Science-Based Targets Initiative (SBTi): Goals, Process and Reduction Path

The Science-Based Targets Initiative (SBTi) defines how companies can set their emissions reduction targets on a scientifically sound basis in line with the 1.5-degree pathway of the Paris Agreement. This article explains the Corporate Net-Zero Standard, the validation process, the rules for small and medium-sized enterprises, and the key changes introduced by the upcoming Version 2.0, including the results of the second public consultation (November to December 2025).

What is the Science-Based Targets Initiative?

The Science-Based Targets Initiative is a joint initiative of CDP, UN Global Compact, We Mean Business Coalition, World Resources Institute (WRI) and World Wide Fund for Nature (WWF), founded in 2015. It develops standards, tools and guidance that companies can use to set climate targets compatible with the 1.5-degree pathway of the Paris Agreement. As of early 2026, more than 10,000 companies worldwide had SBTi-validated targets - these companies represent more than 40 percent of global market capitalization. The central framework is the Corporate Net-Zero Standard, which defines both short-term reduction targets (5 to 10 years) and long-term net-zero targets by 2050 at the latest.

How many companies already have SBTi targets?

The number of validated companies increased by 40 percent in 2025 to 9,764, and the number of validated net-zero targets by as much as 61 percent. In January 2026, the mark of 10,000 validated companies was surpassed. Particularly notable is the momentum in Asia: there, the number of validated companies rose by 53 percent in 2025 and thus almost matched the European increase. Japan leads with more than 2,000 validated companies worldwide, followed by the United Kingdom, the United States and China. In Europe, penetration in leading indices such as CAC 40, DAX 40 and FTSE 100 is particularly high - for listed German industrial companies, SBTi company targets have effectively become the market standard.

Would you also like to set SBTi targets? Feel free to use our free SBTi template for companies to get started:

SBTi and the Paris Agreement: criteria and benefits for companies

The Paris Agreement commits the international community to limit global warming to well below 2 degrees - ideally 1.5 degrees - above pre-industrial levels. SBTi translates this objective into methodological requirements for companies. The decisive factors are the Cross-Sector Pathway with a minimum reduction of 4.2 percent per year for absolute targets and sector-specific pathways according to the Sectoral Decarbonization Approach methodology. The basis for accounting is the Greenhouse Gas Protocol, which defines Scope 1, Scope 2 and Scope 3.

Science-based targets pay off for companies on several levels. They reduce costs through energy efficiency and make access to capital easier, as investors and banks increasingly incorporate climate-related metrics into their financing decisions. A study by the European Central Bank shows that banks that have joined the SBTi charge companies with emissions reduction targets particularly low interest rates compared with companies without such targets. They strengthen reputation and credibility with customers, investors and talent, drive innovation along the value chain, and reduce regulatory risks in the context of ESRS and sustainability reporting.

How does the Science-Based Targets Initiative work?

The SBTi process guides companies to science-based climate targets in five steps. In the first step, the company makes a public commitment (Commitment Letter) and thereby signals its intention to develop SBTi-compliant targets. In the second step, emissions across all relevant scopes are recorded and a base year is established. In the third step, the company defines short-term reduction targets (5 to 10 years) as well as long-term net-zero targets by 2050 at the latest. In the fourth step, the targets are submitted to SBTi Services for independent validation and checked against the current criteria. In the fifth step, companies report publicly on their progress every year and adjust their measures accordingly. After validation, companies also commit to communicating the targets publicly within six months.

Short-term vs. long-term SBTi targets

Short- and long-term SBTi targets form a two-tier system. Short-term targets require immediate action with a time horizon of 5 to 10 years and a minimum reduction of 4.2 percent per year for the 1.5-degree pathway. A short-term target must cover at least 95 percent of Scope 1 and Scope 2 emissions. If Scope 3 emissions account for more than 40 percent of total emissions, a Scope 3 target must also be set, covering at least 67 percent of those emissions. Long-term targets define the end goal: at least 90 percent reduction across all scopes by 2050 at the latest, with remaining residual emissions neutralized through permanent carbon removal. Both target levels must be submitted together.

