for the use of sold products, irrespective of the share of scope 3 emissions. (C4)

  • At a minimum, scope 1 and scope 2 targets have to be in line with the level of decarbonization required to keep global warming to 1.5°C compared to pre-industrial temperatures (C15).

  • Scope 3 targets must be consistent with the level of decarbonization required to keep global temperature increase well-below 2°C compared to pre-industrial temperatures (C18).

  • Targets must cover a minimum of 5 years and a maximum of 10 years from the date of submission to the SBTi (C13). In addition, companies are encouraged to develop long-term targets that cover targets up to 2050 (R5).

Additionally, the SBTi provides sector-specific guidance and methods referring to Scope 1 and 2, and Scope 3 emissions for multiple sectors. These sector-specific requirements relate to the use of target-setting methodologies and minimum ambition levels.

View the full list of criteria for SBTs on this website.

Example for science-based targets in the real estate sector

Let us consider a real estate service company. Its SBTs could be defined as follows:

  • Halve all Scope 1 and 2 emissions by 2030.

  • Reduce all scope emissions (including scope 3) by 95% by 2040.

These targets are consistent with the Paris Climate Agreement.

To meet the targets for scope 1 and 2 emissions, the real estate company is powering all of its office space with energy from renewable sources and converting 100% of its fleet to electric cars.

As more than 90% of the company's total scope emissions are scope 3 emissions from its properties, the company must also define a scope 3 target. These pose a particular challenge. Therefore, the company has a strong focus on energy efficiency in the buildings it manages. For example, energy-efficient electricity and heat supply is ensured through collaboration with construction companies.

The SBTi’s Net-Zero Standard

In October 2021, the Science-Based Targets initiative introduced its Net-Zero Standard, establishing a common, robust, and science-based foundation for the concept of net-zero. It provides businesses with guidance, criteria, and resources required to achieve science-based net-zero targets consistent with limiting global temperature rise to 1.5°C. More than 170 businesses have declared net-zero targets as of March 2023. Moreover, the SBTi is currently creating the first science-based net-zero target-setting standard for the financial industry, which is scheduled to debut at the beginning of 2024.

Not sure what net-zero means exactly? Look it up in our emission dictionary.

The key requirements of the Net-Zero Standard include:

  • Concentrate on rapid, deep cuts to GHG emissions, particularly along the entire value chain

  • Set both short-term and long-term targets

  • No net-zero claims until long-term targets are achieved with 90% decarbonization by 2050

  • Take action beyond the value chain and continue to invest to mitigate climate change elsewhere

Benefits for companies of setting science-based targets

Aside from the environmental benefits, businesses can also benefit from setting science-based targets.

According to the SBTi, these business benefits include:

  • Enhanced brand image: As a result of consumers' increased environmental awareness, setting SBTs appears to have a positive effect on brand reputation.

  • Increased investor confidence: Investors perceive sustainability as a measure of a company's credibility, as they want to safeguard their investments for the future.

  • Resilience against stricter regulation: The EU continues to work on increasingly stringent regulations in order to achieve the EU climate targets – SBTs support the development of a sustainable business model at an early stage.

  • Innovation boost: In order for SBTs to be achieved, new methods, workflows, and product properties must be developed – thus promoting research and innovation.

  • Cost savings: SBTs can assist in discovering untapped optimization potential, which can lead to bottom-line savings – for example, by phasing out fossil fuels, which will become scarce and expensive in the future.

  • Competitive advantage: All the above advantages also help to become a pioneer of sustainability in the sector and to stand out from the competition.

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