Overview
SBTi is a global initiative based on climate science, aimed at guiding companies in setting GHG reduction targets aligned with climate stabilization. The initiative is instrumental in supporting corporate strategies for sustainability and risk management in the face of increasing climate-related challenges.
As of July 2022, companies are no longer permitted to set targets based on the "well below 2°C" scenario. Instead, the minimum standard now requires aligning targets with a 1.5°C warming scenario. This new requirement applies to both Scope 1 and Scope 2 targets. Companies certified under the older standard before 2020 may continue using it until 2025, after which a new review and validation are required. Organizations certified after 2021 must update their targets at least every five years. All target submissions after July 15, 2022, must follow the updated criteria.
Scope of application
The initiative applies to all companies with more than 500 employees. Small and Medium Enterprises (SMEs) are subject to a separate set of criteria.
SBTi is applicable across all industries, including cement, steel, power, oil and gas, transportation, and financial institutions. The initiative provides industry-specific guidance and target-setting standards to ensure relevance and applicability.
Core components
SBTi’s framework comprises the following key elements:
- Carbon budget: Defines the total allowable GHG emissions to keep global temperature rise within 1.5°C or well below 2°C.
- Emissions trajectory: Establishes the scale and timeline for emissions reductions.
- Allocation methodology: Determines how the global carbon budget is distributed among entities.
Target validation process and fees
Once a company submits its commitment to SBTi, it has a two-year period to set targets. Targets must then be reassessed or adjusted every five years to remain valid.
Review criteria
1. Timeframe
- Target years must fall within a 5 to 10-year period from the date of submission.
2. Science-based target boundary
- The target must include all Scope 1 and Scope 2 emissions.
- If Scope 3 emissions account for more than 40% of total emissions, Scope 3 targets are also required.
3. Ambition level
- Scope 1 and Scope 2 targets must align with a 1.5°C scenario.
- Scope 3 targets may align with a "well below 2°C" pathway.
4. Scope 2 criteria
- Companies must disclose their methodology for calculating Scope 2 emissions.
5. Scope 3 criteria
- Organizations must follow the GHG Protocol guidelines to identify Scope 3 emissions.
- If Scope 3 emissions exceed 40% of total emissions, targets must be set to cover at least two-thirds of these emissions.
6. Reporting
- Companies must publish their GHG inventory and decarbonization progress annually.
7. Recalculation
- Companies must recalculate and update targets in the event of significant changes in organizational structure, base year emissions, or calculation methods. Recalculation is also required if Scope 3 emissions exceed the 40% threshold.
SBTi target setting methodology
Source
- SBTi official website
Last Updated: March 22, 2024