Why set SBTi targets?

Setting science-based targets creates a structured, science-based pathway for reducing emissions across entire value chains. Near-term targets define the reductions a company must achieve within the next 5-10 years in line with a 1.5°C pathway for all three scopes. Net-zero targets extend this pathway to 2050 or earlier in line with the Paris Agreement, requiring deep absolute reductions of at least 90-95% across scope 1-3, with any small residual emissions neutralized through high-quality removals. SBTi’s framework ensures all relevant emissions sources are covered, target years follow consistent timelines, and reduction pathways are aligned with global climate goals.

Key rules for SBTi target setting:

• Scope 1 & 2 near-term: 1.5°C aligned, 5-10 year target year window.
• Scope 3 near-term: 1.5°C aligned, 5-10 year target year window. Required when scope 3 ≥40% of total emissions; must cover ≥67% of scope 3 emissions.
• Net-zero targets: 95% coverage of scope 1 and 2; 90% coverage of scope 3; target year 2050 or earlier.
• Initial commitment window: A company has 24 months after submitting the SBTi commitment letter to validate targets.

What does SBTi require in order to validate your targets?

Companies seek SBTi validation to prove that their targets are complete and ambitious. Sustainability leaders must use the approved methods, such as the Absolute Contraction Approach (ACA) or Sectoral Decarbonization Approach (SDA). Corporate targets are obliged to align with the SBTi rules outlined below. 

Key requirements for companies

• Near-term targets have a 5-10 year timeline
• Net-zero targets must be achieved before 2050
• Scope 1 and 2 emission reduction targets must always be included 
• Scope 3 targets required if scope 3 emissions exceed 40% of total emissions

Scope coverage 

Companies are required to include scope 1 and 2 emissions in their targets. The requirements for scope 3 validation are more specific. If companies choose to use supply engagement targets, they must verify that a defined share of suppliers will have set their own science-based targets within five years. SBTi reviewers will check coverage calculations, supplier engagement design and evidence of category prioritization. 

Approaches to target setting

• The ACA approach requires a linear reduction in absolute emissions. 
• The SDA uses sector-specific pathways that follow SBTi-approved trajectories

Net-zero targets must result in deep absolute reductions in all three scopes. Only a very small portion (5-10%) can be neutralized via verified removals. Avoided emissions and offsetting are not included in reductions. 

SBTi requires businesses to reference sector guidance applicable to their activity. SBTi has released guidance for transport, buildings, forestry and agriculture, and several other industrial sectors. Companies can find more information about setting boundaries and ambition levels in SBTi’s sectoral guidance. 

SBTi validation process

The validation process starts when companies sign an SBTi commitment letter, creating a 24-month window to prepare and submit their target. In this period, the company must follow SBTi’s Corporate Near-Term Standard, as well as the Corporate Net-Zero Standard if they are setting net-zero targets. Submitted targets are checked against published criteria and sector-specific guidance. 

Submission requirements

1. Base-year inventory following GHG Protocol

2. All relevant scope 3 categories included

3. Selection of method + sector guidance

4. Clear target boundary

5. Evidence and calculations

What information and evidence do you need before submission?

Ahead of submitting targets for SBTi validation, companies must compile a complete package that supports the credibility, ambition and feasibility of their targets. This includes emissions data, methodological choices and more. Below is a checklist of the key information to prepare for submission. 

• Base-year GHG inventory
• Boundary definitions (organizational and operational)
• Activity data and emission factor documentation
• Scope 3 category emissions, relevance tests
• Method-selection justification
• Target boundaries and reduction calculations
• Abatement roadmap with supporting assumptions
• Governance structure and KPI owners
• Draft communication plan and public disclosure

How to set SBTi targets step-by-step

Companies should set a baseline emission year, choose method and ambition, set near-term and net-zero targets, cover Scope 3 credibly, validate with SBTi, and operationalize tracking with quarterly reviews.

