Guide to SBTi: Science Based Target Initiative

The SBTi (Science Based Targets initiative) is a partnership between the UNGC (UN Global Compact), WRI (World Resources Institute), CDP (Carbon Disclosure Project) and WWF, which supports companies in setting greenhouse gas (GHG) reduction targets aligned with climate science and the goals of the Paris Agreement, aiming to limit global warming to 1.5°C or well below 2°C above pre-industrial levels. In this article, we aim to provide a comprehensive guide to better understand what the initiative entails and the benefits for those whoi participate.

[INDEX]

1. Characteristics of Science Based Targets
2. Purpose
3. SBTi adoption and target-setting process
4. SBTi adoption and target-setting process for SMEs
5. The Net Zero Standard – March 2024 update
6. Benefits of joining the SBTi
7. Importance of Net Zero Standard
8. Conclusions

• Rapid and significant reductions: targets must be aligned with limiting global warming to +1.5°C by 2100, requiring a 45% reduction in global CO2 emissions by 2030 compared to 2010 levels and achieving net-zero emissions around 2050 (as indicated by the IPCC).
• Emissions reduction, not offsets: the SBTi focuses on the direct reduction of greenhouse gas emissions over time. The use of offsets (removal of greenhouse gases or projects outside the value chain) is not considered for achieving reduction targets, although it is encouraged as an additional contribution.
• Including “indirect” emissions in targets (Scope 3): targets must cover Scope 1 and 2 emissions (the company’s direct activities). Additionally, if Scope 3 emissions (upstream and downstream value chain) account for more thna 40% of total emissions, they must be included in SBTi targets, pushing companies to decarbonize the entire value chain.

The initiative aims to guide companies toward structured and meaningful decarbonization, recognizing the central role of the private sector, which is responsible for the majority of global emissions and supporting the setting of emission reduction targets.

The SBTi validates these corporate targets, ensuring they are scientifically grounded and aligned with the latest scientific guidance (IPCC).

The standard process for large companies involves several stages:

The company sends a letter of commitment to the SBTi, declaring its intention to set science-based emission reduction targets.

The emissions inventory (Scope 1,2 and 3 according to the GHG Protocol) is calculated and reduction targets are set. The SBTi offers approaches based on “absolute contraction” (total emissions reduction) or “intensity metrics” (reduction per unit of output).

Submission of targets to the SBTi for official validation (within 24 months of the commitment letter).

Publication of approved targets (within two years of signing the commitment)

Annual public disclosure of emissions and progress toward targets. A simplified procedure is provided for small and medium-sized enterprises

For SMEs, the SBTi adoption and target-setting process is simplified compared to large companies

SMEs submit a letter of commitment, just like large companies, but through a more streamlined process

Unlike large companies, SMEs are not required to calculate all Scope 3 emissions in detail. Instead, they can adopt standardized predefined targets for reducing Scope 1 and 2 emissions

Instead of a detailed analysis and lengthy review, SMEs submit their targets through a simplified and faster validation process.

Once approved, the targets are published, just like for large companies.

SMEs are still required to report their progress annually, but with less complex requirements compared to large companies.

Thus, the process is less burdensome, with fewer calculation requirements and a faster approval process, enabling them to adopt SBTs with more limited resources

The SBTi initiative introduced the Net Zero Standard to help companies set credible decarbonization targets aligned with climate science. This standard, first released in October 2021 (and update in 2024), defines long-term targets (no later than 2050, or 2040 for the energy sector) consistent with the 1.5°C goal across all scopes (1,2 and 3), aiming to achieve global net-zero emissions by mid-century. Today, it serves as the global reference for mapping concrete pathways toward net-zero emissions.

It requires ambitious short-term reductions (having emissions by 2030) and long-term reductions (reducing 80-100% of initial absolute emissions by 2050, with a minimum of 80% for “hard-to-abate” sectors as agriculture and forestry).

The standard also emphasizes the need to neutralize residual emissions (0-20%, depending on the sector) through permanent carbon removal from the atmosphere once the long-term target is achieved. It encourages companies to act “beyond the value chain” (Beyond Value Chain Mitigation – BVCM) by investing in climate protection projects, while making clear that this does not replace internal reductions.

A company is considered “net-zero” only when it has reached its long-term reduction target (approximately 90% reduction ) and has neutralized its residual emissions.

• Enhancement of corporate reputation and market credibility
• Positioning as a leader in the sector, demonstrating a forward-looking approach to sustainability
• Anticipation of market trends and future environmental regulations, reducing risks and maintaining competitiveness
• Strenghtening competitive position in the transition to a low-carbon economy
• Achievement of emission reductions in line with or exceeding the projections of the Paris Agreement

It bridges the gap between global commitments and the reductions needed to limit warming to 1.5°C, providing a scientific basis for credible targets. It offers a solution to certify companies ‘ net-zero goals, addressing the lack of comparability and consistency between declarations.

Companies adopting this standard must set both short and long term targets covering all emissions (Scope 1, 2 and 3).

The Science Based Target initiative provides a fundamental and scientifically rigorous framework to guide companies in setting and validating emission reduction targets aligned with global climate agreements. The introduction and update of the Net Zero Standard emphasize the importance of ambitious short and long term targets, focusing on direct emission reductions and the neutralization of residual emissions.

Joining the SBTi not only contributes to the fight against climate change but also offers significant competitive and reputational advantages for companies. The growing adoption globally and in Italy hihglights the increasingly central role of the SBTi in the transition to a low-carbon economy.