How can small and medium-sized enterprises set SBTi targets?

Small and medium-sized enterprises (SMEs) with fewer than 500 employees can choose between two routes. The simplified SME approach (SBTi Small and Medium Enterprises Route) offers a standardized target-setting process with predefined ambition levels: at least 42 percent reduction in Scope 1 and Scope 2 emissions by 2030 compared with a current base year; Scope 3 emissions do not have to be reduced quantitatively, but must be measured and managed. The regular route is also available and makes sense for companies whose Scope 3 emissions make up a large share of their overall footprint. The SME approach significantly shortens the validation process and lowers costs.

Corporate Net-Zero Standard V2.0: the most important changes

Note: The following information is based on the second consultation draft of the SBTi (published in November 2025, consultation closed on 12 December 2025). The final Version V2.0 is expected during 2026 and will be binding from 1 January 2028. Version 1.3 will continue to apply until 31 December 2027. Details may still change before publication.

Companies with existing SBTi targets keep them until the end of the respective time horizon, but should start a gap analysis now to prepare the transition to V2.0 in a structured way.

Criticism of SBTi and current developments

The Science-Based Targets Initiative has been under pressure for several years. Critics accuse it of enabling greenwashing by temporarily allowing carbon credits to be counted toward Scope 3 emissions. Methodological weaknesses and a potential conflict of interest due to financing from corporate contributions add to the criticism. Studies such as that of the New Climate Institute have pointed out that validated targets in practice often lag behind the announced reductions. The initiative is responding by tightening its standards: shorter target cycles, more transparency obligations and the new Corporate Net-Zero Standard V2.0. Whether these adjustments will sustainably strengthen credibility depends largely on implementation and independent oversight.

For land- and forest-intensive sectors such as the food industry, the Forest, Land and Agriculture Guidance (FLAG) is also relevant. The SBTi published an updated version (FLAG V1.2) in March 2026. Companies submitting a FLAG target must present a No-Deforestation Commitment within two years. For submissions after 2028, an additional hard deadline applies: the No-Deforestation Commitment must be fulfilled by 31 December 2030 at the latest. For companies in the food and agriculture sector, this means a significant tightening of due-diligence obligations along the supply chain.

What must companies report about SBTi progress?

After validation, companies must report annually and publicly on their emissions development and target progress. This includes current emissions by Scope 1, 2 and 3, the percentage progress compared with the base year, and the key reduction measures. In practice, reporting usually takes place within existing formats such as a sustainability report, CDP questionnaire or ESRS reporting. With Version 2.0, additional disclosures on Scope 3 category coverage, target anchoring at management level, external assurance and the Climate Transition Plan will become mandatory. Structured monitoring that draws directly from the carbon accounting process significantly reduces the effort required for this annual disclosure.

Excel template: defining SBTi targets

Companies structuring SBTi-compliant targets for the first time need a robust basis for their emissions data and reduction pathway. The free Excel template "SBTi for Companies" from Global Changer provides exactly this starting point. It includes a pre-structured emissions data sheet for Scope 1, Scope 2 (Market- and Location-Based) and all 15 Scope 3 categories. From this, the template automatically calculates three reduction scenarios with target horizons 2030, 2035 and 2040 and extracts the three largest Scope 3 subscopes with their own reduction pathways. An overall overview ("Climate Journey") shows the development of all scopes over the target period.

After clicking the download button, you will receive the template directly by email. It is ready to use immediately and is suitable both for internal reporting and for communication with investors and auditors.