Step 1: Establishing a defensible base year

Companies choose a base year to set a credible foundation for targets. In-house sustainability experts must clearly define their organizational boundary using operational control, financial control or equity share. Within this boundary, a full GHG inventory must be prepared using the GHG Protocol Corporate Standard for scope 1 and 2, and the Corporate Value Chain Standard for scope 3. 

Scope 3 emissions must be mapped across all 15 scope 3 categories, even if some are estimated using spend-based or secondary emissions factors. Companies evaluate data quality across several dimensions such as representativeness, completeness and methodological consistency. Businesses working in the agricultural sector also screen for and isolate their Forest, Land and Agriculture (FLAG) emissions. FLAG emissions are considered material if they make up more than 20% of total emissions. 

Checklist for setting a base year:

• Organizational boundary (equity or control approach)
• Operational boundary (Scopes 1, 2, 3)
• Base-year emissions for all scopes‍
• Data-quality scoring (activity, spend, economic intensities)‍
• Scope 3 relevance test (if >40%) 
• FLAG screening (required if ≥20% of total emissions)
• Assess which scope 3 categories are material

Step 2: Selecting SBTi methods and ambition levels

SBTi offers two main methods for setting targets: ACA and SDA.

The SDA is only available for certain sectors with defined pathways, such as power generation, buildings cement and FLAG activities. If an operation’s emissions fall under one of these specific sectors, those emissions must be targeted using the SDA, while remaining emissions can be addressed with ACA.

Under ACA, companies follow reduction rates, at least 4.2% annual absolute reduction for scope 1 and 2 and 2.5% annual reduction for scope 3. ACA can be expressed through absolute or intensity targets, as long as they result in the required rates. 

Near-term targets must have a timeline of 5-10 years, net-zero targets must be achieved by 2050. Companies can choose to submit net-zero targets later than near-term targets, though net-zero ambitions are becoming increasingly expected from investors and regulators.

Step 3: Defining a robust scope 3 strategy

According to SBTi, scope 3 emissions typically represent >70% of a company’s emissions. Decarbonizing scope 3 successfully depends on selecting the right scope 3 categories and designing a credible supplier engagement strategy. Scope 3 targets must cover at least 67% of total scope 3 emissions.

Companies should identify emission-intensive categories using spend and activity based data. Priority should be given to decarbonizing suppliers and activities that contribute to the largest share of emissions. SBTi allows companies to meet coverage thresholds with a combination of absolute-reduction targets, intensity targets and supplier engagement targets. Supplier engagement targets require suppliers to set SBTi-approved targets themselves, usually within 3-5 years. 

Scope 3 coverage example:

• Total Scope 3 emissions = 10,000 tCO₂e
• Required coverage = 67% = 6,700 tCO₂e
• GHG category 1 + 4 + 9 = 7,400 tCO₂e → coverage achieved

Supplier engagement target example:
You choose a target: “By 2029, 60% of suppliers by financial spend covering 80% of emissions will have science-based targets.”

Absolute reduction target:
“Reduce scope 3 emissions 28% by 2034 from a 2023 baseline year”. This is aligned with the minimum 2.5% reduction per year 

Intensity-based reduction: “Reduce scope 3 emissions per unit of revenue by 40% by 2030 from a 2022 baseline”

Category-specific reduction target: “Reduce emissions from Category 1 by 30% by 2030”

Step 4: Building a reduction roadmap

Companies need to develop a reduction roadmap with clear interventions to meet SBTi-aligned trajectories. This includes modeling reduction potential across operational and value-chain levers, such as energy efficiency, electrification, renewable energy procurement, logistics optimization, material substitution, process changes, product design and circularity initiatives. 

