Mar 21, 2025
Climate change is one of the greatest global challenges of our time, deeply affecting both economies and ecosystems. In tackling this global challenge, not only governments but also companies have a critical responsibility. The Science Based Targets initiative (SBTi) provides a global framework that helps companies set greenhouse gas emission reduction commitments in line with the latest scientific data. So, what is the SBTi and why is it of strategic importance for companies?
What is the Science Based Targets Initiative (SBTi)?
The SBTi (Science Based Targets initiative) is an initiative that enables companies to set greenhouse gas emission reduction targets in line with the rapid and deep emission reductions needed to meet the Paris Agreement's goal of limiting global warming to 1.5°C. The SBTi guides companies in taking necessary steps to avoid the worst impacts of climate change. These targets are based on the latest climate science and scientists' recommendations.
The SBTi has been established through the collaboration of four organizations:
CDP (Carbon Disclosure Project): A global system that enables companies and cities to disclose their environmental impacts.
United Nations Global Compact: A United Nations initiative that encourages companies to adhere to sustainability principles.
World Resources Institute (WRI): A research organization that develops practical solutions to global problems.
World Wide Fund for Nature (WWF): One of the world's leading conservation organizations.
The Importance of SBTi and Its Benefits for Companies
The SBTi provides numerous significant benefits for companies:
Managing Climate Risks: The SBTi helps companies better understand and manage the physical risks (e.g., extreme weather events, sea-level rise) and transition risks (e.g., policy changes, technological developments) associated with climate change.
Investor Confidence and Access to Financing: Science-based targets enhance investors' confidence in companies' climate actions. Investors who care about sustainability performance show more interest in companies that set SBTi targets. This situation facilitates companies' access to financing and strengthens their financial stability.
Competitive Advantage and Market Leadership: The SBTi enables companies to gain a competitive advantage by demonstrating sustainability leadership. Consumers and business partners prefer companies with sustainable practices. Companies that set SBTi targets stand out in the market and enhance their brand value.
Brand Reputation and Meeting Stakeholder Expectations: The SBTi strengthens companies' brand reputation and helps them meet the expectations of stakeholders (e.g., employees, customers, suppliers, society). Transparent and science-based targets increase stakeholders' trust in companies.
Legal Compliance and Future Preparedness: The SBTi helps companies prepare for future climate regulations (e.g., carbon pricing, emission standards). A proactive approach allows companies to adapt more easily to regulatory changes and avoid potential costs.
Operational Efficiency and Cost Savings: SBTi targets encourage companies to find innovative solutions to reduce emissions. In this process, companies can improve energy efficiency, optimize resource use, and reduce waste generation. Such improvements increase operational efficiency and provide cost savings.
How Does the SBTi Process Work?
The SBTi process offers a structured approach for companies to set science-based targets and achieve these targets. The process generally includes the following steps:
Commitment: Companies commit to science-based target setting through SBTi's official website. This step demonstrates the company's commitment to climate action.
Target Development: Companies develop emission reduction targets in accordance with SBTi criteria and methodologies. In this process, companies consider Scope 1, 2, and 3 emissions. Targets must align with the goals of the Paris Agreement.
Target Submission: The developed targets are presented to the SBTi in the format specified by SBTi, along with the necessary documentation.
Target Assessment: SBTi experts evaluate the submitted targets in detail against scientific criteria, methodologies, and requirements set by SBTi. This assessment process aims to ensure that the targets are based on scientific grounds and are sufficiently ambitious.
Target Approval: Targets approved by the SBTi are publicly disclosed on the SBTi website and the company’s own platforms. Approved targets demonstrate the company's commitment and transparency regarding climate action.
Target Implementation and Monitoring: Companies implement the necessary strategies and action plans to achieve the approved targets. In this process, companies develop emission reduction projects, enhance energy efficiency, invest in renewable energy sources, and collaborate with the supply chain.
Reporting: Companies regularly report (typically annually) on their progress toward achieving the targets. This reporting ensures transparency and accountability. Companies share emission data, implemented projects, and results with stakeholders.
SBTi Target Types and Scopes
The SBTi allows companies to set targets for different emission sources:
Scope 1 Emissions: Direct greenhouse gas emissions from sources owned or controlled by the company. Examples include emissions from company-owned vehicles, production facilities, and equipment.