What Global Changer software additionally delivers

The Excel template covers the starting point; for operational implementation of SBTi targets, enterprise structures need more. The CO₂ reduction module from Global Changer plans and manages transition plans according to SBTi methodology, creates individual reduction pathways and documents them in an audit-proof way. Each measure is evaluated economically according to the VALERI methodology (DIN EN 17463) - including CAPEX, OPEX, ROI, NPV and payback time - and can be tracked across locations in real time. A database with more than 270 reduction measures and the measures list according to ISO 50001 provide the substantive basis; a seamless audit log ensures transparency for auditors.

In addition, Global Changer covers complete climate accounting (Scope 1 to 3) with AI-assisted matching of emission factors for Scope 3.1, access to more than 60,000 emission factors from ecoinvent, AGRIBALYSE and EcoTransIT, as well as AI-assisted Product Carbon Footprints. Hosting and AI run entirely in Germany, the company is ISO 27001-certified and GDPR-compliant. A Demo can be booked directly online.

Frequently asked questions about SBTi

What is the difference between Science Based Targets and the Net-Zero Standard?

Science Based Targets is the umbrella term for all science-based climate targets validated by the SBTi. The Corporate Net-Zero Standard is the specific framework within the SBTi that governs both near-term reduction targets (5 to 10 years) and long-term net-zero targets by 2050 at the latest. Earlier SBTi targets often covered only the near-term horizon. With the Net-Zero Standard, near-term and long-term targets were merged into a mandatory two-tier system.

SBTi or CDP – what is the difference?

SBTi and CDP are different initiatives that complement each other. The SBTi is a standard-setting body that validates emission reduction targets based on scientific criteria. CDP (Carbon Disclosure Project) is a disclosure platform through which companies report their climate data annually. CDP is also one of the founding organizations of the SBTi. In practice, companies use CDP as a reporting channel to transparently disclose their SBTi progress to investors and customers.

Can SBTi targets be achieved with carbon credits?

No, carbon credits do not replace emission reductions under the SBTi framework. Reduction targets must be achieved through actual mitigation across Scope 1, 2, and 3. Offsetting is only permitted for neutralizing residual emissions on the path to net-zero – and even then, only through high-quality, permanent removal methods. With the Corporate Net-Zero Standard V2.0, this principle is further sharpened through the OER concept (Ongoing Emissions Responsibility).

Which companies need to set SBTi targets?

SBTi validation is voluntary – there is no legal obligation. In practice, however, it becomes effectively mandatory through market mechanisms: investors, large customers in the supply chain, and ratings such as MSCI or ISS ESG increasingly expect validated climate targets. In leading indices such as DAX 40, CAC 40, and FTSE 100, SBTi targets are already largely standard. Companies in the food, chemicals, and automotive industries face additional pressure through FLAG and sector-specific requirements.

Does a company need to cover all Scope 3 emissions for SBTi?

Not all, but the material ones. If Scope 3 emissions account for more than 40 percent of total emissions, a Scope 3 target is mandatory and must cover at least 67 percent of those emissions. Under the Corporate Net-Zero Standard V2.0, this blanket threshold is replaced: going forward, all Scope 3 categories accounting for at least 5 percent of total emissions must be addressed. This represents a category-specific approach that increases transparency and comparability.

What happens if a company misses its SBTi targets?

If a company fails to meet its validated SBTi targets, it is removed from the Target Dashboard and publicly flagged as "commitment removed." There are no formal sanctions – the consequences are reputational and market-driven: loss of trust among investors, deteriorating ESG ratings, and risks in customer communications. With Version 2.0, the SBTi further tightens accountability through five-year validation cycles and spot-check audits.

When does the new Corporate Net-Zero Standard V2.0 take effect?

The Corporate Net-Zero Standard V2.0 will be published in the course of 2026 and becomes mandatory for new target submissions from January 1, 2028. Until December 31, 2027, companies can still submit targets under Version 1.3. Already validated targets remain valid until the end of their time horizon, and a planned transition guide will govern the migration to V2.0. Companies should use the transition period for a gap analysis.