Setting Science-Based Targets: What SBTi Validation Actually Requires

By Sai Shankar, Guest Author

Announcing a Net Zero commitment is now commonplace. Getting that commitment validated as a science-based target is a considerably more involved exercise, and it is where many organisations discover that their emissions data, methodology, and internal alignment are less complete than they had assumed.

The Science Based Targets initiative provides the most widely recognised framework for setting corporate climate targets that are consistent with the goals of the Paris Agreement. Its validation process serves as an independent check on whether a target is credible, whether the underlying inventory is fit for purpose, and whether the commitment is anchored in a defensible pathway.

What SBTi Is and Why It Matters

The Science Based Targets initiative is a partnership between CDP, the United Nations Global Compact, the World Resources Institute, and the World Wide Fund for Nature. It sets criteria for corporate emissions reduction targets, validates targets submitted by companies, and publishes those validations for public reference.

A validated SBTi target is increasingly a market expectation rather than a differentiator. It is referenced by:

• Investor stewardship teams assessing portfolio company climate credibility
• Customers embedding supplier decarbonisation requirements into procurement decisions
• Ratings agencies and ESG data providers
• Regulators and policymakers evaluating corporate transition claims

An announcement of intent, without SBTi validation, no longer carries the same weight it did a few years ago.

The Overall Structure of an SBTi Target

Under the SBTi framework, a company committing to science-based targets is required to set:

• Near-term targets: covering a period of typically 5 to 10 years from the base year, addressing Scope 1 and 2, and Scope 3 where it is material
• Long-term targets: setting the level of decarbonisation required to reach Net Zero, typically by 2050 or earlier depending on the sector and the standard applied
• Net Zero commitment: a formal statement of the year in which the company will reach Net Zero across the required scopes

The near-term and long-term targets are not alternatives. Both are required under the Corporate Net-Zero Standard, and the near-term target is the immediate accountability mechanism.

Scope 3: The Requirement Most Companies Underestimate

SBTi requires the setting of a Scope 3 target where Scope 3 emissions represent 40 per cent or more of the company’s total emissions. In practice, this threshold captures the majority of companies in almost every sector outside heavy industry.

The Scope 3 target must cover at least two-thirds of total Scope 3 emissions in the near term. This is where the operational challenge sits. For many companies, Scope 3 accounts for 80 to 95 per cent of the total inventory, and the largest categories are often supply chain (Category 1) and use of sold products (Category 11).

Setting a defensible Scope 3 target therefore requires:

• A reasonably complete Scope 3 inventory across the material categories
• Sufficient data quality to establish a credible base year
• A pathway that reflects real levers, not aspirational reduction assumed to occur in the future
• Clarity on which categories are included and excluded, with reasoning

Companies that submit an SBTi validation with a weak Scope 3 foundation frequently need to withdraw and resubmit. Getting the inventory right before targeting is faster than the reverse.

The Validation Process

The SBTi validation process moves through five broad stages:

• Commit: the company signs a commitment letter, publicly declaring intent to set a science-based target
• Develop: the company develops emissions reduction targets consistent with the SBTi criteria
• Submit: the company submits its targets to SBTi for formal validation, along with the required supporting information
• Communicate: once validated, the company communicates its targets publicly and inputs them into the SBTi target dashboard
• Disclose: the company reports progress against its targets annually and provides an updated GHG inventory

Validation is a paid service, with the fee tied to company size. It is not a rubber stamp. Validators assess the target ambition, the inventory boundary, the methodology, and the internal consistency of the submission. Rejections and requests for resubmission are common.

What SBTi Actually Reviews

The specifics of the review vary by company and target type, but common areas of focus include:

1. Base Year Selection

The base year must be recent and representative. Choosing a base year in which emissions were unusually high, for example due to a one-off event, is likely to be challenged. The base year inventory must be complete, calculated to a consistent methodology, and recalculable if the company boundary changes.

2. Target Ambition

Near-term Scope 1 and 2 targets must be consistent with limiting warming to 1.5 degrees Celsius, which for most sectors means a minimum linear annual reduction of 4.2 per cent from the base year. Scope 3 targets may be aligned with either 1.5 degrees or well below 2 degrees, depending on the target type and sector.

3. Boundary and Coverage

The target must cover at least 95 per cent of Scope 1 and 2 emissions across the corporate boundary. Any exclusions must be justified. For Scope 3, the two-thirds coverage requirement applies as noted above.

4. Methodological Consistency

Emissions must be calculated using recognised methodologies, typically the GHG Protocol Corporate Standard and Corporate Value Chain Standard. Inconsistent application, undocumented emission factors, or unclear boundary decisions are common reasons for rework.

5. Sector-Specific Guidance

Certain sectors, including power, financial institutions, forest, land and agriculture, and others, have specific SBTi guidance and methodologies. A submission that does not follow the applicable sector guidance will not be validated.

Recent Evolution: The Corporate Net-Zero Standard

SBTi’s Corporate Net-Zero Standard sets the requirements for corporate Net Zero targets. A revised version of the standard has been under consultation, with proposed changes including clearer treatment of Scope 3, changes to the role of carbon removals and offsets, and refined requirements for hard-to-abate sectors.

Companies currently developing or refining SBTi targets should track the standard’s evolution closely. Targets validated under one version of the standard may need to be revisited when a subsequent version becomes effective, particularly where the treatment of Scope 3 or carbon removals changes materially.

Where Companies Get Stuck

The most common failure modes we see in SBTi target-setting programmes:

• Incomplete Scope 3 inventory: committing to a target before the underlying Scope 3 data foundation is in place, leading to rework and delays
• Base year issues: selecting a base year without documenting why it is representative, or without a clear restatement policy for subsequent boundary changes
• Overreliance on offsets in the pathway: assuming that offsets or removals will close the gap, when SBTi requires reductions to come primarily from operational and value chain decarbonisation
• Sector guidance overlooked: submitting targets without applying the applicable sector-specific methodology
• No internal governance: targets set by the sustainability team without formal approval by finance, operations, and executive committees, leading to weak accountability and slow progress
• Progress reporting deferred: committing to annual disclosure but not building the underlying system to produce it, so that year-on-year reporting becomes a fire drill

How Horizon ESG Supports SBTi Target-Setting and Tracking

Horizon ESG’s Targets and Baselines module and Emissions Pathway module are designed to support the full lifecycle of a science-based target. Teams can:

• Establish a base year inventory with structured methodology documentation
• Model reduction pathways aligned with 1.5 degree and well below 2 degree scenarios
• Structure Scope 3 targets with defined category coverage and inclusion rules
• Track annual performance against near-term and long-term targets in a single view
• Manage restatement of base year figures where boundary changes occur
• Generate progress disclosures consistent with SBTi reporting expectations

The result is a target-setting and progress-tracking process that is defensible during validation and sustainable over the ten-year performance horizon that SBTi requires.

A Practical Starting Point

If SBTi validation is on the roadmap but the Scope 3 inventory is not yet complete, sequence the work. Building the inventory first, and using it to inform the target, produces a stronger submission than the reverse.

Book a free demo at horizonesg.global/esg-reporting-demo to see how Horizon ESG supports the full path from inventory to target-setting to annual progress reporting.