The role of science-based targets in corporate climate action
As the urgency of addressing the climate crisis increases, companies and financial institutions worldwide are being called upon to play a greater role in reducing greenhouse gas emissions and contributing to a net zero economy. To support this transition, the Science Based Targets initiative (SBTi) has emerged as a leading corporate climate action organization, helping businesses set credible, science-based emissions reduction targets aligned with the latest climate science.
A crucial framework developed by the SBTi is the Corporate Net-Zero Standard, which now enables companies and financial institutions to align their climate strategies with the goal of limiting global heating to 1.5°C. First launched in 2021, this standard has guided thousands of companies in defining robust decarbonization strategies.
Now, the SBTi is refining this standard, with Version 2.0 (V2) currently under public consultation. This revision aims to address evolving challenges in corporate sustainability, particularly around Scope 3 emissions and the use of carbon removal credits.
What is the Science Based Targets initiative (SBTi)?
The Science Based Targets initiative (SBTi) is a partnership between several organizations, including the World Resources Institute (WRI), CDP, the United Nations Global Compact, and the World Wide Fund for Nature (WWF). Launched in 2015, the SBTi provides a structured framework to help companies set science-based targets for reducing their greenhouse gas emissions in alignment with global climate goals.
By defining best practices in corporate decarbonization, offering technical assistance, and validating corporate emissions reduction targets, the SBTi has become the gold standard for ambitious corporate climate action. More than 10,000 businesses have set, or committed to setting, emissions reduction targets through the SBTi framework, underscoring its impact on financial institutions worldwide and global climate efforts.
What are science-based targets?
Science-based targets (SBTs) are corporate emissions reduction targets that align with the level of decarbonization required to keep global temperature rise below 1.5°C, as outlined in the Paris Agreement. These targets ensure that businesses are making measurable, meaningful contributions to climate mitigation.
The key principles of science-based targets
- Covering Scope 1, Scope 2, and, in most cases, Scope 3 emissions.
- Focusing on absolute emissions reductions, rather than relying on carbon offsets.
- Aligning with the Corporate Net-Zero Standard, which provides guidance on near-term and long-term target-setting.
- Requiring companies to report on progress annually.
SBTs provide a structured approach for businesses to decarbonize, manage their climate change-related risks, and build resilience in a rapidly evolving regulatory and economic landscape.
The history of the SBTi Corporate Net-Zero Standard
The SBTi Corporate Net-Zero Standard was first introduced in 2021 as the world’s first global framework for companies to set science-based net-zero targets. The goal was to ensure that corporate commitments to net zero were aligned with climate science, rather than relying heavily on offsets or unverified claims.
Key milestones in the standard’s development
- 2021: Release of the first version of the Corporate Net-Zero Standard.
- 2023: Growing discussions around the use of carbon credits in corporate net-zero strategies, particularly for Scope 3 emissions.
- 2024: Internal debates within the SBTi regarding the role of carbon offsets led to leadership changes and delays in revising the standard.
- March 2025: Release of the draft revision (V2.0), proposing new approaches to Scope 3 reductions, carbon removal, and corporate transition pathways.
The revision aims to improve corporate climate accountability by clarifying emissions reduction targets and offering businesses a more structured approach to achieving net-zero emissions.
What does the new version of the standard propose?
New approach to Scope 1 and Scope 2 targets
- Under the current framework, Scope 1 (direct emissions) and Scope 2 (indirect emissions from purchased energy) are often combined.
- The new proposal separates Scope 1 and Scope 2 targets, requiring companies to track and address these emissions individually.
- This change is intended to drive greater accountability and encourage businesses to transition to zero-carbon electricity by 2040.
Stronger requirements for Scope 3 emissions
- Companies must reduce at least 90% of absolute Scope 3 emissions by 2050.
- The standard introduces customized Scope 3 goals based on industry categories and supply chain influence.
- Businesses may count emissions reductions from sustainable procurement strategies (e.g., purchasing low-carbon steel or cement) towards their targets.
Incorporation of carbon removal strategies
- The draft allows companies to use carbon removal credits for residual emissions, but only after exhausting all other reduction measures.
- Companies must set both short-term and long-term targets for carbon removal.
- The standard does not specify which technologies qualify but emphasizes durability and effectiveness.
Categorization of companies based on size and location
- Category A (large and medium companies in high-income countries) will face stricter requirements, such as accelerated target verification (1 year instead of 2 years).
- Category B (small and medium companies in low-income countries) will have more flexibility, including extended verification timelines.
A focus on progress tracking and target renewal
- Companies must assess progress towards their targets using predefined formulas.
- A structured target renewal process will be introduced to ensure continuous alignment with evolving climate science.
New transition pathway and public consultation
- The SBTi has opened a public consultation period until June 1, 2025, to refine these updates.
- A structured transition pathway will be developed, ensuring companies can confidently set targets under V1.2 while preparing for V2.0.
- The final standard is expected to be approved by the end of 2025 and take effect in 2026.
Why this matters for companies
The revision of the Corporate Net-Zero Standard reflects the growing need for credible net zero plans. With businesses playing a pivotal role in the net zero economy, adopting updated emissions reduction targets will be essential to maintaining corporate credibility and regulatory compliance.
For companies already on their SBTi journey, the new standard will provide greater clarity on emissions tracking, carbon removal, and transition planning. For those yet to commit, now is the time to engage with the SBTi’s public consultation and prepare to align your company’s climate strategy with evolving best practices.
The world is moving towards net zero, and businesses that take action now to combat the climate crisis will be best positioned for long-term success in a low-carbon economy.