Scope 2 Emissions: Indirect greenhouse gas emissions from the generation of purchased electricity, heat, steam, or cooling energy.
Scope 3 Emissions: Indirect greenhouse gas emissions from other sources in the company’s value chain (not included in Scope 1 and 2). Scope 3 emissions typically account for a large portion of a company's total emissions. Examples include emissions from the production of goods and services purchased from suppliers, business travel of employees, and the use and disposal of products.
The SBTi requires companies to set targets for Scope 1 and 2 emissions. For Scope 3 emissions, companies must set targets if these emissions constitute a significant portion of their total emissions.
Net Zero Target and the Role of SBTi
The SBTi also provides a framework for companies to achieve net zero emissions targets. Net zero means that companies reduce their emissions as close to zero as possible and balance any remaining emissions with projects that remove those emissions from the atmosphere (e.g., forest restoration, carbon capture and storage).
The SBTi ensures that companies adhere to scientific criteria and methodologies when setting their net zero targets. The SBTi's Net Zero Standard provides companies with a clear roadmap to achieve their net zero targets.
SBTi and Climate Science
The SBTi helps companies align their climate actions with the latest climate science. The SBTi relies on reports and recommendations from leading scientific organizations such as the Intergovernmental Panel on Climate Change (IPCC). The SBTi guides companies in achieving the emission reductions necessary to meet the goal of limiting global warming to 1.5°C.
Solutions
There are various solutions available for companies to succeed in the SBTi process. These solutions may vary depending on the companies' needs and resources. Some common solutions include:
Consulting Services: Companies can seek support from specialized consulting firms on matters such as SBTi target setting, carbon footprint analysis, developing emission reduction strategies, creating net zero roadmaps, and sustainability reporting.
Technological Solutions: Companies can utilize various technological tools and platforms to collect, analyze, and report emission data. These tools can help companies manage and reduce their emissions more effectively.
Collaborations: Companies can collaborate with suppliers, customers, and other stakeholders to reduce their emissions. Value chain collaborations can help companies manage their Scope 3 emissions.
Training and Awareness: Companies can increase their employees' awareness by educating them about SBTi and climate change. This can contribute to creating a culture that will help companies achieve their sustainability goals.
It is important for companies to identify and implement the right solutions to succeed in the SBTi process.
Frequently Asked Questions (FAQs)
Who can participate in the SBTi?
Companies of all sectors and sizes can participate in the SBTi. The SBTi also offers a special roadmap for small and medium-sized enterprises (SMEs).
Is it mandatory to set an SBTi target?
While it is not currently mandatory, setting an SBTi target is becoming increasingly important for companies to manage climate risks, enhance investor confidence, gain a competitive advantage, and meet stakeholder expectations. Many countries and regions are introducing regulations that make climate action mandatory for companies.
How often should SBTi targets be updated?
SBTi targets should be updated at least every 5 years. However, it is important to keep up with developments in climate science and best practices and update targets more frequently when needed.
What is the difference between a net zero target and an SBTi target?
An SBTi target ensures that emission reduction targets are based on scientific criteria. In contrast, a net zero target aims to reduce emissions as close to zero as possible and balance any remaining emissions. The SBTi provides a framework and methodology to achieve the net zero target.
Is it possible to get support during the SBTi process?
Yes, companies can receive support from consulting firms during the SBTi process. These firms can assist companies in setting their SBTi targets, measuring their emissions, developing reduction strategies, and reporting.
What is the cost of setting SBTi targets?
The cost of setting SBTi targets varies based on the company's size, sector, complexity of emission sources, and the scope of consulting services required. However, the long-term benefits of setting SBTi targets (e.g., risk management, investor confidence, competitive advantage) often far exceed the costs.
How long does it take to reach SBTi targets?
The time required to achieve SBTi targets varies based on the company's current emission levels, reduction potential, strategies implemented, and other factors. Companies can adopt a phased approach by setting short, medium, and long-term targets.
What challenges might companies face when setting SBTi targets?
When setting SBTi targets, companies may encounter various challenges such as difficulties in data collection and analysis, challenges in calculating Scope 3 emissions, technological and financial barriers, stakeholder engagement difficulties, and challenges in adapting to changes in climate science. Consulting services can help overcome these challenges.