Components of a credible roadmap 

• Abatement curve: shows companies which measures deliver the highest impact at lowest cost
• Renewable energy sourcing: company outlines how they will transition to clean energy
• Supplier switching if needed: companies shift to new suppliers if existing suppliers cannot meet their standards
• CAPEX/OPEX estimates: cost estimates and allocation allow leadership to understand the financial implications of each initiative
• Operational feasibility: company evaluates each action to confirm it can be implemented without operational constraints
• ROI (return on investment) analysis: financial and strategic returns show why each intervention is justified
• \Strict timelines: clear deadlines build momentum and create accountability
• Accountability; interim checkpoints: assigned owners and regular reviews keep the roadmap on track

Step 5: Submitting to SBTi and communicating targets

Companies submit various documents to SBTi for validation. SBTi approves targets within 30 days for near-term and up to 60 days for net-zero targets. Once validated, these targets are typically published in annual reports and via SBTi’s public dashboard.

SBTi submission requirements

• Commitment letter
• Full GHG inventory
• Target submission form
• Methodological rationale
• Target calculations
• Evidence scope 3 
  
  • Scope 3 coverage
  • Target type selection

Step 6: Tracking, disclosing and iterating targets quarterly

Upon validation, companies must track progress annually, although quarterly tracking is recommended for accuracy. Monitoring includes updating activity data, recalculating emissions for new years, evaluating supplier engagement, assessing pathway variance and adjusting the roadmap based on performance. As companies likely start reporting on other frameworks, they must ensure the presented data is consistent across climate-reporting frameworks. 

How does software make the SBTi reporting process more cost-effective?

Manual emissions reporting causes regulatory risks and time delays. Fragmented data can cause unclear trails, these gaps may cause companies to miss requirements. Coolset reduces both risks and time required by replacing spreadsheets and scattered data with one structured platform. 

• Accelerated data collection: Coolset streamlines input with pre-built templates, activity mappings, and supplier-level data capture. This makes it easier to gather scope 1-3 emissions and ESG disclosures.
• Centralized documentation: Evidence libraries and controlled records in Coolset are directly linked to KPIs, materiality outcomes and disclosures. This facilitates preparation for submission. 
• Forecasting tools: Coolset enables teams to evaluate their progress and take action early, by tracking progress and modeling future scenarios. Forecasting avoids surprises and allows action to be taken early. 

Have questions? Feel free to reach out to our team.

FAQs

How do you set an SBTi target?

To set an SBTi target, full scope 1-3 emissions must be measured. A base year must be chosen, as well as an SBTi approved method: Absolute Contraction Approach or Sectoral Decarbonization Approach. Once the calculations are complete, targets are submitted to SBTi for approval. Companies need to make a credible reduction roadmap and track their progress annually. 

How do you collect data for Scope 3 emissions?

Scope 3 is collected by combining activity-based (e.g. kilometers transported, materials purchased) and spend-based estimates. Companies begin by generating a spend-based estimate across all 15 categories to identify material categories. Data quality of material scope 3 categories is improved progressively by adding primary supplier or activity-based data. A key part of scope 3 data collection is developing a repeatable workflow for supplier requests and allocating emissions to specific suppliers.

How do you reduce Scope 3 Category 1 emissions?

Reducing category 1 (purchased goods and services) requires changes in supplier engagement, product design and procurement policy. Companies can reduce their category 1 scope 3 by switching to lower-carbon materials, setting minimum recycled-content thresholds, redesigning products for material efficiency and shifting to suppliers with SBTi certification. SBTi encourages supplier engagement targets because category 1 emissions rely on a decarbonized supply chain.

What is the difference between near-term and net-zero targets?

Near-term targets cover 5-10 years and require fast reductions. They are typically aligned with a 1.5ºC trajectory for scope 1-3. Scope 3 only has to be addressed if it is material. 

Companies have to reduce their emissions between 90-95% to achieve their net-zero targets. Only a small portion of removals are permitted, which must be neutralized with durable removals. 

Do SMEs have to set Scope 3 near-term targets?

Small and medium sized-enterprises (SMEs) are not required to set scope 3 near-term targets, even if scope 3 is a large part of the emissions. SBTi encourages SMEs to work with suppliers and customers to reduce scope 3, but it is not mandatory. SMEs using the  corporate route, for net-zero validation or regulatory reasons, must follow full scope 3 requirements.