Current Points to Note in the SBTi Process

Science Based Targets initiative (SBTi) is an international initiative that enables companies to set emission reduction targets aligned with Paris Agreement goals. SBTi is operated in partnership with CDP, UN Global Compact, World Resources Institute (WRI), and WWF.

The SBTi target setting process requires technical requirements, organizational readiness, and strategic planning. In this article, we address critical points in the process and commonly encountered challenges.

Target Types

SBTi defines different target types across different time frames and scopes.

Near-term targets

Targets to be achieved within 5-10 years. They ensure companies take immediate action.

Requirements:

Target year must be 5-10 years from submission date
Base year must be no more than 2 years before submission date
Target is mandatory for Scope 1 and Scope 2
Scope 3 target is determined based on threshold condition

Scope: Scope 1, Scope 2, and (conditionally) Scope 3 emissions

Long-term targets

Targets set to reach net-zero by 2050 or earlier. Defined under the Net-Zero Standard.

Requirements:

At least 90% reduction for Scope 1 and 2 (compared to base year)
At least 90% reduction for Scope 3 (compared to base year)
Remaining residual emissions (≤10%) must be neutralized with carbon removal

Net-Zero target

Combination of near-term and long-term targets. SBTi Net-Zero Standard is the most comprehensive commitment.

Two components:

Near-term target (within 5-10 years)
Long-term net-zero target (generally 2050)

Scope 3 Threshold Calculation Methodology

The threshold calculation determining whether a Scope 3 target is mandatory is critical.

Threshold rule

If Scope 3 emissions represent 40% or more of total Scope 1+2+3 emissions, a Scope 3 target is mandatory.

Calculation: Scope 3 ratio = Scope 3 / (Scope 1 + Scope 2 + Scope 3) × 100

Example: A company's emissions:

Scope 1: 10,000 tCO2e
Scope 2: 5,000 tCO2e
Scope 3: 35,000 tCO2e
Total: 50,000 tCO2e
Scope 3 ratio: 35,000 / 50,000 = 70% → Scope 3 target mandatory

Scope 3 target coverage

When setting a Scope 3 target, at least 67% must be covered. That is, categories representing two-thirds of Scope 3 emissions must be included in the target scope.

Prioritization: The largest categories are included as priority. For example, Category 1 (purchased goods) and Category 11 (product use) are the largest items for many companies.

FLAG Sector Requirements

FLAG (Forest, Land and Agriculture) defines separate target requirements for specific sectors.

Sectors covered by FLAG

SBTi has identified sectors with significant FLAG emissions:

Food production and processing
Agricultural products
Forest products and paper
Textiles and apparel (natural fibers)
Biofuels and biomaterials

FLAG target requirements

If FLAG emissions represent 20% or more of the company's total Scope 1+2+3 emissions, a separate FLAG target must be set.

FLAG target characteristics:

FLAG-specific scenario is used
Land use change (LUC) emissions are included
Sector-specific decarbonization pathway is followed

FLAG and standard target distinction

Companies within FLAG scope set two separate targets:

FLAG target: For forest, land, and agriculture emissions
Standard target: For all other emissions

Target Formulation Methods

Targets can be formulated on an absolute or intensity basis.

Absolute target

Targets reduction of total emission amount.

Example: "Reduce Scope 1+2 emissions by 50% by 2030 compared to 2020 base year"

Advantage: Clear and understandable. Directly reflects total atmospheric impact.

Requirement: At least 4.2% annual linear reduction (for 1.5°C scenario)

Intensity target

Targets reduction of emissions per unit. Unit can be revenue, product quantity, or number of employees.

Example: "Reduce Scope 1+2 emissions per ton of product by 50% by 2030"

Usage conditions: SBTi accepts intensity targets for Scope 1+2 only under certain conditions. The company's growth forecast must be aligned with sector decarbonization pathway.

For Scope 3: Scope 3 targets are generally formulated on an intensity basis because absolute Scope 3 targets can be difficult for growing companies.

Validation Process and Timeline

Pre-submission preparation (3-6 months)

Inventory preparation:

Completion of Scope 1, 2, and 3 inventory
Data quality assessment
Base year selection and documentation

Target design:

Scenario selection (1.5°C or well-below 2°C)
Target formulation (absolute or intensity)
Scope determination (which categories included)

Internal approval:

Senior management approval
Target achievability assessment
Resource planning

Submission process (1-2 months)

Commitment letter: A commitment letter for target setting is sent to SBTi. At this stage, no target has been set yet, but commitment is made to submit a target within 24 months.

Target submission: Target and supporting documents are submitted to SBTi. Application is made through online portal.

Validation (2-4 months)

SBTi evaluates submitted targets. They may ask questions and request additional information. Evaluation time varies according to application volume.

Evaluation criteria:

Inventory completeness and quality
Target formulation compliance with criteria
Adequacy of supporting documents

Approval and publication

Approved targets are published on the SBTi website. The company can use approved targets in its communications.

Annual Progress Reporting

Annual progress reporting is mandatory after target approval.

Reporting requirements

Annual emission data
Progress compared to base year
Distance remaining to target year
Summary of reduction actions

Reporting channels

Reporting through CDP is recommended. CDP Climate Change questionnaire is aligned with SBTi reporting requirements.

Common Rejection Reasons

Common issues leading to target rejection in SBTi evaluation:

Inventory gaps

Incomplete screening of Scope 3 categories
Missing significant emission sources
Undocumented data quality inadequacy

Target formulation errors

Insufficient reduction rate
Target year not in appropriate range
Scope requirements not met

FLAG omission

FLAG emissions not evaluated
Separate FLAG target not set
LUC emissions not included

Documentation inadequacy

Incomplete methodology explanation
Undocumented assumptions
Unreferenced data sources

Post-Approval Changes and Resubmission

Situations requiring target update

Significant company structure change (merger, acquisition, divestiture)
Change in sector classification
Update in SBTi criteria

Recalculation policy

Recalculation is required when base year emissions change by more than 5%. This ensures the target remains current.

Target ambition raising

Companies can update their existing targets by setting more ambitious ones. For example, transition from well-below 2°C target to 1.5°C target.

Organizational Success Factors

Senior management ownership

Target setting and implementation fail without senior management support. CEO or board sponsorship is critical.

Cross-functional team

Target implementation requires participation of multiple departments: operations, procurement, product development, finance, sustainability.

Resource planning

The target setting process requires resources: human resources, consulting budget, software and tools.

Internal communication

Communication of the target to the entire organization is necessary for implementation success. Employees must understand what the target means and their roles.

Conclusion

SBTi target setting process requires technical accuracy and organizational readiness. Inventory quality, Scope 3 threshold, FLAG requirements, and target formulation are critical issues.

For a successful process, realistic time planning, senior management ownership, and cross-functional collaboration are essential. Target setting starts as a project but transforms into a long-term commitment requiring continuous progress tracking.

Knowing common rejection reasons and avoiding them speeds up the validation process. Post-approval annual reporting and target updates when necessary are ongoing parts of the process.

Current Points to Note in the SBTi Process